Five names do not always mean five people receiving workers’ compensation coverage. A Tennessee restaurant may have four hourly employees and a corporate officer who has chosen not to cover themselves.
The officer may still matter when the business determines whether it has reached the state’s employee threshold. That is why the count should begin with everyone working for the restaurant—not only the people expected to receive benefits.
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Quick Answer: When Does Tennessee Require Restaurant Workers’ Comp?
Tennessee generally requires non-construction employers with five or more employees to secure workers’ compensation insurance or qualify as self-insured. Restaurant employees who work part time, are minors or are working family members can count. Sole proprietors, partners and LLC members are generally excluded from the threshold count. The state says full-time corporate officers who work for the business are included; an officer’s decision to exclude themselves from policy coverage does not remove them from the count unless they are unpaid or uncompensated. Use the Tennessee Bureau of Workers’ Compensation’s non-construction guidance and owner exemption guidance to check the entity and people involved.
This is a Tennessee employee-count guide. StarNet’s workers’ comp insurance article for restaurants covers the injury side of the topic, including burns, cuts and slips.
The Five-Employee Rule at a Glance
Restaurant staffing arrangement | Likely count question | Action before work starts |
|---|---|---|
Four regular employees | Generally below the non-construction threshold | Review other countable workers and contractual requirements. |
Three full-time and two part-time employees | Five countable people | Arrange coverage before the fifth employee begins. |
Four employees and a full-time, compensated corporate officer | The officer may bring the count to five | Check the officer’s role, compensation and any election to decline personal coverage. |
Four employees and an LLC member who owns the restaurant | The LLC member is generally excluded from the threshold count | Confirm entity status and whether the person is truly a member. |
Four employees and a “1099” cook on assigned shifts | Contractor status may be disputed | Review the real working relationship under Tennessee’s factors. |
Five employees followed by a drop to three | The obligation does not necessarily end with a canceled policy | Review Tennessee’s Form I-3 withdrawal process. |
Examples are simplified. Entity structure, employment status and the applicable exception determine the result. The state’s non-construction page explains the rule in detail.
Count People Across the Business, Not One Shift
Imagine a Nashville sandwich shop with one cook, one prep worker and two servers. A student begins hosting on Saturdays. That fifth employee is a person, even if the host works only a handful of hours a week. Tennessee specifically includes part-time employees and minors in its count, along with family members who work for the business.
Count the business’s employees rather than treating each shift as a separate workforce. If the same employer operates several restaurant locations, do not assume each address has an independent five-person threshold. Determine which legal entity hires, pays and supervises the people. A schedule, roster and payroll report should tell the same story.
A new worker may begin training before opening. Set the coverage effective date before the work. See StarNet’s opening insurance guide.
Owners and Corporate Officers Need Separate Treatment
“The owner does not count” is an unsafe shortcut. Tennessee distinguishes legal structures. Its Bureau says sole proprietors, partners and LLC members are excluded from the employee count used for the five-person threshold in non-construction businesses. It specifically says corporate officers who work full time are included in the count. The state’s exemption guidance adds that an officer’s election to exclude themselves from policy coverage does not remove them from the employee count unless the officer is unpaid or uncompensated.
A full-time, compensated officer may therefore decline personal coverage while still bringing the corporation’s count to five. For non-construction businesses, Tennessee’s corporate officer election guidance describes Form I-6, filed with the corporation. The form must include an affidavit stating that the employer did not advise, counsel or encourage the officer to waive coverage. The officer should give the agent and carrier a copy of the exclusion for audit purposes. For an officer whose hours or compensation do not fit that example, verify the treatment with the Bureau rather than assuming an answer.
Keep entity records with the roster. StarNet’s restaurant quote checklist helps organize ownership and payroll details.
Why Calling a Cook a Contractor May Not Work
Tennessee says a Form 1099 does not itself decide whether a worker is an employee. Its Bureau considers seven factors, giving significant weight to who controls the work. They include the right to terminate, method of payment, provision of tools and equipment, scheduling freedom and the ability to offer services elsewhere.
Picture someone who reports at 4 p.m. three nights a week, uses the restaurant’s kitchen and follows the chef’s instructions. A contractor label on that person’s invoice may be inconsistent with the way the job actually works. An independent caterer delivering a contracted service under their own business arrangement may raise a different set of facts. Ask for a status review instead of using a payment method to reach a desired count.
For staffing-agency workers, identify the employer and insurer. See StarNet’s workers’ comp audit article on outside-labor records.
When a Restaurant Grows or Shrinks
A fifth countable employee can trigger a requirement while a restaurant is expanding. Do the count when the job offer is accepted, then confirm the effective date before that employee begins work. A policy quote, payment instruction or certificate request is not a substitute for active coverage.
If a covered restaurant later drops below five employees, do not assume the legal position changes simply because its payroll shrank. Tennessee’s Bureau says an employer may elect to withdraw from coverage after falling below the threshold but must file a Notice of Withdrawal from Coverage, Form I-3; the withdrawal takes effect after Bureau acceptance. Confirm the process before canceling. Lease obligations and a desire to protect workers may lead the business to keep coverage anyway.
Construction contractors have different Tennessee rules. For renovations, see StarNet’s restaurant renovation guide.
What if the Restaurant Has Fewer Than Five?
Below the usual threshold, workers’ comp may still be a business decision. Tennessee warns that when a business is not required to carry the insurance and an employee is injured, that worker may be able to sue the employer. Workers’ comp can also be requested in a contract or preferred by an operator who wants a defined response to employee injuries.
The employee threshold does not address customer injury, property damage or lost revenue. StarNet’s restaurant insurance checklist covers those exposures.
A Hiring Checklist for Tennessee Restaurants
Before adding a worker, make a list of all current employees and their start dates. Include part-time staff, minors, working relatives and full-time corporate officers who receive compensation. Record which people are owners, partners or LLC members and the business entity they belong to. Review workers paid through an agency or by Form 1099 based on their actual relationship to the restaurant.
Then send the roster, estimated payroll, locations and proposed start date to the insurer. If coverage is required, obtain an effective policy for the correct legal employer. Save the policy, owner elections and carrier correspondence where a manager can find them after an injury or an audit. Recount when the business opens a second location or changes its legal structure.
Frequently Asked Questions
Do part-time servers count toward Tennessee’s five employees?
Yes. Tennessee includes part-time employees in the non-construction count.
Does a restaurant’s corporate officer count if they opt out of coverage?
A full-time, compensated corporate officer is included in the threshold count even if they exclude themselves from policy coverage. Check unusual work-hour or compensation arrangements with the Bureau.
Do sole proprietors and LLC members count as employees for the threshold?
Tennessee generally excludes sole proprietors, partners and LLC members from the non-construction threshold count. Other workers must still be counted.
Are five people required to work at the same time?
No. The rule concerns the employer’s employee count; part-time employees do not vanish because their shifts are on different days.
Can a restaurant rely on a 1099 to keep its count at four?
No. Tennessee evaluates the working relationship, including control over the work, rather than relying on the tax form alone.
Can workers’ comp be canceled immediately after staffing drops below five?
Tennessee describes a Form I-3 withdrawal process for an employer that falls below the threshold. Confirm Bureau acceptance and other obligations before changing coverage.
Contact StarNet Insurance Group
One hire can change a Tennessee restaurant’s legal requirement, especially when a full-time, compensated corporate officer is part of the business.
This article is for general education, not legal advice or a guarantee of coverage. Worker classification, owner treatment, exceptions and claims depend on current law and the facts. Confirm requirements with the Tennessee Bureau of Workers’ Compensation and qualified professionals.
Contact StarNet Insurance Group to review the roster, entity structure, policy date and other restaurant coverage before the next shift is added.
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