Helpful Tips for Employers
NUMBER OF EMPLOYEES
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Chapter 440 of the Florida Statutes requires all Employers with 4 or more employees, or if in the construction industry, one or more employees, to provide workers compensation coverage for all of its employees. Chapter 440.02(15)(b) includes corporate officers in the employee count, unless they have filed an Election to be Exempt form with the Bureau of Compliance.
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Sole Proprietors, Partners and Members of Limited Liability Companies (LLC) in non-construction industries are not considered employees for workers compensation purposes.
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An Employer outside the construction industry with fewer than four employees choosing not to secure workers compensation coverage, MUST post clear written notice in a conspicuous location at each work site directed to all employees and other persons performing services at the worksite of their lack of entitlement to benefits under chapter 440.055 Florida Statutes.
CONSTRUCTION INDUSTRY
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Every Employer shall, as a condition to applying for and receiving a building permit, show proof and certify to the permit issuer that it has secured compensation for its employees under this chapter as provided in ss. 440.10 and 440.38. Proof of coverage must be evidenced by a certificate of insurance, a valid certificate of exemption approved by the Division of Workers Compensation or proof of the Employer’s right to self-insure.
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Out-of-State contractors engaged in work in Florida are required to secure payment of workers compensation coverage for all of its employees. Administrative Code Rule 69L-6.019 further states: Every employer who is required to provide workers' compensation coverage for employees engaged in work in this state shall obtain a Florida policy or endorsement for such employees that utilizes Florida class codes, rates, and manuals that are in compliance with and approved under the provisions of Chapter 440, F.S., and the Florida Insurance Code, pursuant to Sections 440.10(1)(g) and 440.38(7), F.S. In order to comply with these statutes, any policy or endorsement presented by an Employer as proof of workers compensation coverage for employees engaged in work in this state must list "Florida" in item 3A and use Florida approved classification codes, rates and estimated payroll in Item 4.
SUBCONTRACTORS
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A contractor/subcontractor relationship arises when one business entity or individual enters into a contract with another to perform all or a portion of that job. The following items are important issues that Employers who use subcontractors need to know to protect themselves from uninsured claims and additional premiums.
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Pursuant to Chapter 440.02(15)(c)2, F.S., the definition of "Employee" includes: All persons who are being paid by a construction contractor as a subcontractor, unless the subcontractor has validly elected an exemption as permitted by this chapter, or has otherwise secured the payment of compensation coverage as a subcontractor, consistent with s. 440.10, for work performed by or as a subcontractor. In other words, the employees of a subcontractor are considered the statutory employees of the construction contractor unless the subcontractor has purchased a workers compensation for such individuals.
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Chapter 489.113(2), F.S. states: No person who is not certified or registered shall engage in the business of contracting in this state. If you are a contractor licensed by or under the authority of the Department of Business and Professional Regulation (DBPR), you are required to hire and pay the subcontractors directly. Pulling permits for others, who are not licensed to engage in the business of contracting is prohibited. Note: Subcontractors must be paid directly by the qualified business entity that pulls the permits.
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A sole proprietor or owner-operator with no employees, working as a subcontractor, will cause all the payroll of the Construction Executive Supervisor or Construction Superintendent to be assigned to the highest rated construction classification code applicable to the policy, rather than to Code 5606.
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If you hire a subcontractor that has an employee leasing arrangement providing workers compensation insurance, you must furnish a valid certificate of insurance for the leasing company showing proof of Florida workers compensation insurance, as well as an affidavit from the subcontractor attesting to not having any unreported employees.
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If you hire a subcontractor with only an exempt officer with no employees and pay that subcontractor more than $100,000 annually, or $25,000 per quarter, the FWCJUA will apply a "reasonableness test" to that subcontractor and will include any payments in excess of $100,000 as remuneration, resulting in a potential increase to your total estimated annual premium. This "reasonableness test" is based on 3 times Florida's average hourly wage for the construction industry multiplied by the number of work hours in a year, as published by the Agency for Workforce Innovation. Based on these published Florida statistics, it is unusual for a sole proprietor or owner-operators with no employees to earn more than $100,000 annually.
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The FWCJUA recommends that all Employers who hire subcontractors register with the Division of Workers Compensation to aid in tracking subcontractor coverage and identifying uninsured and non-exempt subcontractors. Go to www.myfloridaCFO.com/wc and then to the database titled "Construction Industry Policy Tracking Database". Follow the instructions for registering and the Division will endeavor to notify you of any changes to the subcontractors coverage or exemption status. An Employer insured by the FWCJUA is responsible for paying premium on all uninsured subcontractors.
INDEPENDENT CONTRACTORS (Non-Construction Industry Only)
Effective July 1, 2003, Senate Bill 50A eliminated Independent Contractors in the construction industry. However, there are Employers who try to avoid paying workers compensation premiums by entering into contracts that treat employees as independent contractors. Please be aware that such contracts are not absolutely determinative of whether a true independent contractor relationship exists. In order to meet the definition of independent contractor, at least 4 of the following criteria must be met:
1. maintains a separate business with his or her own work facility, truck, equipment, materials or similar accommodations;
2. holds or has applied for a federal employer identification number, unless the independent contractor is a sole proprietor who is not required to obtain a federal employer identification number under state or federal regulations;
3. receives compensation for services rendered or work performed and such compensation is paid to a business rather than to an individual;
4. holds one or more bank accounts in the name of the business entity for the purpose of paying business expenses or other expenses related to services rendered or work performed for compensation;
5. is able to perform work for any entity in addition to or besides the employer at his or her own election without the necessity of completing an employment application or process;
6. receives compensation for work or services rendered on a competitive-bid basis or completion of a task or a set of tasks as defined by a contractual agreement, unless such contractual agreement expressly states that an employment relationship exists.
If failing to meet 4 of the above 6 criteria, an individual may still be presumed to be an independent contractor if he/she satisfies any of the following conditions:
1. performs or agrees to perform specific services or work for a specific amount of money and controls the means of performing the services or work;
2. incurs the principal expenses related to the services or work that he or she performs or agrees to perform;
3. responsible for the satisfactory completion of the work or services that he or she performs or agrees to perform;
4. receives compensation for work or services performed for a commission or on a per-job basis and not on any other basis;
5. realizes a profit or suffer a loss in connection with performing work or services;
6. has continuing or recurring business liabilities or obligations;
7. success or failure depends on the relationship of business receipts to expenditures. If you are seeking immunity from workers' compensation coverage for an independent contractor, be sure that such a relationship does in fact exist. For more information, please refer to Section 440.02, Florida Statutes.
CLAIM REPORTING
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To report a claim for an injured employee call 1-800-832-7839 If you or your employees want more information on what to expect should an injury occur, follow this link: FWCJUA Service Provider: Travelers |