Whether your Tennessee LLC needs workers compensation turns on two things: how many employees you have and whether the work is construction. A non-construction LLC is required to carry it once it regularly employs five or more people, while a construction LLC needs coverage from its very first worker. The members themselves are outside the count in either case: an LLC member is not treated as an employee unless they file to opt in, so members do not push you toward the five and are not automatically covered.
Who this is for: Owners of a Tennessee LLC, whether a single-member LLC with no staff, a multi-member LLC, or an LLC running a payroll of employees.
The short version
- A non-construction LLC must carry comp once it regularly employs five or more people.
- A construction LLC needs coverage from the first worker, with no five-employee grace.
- LLC members are outside the employee count and are not covered unless they file to opt in.
- In construction, a member who owns at least a fifth of the LLC can file for a spot on the state exemption registry instead of covering themselves.
- Clients and general contractors routinely require proof of coverage before your LLC can start work.
How Tennessee treats LLC members
Tennessee does not treat an LLC member as an employee by default. A member is an owner, not staff, so they are not counted toward the five-employee trigger and are not on the policy unless they file a written election with the insurer to opt in. That is the opposite of how the state treats a paid corporate officer, who is counted and covered by default. If a member wants comp to pay their own on-the-job injuries, they elect in and their pay is rated into the premium; if they do nothing, they are simply off coverage. The employees are the ones who drive the requirement: once a non-construction LLC regularly employs five or more, or a construction LLC hires anyone, those workers must be covered.
| Your LLC setup | Is comp required? | What owners and staff should know |
|---|---|---|
| Single-member, no employees, non-construction | No | The member is off by default and can elect in; a work injury otherwise falls on their own insurance |
| Non-construction with fewer than five employees | No, but optional | Not mandated yet; many buy anyway for contracts and protection |
| Non-construction with five or more employees | Yes | All employees covered; members still outside the count unless they opt in |
| Any construction LLC with a worker | Yes | Coverage from the first worker; members cover themselves unless registry-exempt |
Opting in, or the construction exemption
Because a Tennessee LLC member starts off coverage, the choice for a non-construction owner is whether to elect in to cover their own injuries. In construction the rule flips: a construction LLC member is expected to carry comp on themselves, but a member who is actively engaged in the construction work and owns at least twenty percent of the LLC can file for a place on the state's construction exemption registry, which excuses that one named person. The registry spot covers only the individual who files, never the LLC's employees, so any crew you hire still needs a policy.
Why the setup matters more than the label
The limited liability in an LLC shields your personal assets from many business debts, but it does not by itself answer an injured employee, which is exactly what comp is built to handle. And because members are outside the count, an owner-run LLC can operate below the five-employee line longer than a corporation with paid officers would, since those officers count. So two similar businesses can sit on opposite sides of the mandate purely because of how they are organized, which is why it pays to check your own structure rather than a rule of thumb.
A Memphis example
Illustrative, not a quote. A two-member electrical contracting LLC in Memphis runs the business with one apprentice on payroll. Because electrical work is construction, Tennessee requires a policy from the first worker, so the apprentice is covered from day one, even though the LLC is nowhere near five employees. Both members work in the field, so each files for a spot on the construction exemption registry, which excuses them individually while the apprentice stays covered. When a builder they want to work for asks for proof of coverage, the LLC already has a policy and produces a certificate the same day. See our workers comp for electricians page.
Real questions Tennessee owners ask
Does my Tennessee LLC have to carry workers comp?
It depends. A non-construction LLC must carry it once it regularly employs five or more people. A construction LLC needs it from the first worker. Members are outside the count and covered only if they opt in.
Am I covered as an LLC member in Tennessee?
Not automatically. Tennessee treats an LLC member as an owner, not an employee, so you are off the policy unless you file a written election to opt in. That is the opposite of how paid corporate officers are treated.
Do LLC members count toward the five-employee trigger?
No. Sole proprietors, partners, and LLC members do not count toward the five. Only employees do, plus paid corporate officers. So a member-run LLC can stay below the mandate longer than a corporation would.
My LLC does construction. When do I need coverage?
From your first worker. Construction has no five-person grace, and the members are expected to cover themselves unless a member who owns at least a fifth of the LLC files for a spot on the state exemption registry.
Do I need comp for a single-member LLC with no employees?
Not if it is non-construction, since the member is outside the count. In construction you are expected to cover yourself unless you register for an exemption. Many solo owners buy anyway to get a certificate for clients.
How do I put myself on the policy as a member?
You file a written election with your insurer to opt in, and your pay is then rated into the premium. That gives you comp for your own on-the-job injuries, which a health plan may not cover.
Why do clients ask my LLC for proof of coverage?
General contractors, landlords, and commercial customers require proof to manage their own risk. Even when you have covered everyone required, you usually cannot start the job without showing a certificate.
Why Tennessee owners choose Morrow
- We shop the right market for you. In Tennessee you buy workers' comp on the open, competitive market from any private insurer licensed in the state, because there is no state fund, and if no insurer will take you the NCCI-run Tennessee Workers Compensation Insurance Plan is the guaranteed backstop, so we can shop your rate freely and still have a fallback for hard-to-place work.
- We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
- Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
- We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
- Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.
Related Tennessee guides
Every Tennessee business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.
- Business insurance in Tennessee (start here)
- Workers comp: the owner's overview
- I'm a sole proprietor: do I need workers comp?
- I own a corporation (C-corp or S-corp): do I need it?
- We're a partnership: do we need workers comp?
- We're a nonprofit: do we need workers comp?
- My workers are 1099: do I still need it?
- Only part-time or seasonal staff: do I need it?
- I only employ family: do I need workers comp?
- Remote or out-of-state staff: do I need coverage?
- What happens if I don't carry workers comp?
- How much does workers comp cost?
- How do I get workers comp (even if turned down)?
- What insurance do I need for a contractor license?
- Workers compensation insurance, explained
- What workers comp costs (national guide)
- Do sole proprietors need workers comp?
- What workers comp does not cover
- Tennessee electrician workers comp
This guide is general information, not legal advice. Tennessee rules and penalty amounts can change, so verify current requirements with the Tennessee Bureau of Workers' Compensation or a licensed advisor before you rely on them. Last updated: July 2026.