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Workers comp opt-out bill introduced in Tennessee

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Tennessee legislators introduced a bill Thursday that would create an alternative benefit system for injured workers outside of the state-mandated workers compensation insurance program.

The legislation would allow private employers in the state to “set up their own injury benefit plans, subject to a minimum benefit mandate, financial security review, and other employee protections,” according to a document from the national Association for Responsible Alternatives to Workers’ Compensation, a group of employers who are seeking to opt out of traditional state workers comp systems.

Republican Tennessee Sen. Mark Green, who introduced the bill, said in the statement that the measure would “give job creators a way to save more than 50% on workers comp costs, so they can invest in growth and more employees.”

Public employers in Tennessee already have the option to forgo traditional workers comp insurance and set up their own injury benefit plans, according to the ARAWC document.

The proposed legislation is similar to a bill enacted in Oklahoma last year that allowed employers to leave the traditional workers comp system by establishing an alternative benefit program for injured workers.

Opt-out bills in Tennessee and Oklahoma are based on the Texas nonsubscription system, which was established more than 100 years ago and allows employers to decline to buy workers comp insurance. The Texas program does not require employers that opt out to provide benefits to injured workers.

Similar to Texas, employers who elect to leave the Tennessee workers comp system would not retain exclusive remedy legal protections that typically are afforded to workers comp policyholders nationwide, the ARAWC document says.

“One-third of all Texas employers nonsubscribe and are subject to such liability exposure and have found it to be manageable and fully insurable,” according to the document.

The “Tennessee Option” would not be available to employers in the construction or coal mining sectors “due to their unique industry requirements,” according to the ARAWC document.