Construction Claim Rules in Tennessee

Statutory interest rate

Floating, reset twice yearly (postjudgment); currently 8.75%/year for Jul 1 to Dec 31, 2026; up to 10%/year (discretionary prejudgment)

Postjudgment: 2 percentage points below the formula rate published by the state's Commissioner of Financial Institutions, reset every Jan 1 and Jul 1 (or the contract's own rate, if specified). For Jul 1, 2026 through Dec 31, 2026 this works out to 8.75% per year. The rate in effect on the date judgment is entered applies for the life of the judgment and does not change if the formula rate later moves. Prejudgment interest on a contract claim is separately discretionary, awarded 'as equity requires,' capped at an effective 10%/year.

Compounding: Not stated in the statute; generally treated as simple interest.

Citation: Tenn. Code Ann. §§ 47-14-121, 47-14-123

Source: https://www.tncourts.gov/tennessee-judgment-interest-rates

Last checked: 2026-08-23

The post-judgment rate is two points below the formula rate published by the Commissioner of Financial Institutions and resets every January 1 and July 1. The rate in effect when judgment is entered governs for the life of that judgment. Pull the current published figure rather than a stored one.

Accrual: breach of contract claim

Fully discretionary: no fixed statutory accrual date

Tenn. Code Ann. § 47-14-123 allows courts and juries to award prejudgment interest 'in accordance with the principles of equity,' capped at an effective 10% per year. The statute doesn't specify an accrual date; it's decided case by case rather than defaulting automatically to the breach date.

Citation: Tenn. Code Ann. § 47-14-123

Source: https://law.justia.com/codes/tennessee/2023/title-47/chapter-14/part-1/section-47-14-123/

Like New Jersey's contract rule and Pennsylvania's rule for unliquidated damages, this is a genuinely discretionary mechanism; don't assume a guaranteed date-of-breach start.

Accrual: property damage / tort claim

Same equitable, discretionary mechanism as contract claims

The same statute, Tenn. Code Ann. § 47-14-123, governs prejudgment interest on property-damage and other claims; there is no separate date-of-loss rule; courts and juries retain equitable discretion over both whether to award it and what date to use.

Citation: Tenn. Code Ann. § 47-14-123

Source: https://law.justia.com/codes/tennessee/2023/title-47/chapter-14/part-1/section-47-14-123/

Actual Cash Value rule

Broad evidence rule: materials can be depreciated, labor cannot

Tennessee Supreme Court held that when calculating ACV via replacement-cost-minus-depreciation, an insurer may depreciate materials but not labor.

Citation: Lammert v. Auto-Owners (Mutual) Ins. Co., 572 S.W.3d 170 (Tenn. 2019)

Source: https://www.tncourts.gov/courts/supreme-court/opinions/2019/04/15/gregory-j-lammert-et-al-v-auto-owners-mutual-insurance

ACV statute or regulation

Tennessee has a regulatory ACV-calculation rule, but the ban on depreciating labor comes from a state Supreme Court decision interpreting it, not from statutory text that itself singles out labor.

Tenn. Comp. R. & Regs. 0780-01-05-.10(2), part of Tennessee's Unfair Claims Settlement Practices rules for fire and extended-coverage policies with replacement cost coverage, defines actual cash value as replacement cost of the property at the time of loss less depreciation, if any and requires the insurer to provide the insured, on request, a copy of the claim file worksheets detailing any depreciation deductions. The regulation's text does not itself single out labor. Separately, in Lammert v. Auto-Owners (Mut.) Ins. Co., 572 S.W.3d 170 (Tenn. 2019), the Tennessee Supreme Court held that insurers may not depreciate labor cost, reasoning that ordinary usage of depreciation refers to physical wear and that labor, being intangible, cannot physically depreciate. That holding governs in practice but is judicial contract interpretation applied against the regulatory backdrop, not a legislative or regulatory provision that bans labor depreciation on its face.

Citation: Tenn. Comp. R. & Regs. 0780-01-05-.10(2); Lammert v. Auto-Owners (Mut.) Ins. Co., 572 S.W.3d 170 (Tenn. 2019)

Source: https://www.law.cornell.edu/regulations/tennessee/Tenn-Comp-R-Regs-0780-01-05-.10

Recoverable depreciation holdback

No Tennessee statute or regulation found that sets a deadline or notice requirement for paying out withheld depreciation once repairs are completed.

The applicable regulation, Tenn. Comp. R. & Regs. 0780-01-05-.10, addresses how ACV and replacement cost are computed and what depreciation documentation insurers must disclose, but contains no provision governing the timing of, or the insured's window for, recovering held-back depreciation once repairs are finished.

Citation: Tenn. Comp. R. & Regs. 0780-01-05-.10

Source: https://www.law.cornell.edu/regulations/tennessee/Tenn-Comp-R-Regs-0780-01-05-.10

Checked the state's fire and replacement-cost claims-settlement regulation directly; it does not address depreciation holdback timing and no separate holdback-specific statute was located.

“No damages for delay” clause enforceability

Enforceable, even when results are harsh, with the standard four exceptions

Tennessee courts (through its intermediate Court of Appeals) enforce a no-damages-for-delay clause according to its terms, even where the result seems harsh to the contractor, while recognizing the same four exceptions found in most other states: delay not contemplated by the parties; delay amounting to an abandonment of the contract; delay caused by the other party's bad faith; and delay involving active interference.

Citation: Brown Bros., Inc. v. Metro. Gov't of Nashville, 877 S.W.2d 745 (Tenn. Ct. App. 1993); Thomas & Assocs., Inc. v. Metro. Gov't of Nashville, No. M2001-00757-COA-R3-CV, 2003 WL 21302974 (Tenn. Ct. App. 2003); Haren Constr. Co. v. Metro. Gov't of Nashville, No. M2002-01135-COA-R3-CV, 2003 WL 21537623 (Tenn. Ct. App. 2003)

Source: https://www.woodsaitken.com/sites/default/files/Survey_50-State-Matrix_Pay-If-Paid_No-Damage-for-Delay.pdf

Construction contract filing deadline

6 years for a contract action not otherwise expressly provided for

Tennessee's catch-all limitations period for an action on a contract not otherwise expressly provided for by statute is 6 years from accrual, covering an ordinary written construction-contract claim. Two deadlines sit in front of that one on most construction claims. A mechanic's lien and a payment bond claim each run on their own, far shorter clock, counted from last furnishing rather than from breach and missing either one removes the security while leaving the contract claim alive but unsecured. Check those dates first. Accrual is the other half of the question: the period runs from breach, which on a payment dispute is usually the date payment came due rather than the date the work was done.

Citation: Tenn. Code Ann. § 28-3-109(a)(3)

Source: https://law.justia.com/codes/tennessee/title-28/chapter-3/part-1/section-28-3-109/

State unemployment insurance (SUTA)

New employers pay a flat 2.7%. Experienced employers fall into one of two disjoint bands under Premium Rate Table 6: 0.01% to 2.3% for positive-rated employers, or 5% to 10% for negative-rated employers (no employer falls between 2.3% and 5%). Rates reset semi-annually (Jan. 1 and July 1), not annually. 2026 taxable wage base is $7,000.

Tennessee recalculates experience-rated premiums twice a year rather than once, tied to the reserve ratio in each employer's account. Premium Rate Table 6 governs from 1 July 2026 through 31 December 2026. The experience-rated structure is two separate bands rather than a continuous range: 0.01% to 2.3% for positive-rated employers and 5% to 10% for negative-rated employers, with nothing in between.

Citation: Tennessee Department of Labor and Workforce Development.

Source: https://www.tn.gov/workforce/employers/tax-and-insurance-redirect/unemployment-insurance-tax/ui-tax-rates.html

Last checked: 2026-08-26

Rates reset semi-annually here, so a figure pulled in January may not hold in July.

Workers' compensation rating

Tennessee is an NCCI advisory state; workers' compensation rates are based on NCCI loss costs approved by the Tennessee Department of Commerce and Insurance.

Tennessee is one of the states where the National Council on Compensation Insurance (NCCI) files advisory loss costs and maintains class codes. Individual insurers file their own rates using NCCI loss costs as a base, subject to approval by the Tennessee Department of Commerce and Insurance. Coverage is written in the standard private voluntary and residual (assigned risk) markets; Tennessee is not a monopolistic state and workers' compensation is mandatory (not optional) for most employers with five or more employees.

Citation: Tenn. Code Ann. Section 50-6-101 et seq.; NCCI Tennessee state filings

Source: https://www.ncci.com/Articles/Pages/II_StateAdvisoryForumState_TN.aspx?state=Tennessee

Prevailing wage law

Tennessee has a narrow state prevailing wage law limited to state-funded highway, road and bridge construction over $50,000; it does not cover other public works such as schools or buildings.

The Tennessee Prevailing Wage Act for State Highway Construction Projects (Tenn. Code Ann. Sections 12-4-401 to 12-4-415) requires prevailing wages on state highway, road and bridge contracts exceeding $50,000, as determined by the Tennessee Prevailing Wage Commission. Tennessee has no general state prevailing wage law covering non-highway public works like schools, water systems, or public buildings; those projects are subject only to the federal Davis-Bacon Act when federal funds are involved, at the $2,000 federal threshold.

Citation: Tenn. Code Ann. Sections 12-4-401 to 12-4-415

Source: https://www.dol.gov/agencies/whd/state/prevailing-wages

Legislation was reported in April 2026 that would extend coverage to certain non-highway construction funded by federal or state highway funds. Check the current Tennessee Code, since that would change the scope described here.

Comparative / contributory negligence rule

Modified comparative fault, recovery barred at 50% or more fault

Recovery is reduced in proportion to fault and barred once the worker is 50% or more at fault. A worker exactly 50% at fault recovers nothing.

Citation: McIntyre v. Balentine, 833 S.W.2d 52 (Tenn. 1992); Volz v. Ledes, 895 S.W.2d 677 (Tenn. 1995) (joint and several liability abolished); Eaton v. McLain, 891 S.W.2d 587 (Tenn. 1994) (apportionment guidelines)

Source: https://law.justia.com/cases/tennessee/supreme-court/1995/897-s-w-2d-684.html

Verified against: the holding as quoted verbatim in Whitehead v. Toyota Motor Corp., 897 S.W.2d 684 (Tenn. 1995), restating McIntyre

Non-economic damages cap

Non-economic damages capped at $750,000

Rises to $1,000,000 for catastrophic loss or injury. The cap is lifted where the defendant acted with intent, concealed or destroyed evidence, was intoxicated, or committed a felony.

Citation: Tenn. Code Ann. § 29-39-102

OSHA plan

TOSHA: full state plan, private + public sector

Tennessee operates TOSHA (Tennessee Occupational Safety and Health Administration), a full OSHA-approved state plan covering both private and public-sector employers. A state plan must be at least as effective as federal OSHA and may set stricter standards, so check the state rule before assuming the federal text applies. It also covers state and local government employees, which federal OSHA does not, so a public works injury is inside the state agency's jurisdiction. Citations are issued by the state agency and contested before the state's own review body rather than the federal commission, which changes where the file lives when you go looking for it. Reporting deadlines follow the federal rule: a work-related fatality within 8 hours, an inpatient hospitalisation, amputation or loss of an eye within 24 hours. For a construction claim the inspection file matters more than the citation: photographs, measurements, witness statements and the inspector's narrative are usually obtainable and are often the best contemporaneous record of the site.

Citation: 29 U.S.C. § 667; Tenn. Code Ann. § 50-3-101 et seq.

Source: https://www.osha.gov/stateplans/tn

Weight of an OSHA violation in a negligence case

Tennessee can treat an OSHA violation as negligence per se, but only where the safety rule imposes a duty on the party being sued

The Sixth Circuit has held that Tennessee's negligence per se doctrine reaches safety regulations where the injured worker is within the protected class and the rule binds the defendant. In Wren v. Sullivan Electric an electrical subcontractor that installed inadequate temporary lighting on a construction site was negligent per se under state regulations incorporating the federal OSHA standards. Ellis v. Chase Communications, decided nine years later, marks the limit: the Sixth Circuit left open when an OSHA violation can be negligence per se and declined to run that duty from a property owner to an independent contractor's employees. The practical test in Tennessee is who the regulation actually regulates.

Citation: Wren v. Sullivan Elec., Inc., 797 F.2d 323 (6th Cir. 1986); Ellis v. Chase Commc'ns, Inc., 63 F.3d 473, 477-78 (6th Cir. 1995)

Source: https://m.openjurist.org/797/f2d/323

Both are federal decisions applying Tennessee law rather than Tennessee Supreme Court rulings. Read them before treating an OSHA violation as automatic against a defendant that is not the worker's employer.

Third-party contribution against the employer

A Tennessee statutory employer (principal contractor) enjoys the SAME exclusive-remedy immunity as the direct employer, even if it never actually had to pay workers-comp benefits, barring third-party contribution against it.

A principal contractor is secondarily liable for compensation if the immediate employer cannot pay and in exchange gets the same tort immunity as a direct employer under Tenn. Code Ann. § 50-6-108(c). Coblentz v. Tractor Supply Co. confirms the immunity applies even where the statutory employer never actually paid benefits, so long as it was exposed to the liability.

Citation: Tenn. Code Ann. § 50-6-108(c); Coblentz v. Tractor Supply Co., No. M2023-00249-COA-R3-CV (Tenn. Ct. App. Apr. 26, 2024).

Source: https://www.workerscompensation.com/daily-headlines/tenn-exclusive-remedy-bars-sales-reps-tort-claim/

Injury-severity gate on contribution claims

Narrow intentional-tort exception: an employee can sue the employer directly only by proving actual intent to injure, a high bar.

Tennessee's exclusive-remedy rule generally bars suits against the employer for workplace injuries. The recognized exception requires the employee to prove the employer acted with actual intent to injure, not mere negligence or recklessness. Separately, T.C.A. § 50-6-112 always preserves the employee's right to sue a responsible third party (not the employer) in tort, with the workers' comp insurer holding a subrogation right against that recovery. In practice exclusivity takes the direct employer off the tort table entirely, whatever the OSHA file shows. The claim runs against the other parties on the site: the general contractor, the owner, another subcontractor, an equipment manufacturer. The employer or its carrier then asserts a lien against whatever the worker recovers from those parties, so the figure the worker actually keeps is the recovery less the lien, the fee and the costs. Whether the lien is reduced for the cost of obtaining the recovery is a separate state question worth asking early, because it moves the net more than most people expect.

Citation: Tenn. Code § 50-6-101 et seq., § 50-6-112.

Source: https://www.workerscompensation.com/daily-headlines/tennessees-exclusive-remedy-rule/

Distinctive state doctrine

All construction employers must carry workers' compensation regardless of size, with six narrow exemptions and a registry system

Tennessee's general rule exempts employers with fewer than five employees, but Tenn. Code Ann. § 50-6-902 requires every construction employer to carry coverage regardless of size. The six exemption categories are a non-commercial project, three or fewer exempt providers on the project, already being covered by another party's policy, working directly for the property owner without subcontracting further, working on one's own property and casual employment. The statutory employer rule makes a principal contractor secondarily liable for a subcontractor's uninsured employees and extends exclusivity immunity in exchange. Licensed design professionals, meaning architects, engineers, landscape architects and surveyors, are excluded from the definition of employee.

Citation: Tenn. Code Ann. § 50-6-901 et seq. (Part 9, Construction Services Providers); § 50-6-902; Title 50, ch. 6 App. (design-professional exclusion); Coblentz v. Tractor Supply Co., No. M2023-00249-COA-R3-CV (Tenn. Ct. App. Apr. 26, 2024).

Source: https://www.dayontorts.com/no-personal-injury-case-against-statutory-employer.html