Workers’ compensation is a system of no-fault insurance that provides wage replacement and medical benefits to employees for accidental work-related injuries. The Florida Workers’ Compensation Law (FWCL) defines employer responsibilities in the workers’ compensation program. The Florida Division of Workers’ Compensation (FDWC) monitors compliance for these requirements throughout the state.
Florida law requires most employers to obtain workers’ compensation insurance if they have at least four employees (full-time or part-time). Corporate officers in any industry are also considered employees, unless they elect to be excluded from coverage. Sole proprietors and partners outside of the construction industry are not automatically considered employees, but they may elect to be treated as employees.
Exceptions to the General Coverage Requirements
If an employer has fewer than four employees, or if every worker of an employer is excluded from coverage under the FWCL, the employer is not required to obtain workers’ compensation insurance. However, special coverage requirements exist for employers in the agriculture and construction industries.
Agricultural employers must secure workers’ compensation coverage for their employees if they have five or more regular employees or if they have at least 12 seasonal employees working more than 30 days in the same calendar year.
Construction contractors must secure coverage if they have one or more employees (full-time or part-time). Contractors must consider sole proprietors, partners, corporate officers and members of a limited liability company (LLC) as employees. However, corporate officers and members of an LLC may elect to be exempt from coverage requirements.
Contractors must be able to show proof of coverage or evidence of exemption for their subcontractors. The FWCL will hold a contractor responsible for any of its subcontractors that have no appropriate coverage or certificate of exemption.
If the employee of a subcontractor with no coverage suffers a work-related injury, the contractor must provide the employee with workers’ compensation benefits. The contractor may later recover all benefits paid—plus interest—from the subcontractor, unless a previous agreement exists between the contractor and the subcontractor.
To meet coverage requirements, Florida employers can secure workers’ compensation insurance:
- With a policy from a private insurance company licensed to do business in the state;
- Through self-insurance; or
- By participating in a local government or private self-insuring group.
Employers that are unable to obtain coverage through one of the three options described above may apply for a policy with the Florida Workers’ Compensation Joint Underwriting Association (FWCJUA).
To be self-insured, an employer must obtain permission from the FDWC. To receive the FDWC’s approval, employers must have a net worth of at least $250 million. To calculate its net worth, an employer may include assets from its parent company, subsidiaries, sister companies, affiliated companies and other related entities as long as these are located within the geographic boundaries of the state. If self-insured, the employer must finance all workers’ compensation costs with company funds.
Self-insured employers may also participate in commercial self-insurance funds where a group of employers pool their resources to meet coverage requirements.
Employers must maintain supporting documents that may assist the FDWC in an investigation, such as:
- Business account records (monthly, quarterly or annual);
- Check and cash disbursement journals;
- Complete, executed and written contracts with general contractors, subcontractors, independent contractors and employment leasing companies that specify the terms of reimbursement and performance of any service;
- Documents that may assist to establish an independent contractor’s status;
- Employee leasing company, labor pool and temporary labor service records;
- Employee wage payment documents (W-2 forms, 1099 forms and individual tax statements);
- Employment contracts and other documents that describe terms of employment;
- External and internal audit documents;
- Proof of insurance or certificates of exemption;
- Records that identify the employer’s business name, registration, business form and Federal Employer Identification Number (IRSA Form 575A);
- Records that identify the employer’s occupational and trade licenses, certifications and competency cards;
- State employment and unemployment reports;
- Subcontractor invoices;
- Tax records and all schedules filed with the Internal Revenue Service (IRS);
- Workers’ compensation certificates of insurance or certificates of exemption, along with notices of cancellation, non-renewal, reinstatement and the like.
Employers must keep these records up to date and must maintain them for at least three calendar years in their original form at their principal places of business or job sites in the state. A legible copy is an acceptable substitute for the original.
Employers must keep a record of employee injuries. The record must identify all disabilities or deaths resulting from work-related injuries and must be open to inspection.
Recording benefit payments
Self-insured employers (or insurance carriers) must keep records of all benefit payments. These records must include the amount, time and manner of benefit payment. These records must be available to the Division of Insurance Fraud and the FDWC upon request.
Employers must display in a conspicuous place a notice stating that they have a workers’ compensation insurance policy that complies with state law. The notice must include:
- The name and address of the insurance carrier that provides the policy;
- The policy’s expiration date; and
- An explanation of Florida’s Anti-Fraud Reward Program and instructions on how to contact the Department of Financial Services.
Florida’s Anti-Fraud Reward Program was instituted to encourage individuals to report insurance fraud. As an incentive, the DFS may reward individuals with up to $25,000 if they provide information that leads to the arrest and conviction of persons committing insurance fraud. The program also encourages individuals to report employers that fail to obtain or maintain appropriate coverage.
Individuals who mistakenly report complying employers are not subject to civil liability if they acted without malice or in good faith. The FDWC has provided a model poster that complies with these notice requirements.
If an employer is exempt from coverage requirements and elects not to provide coverage for its workers, the employer must notify the workers of that decision. The employer must post a clear written notice in a conspicuous location at each worksite. The notice must inform employees and other individuals performing services for the employer that it does not offer workers’ compensation benefits.
When an employee is injured on the job, the employer should ensure that he or she receives any necessary medical attention. After learning of an employee’s injury, the employer must report the event to its insurance carrier within seven days. Self-insured employers and insurance carriers must report all injuries that result in four (or more) workdays lost to the FDWC within 14 days.
All employers must report work-related fatalities to the FDWC within 24 hours of the incident.
Florida law prohibits employers from coercing, discharging, disciplining, taking adverse personnel action or refusing to hire any employee or applicant solely because the employee or applicant refuses to obtain an exemption, has filed a claim for workers’ compensation benefits or has reported a violation (or suspected violation) to appropriate authorities. Retaliation is punishable by one year of imprisonment.
Similarly, insurance companies may not revoke or cancel a workers’ compensation policy solely because an employer has returned an employee to work or has hired an employee who has filed a benefits claim. This form of discrimination is also punishable by one year of imprisonment.
Receiving payment for services connected to any workers’ compensation proceeding without the approval of a judge of compensation claims is a first-class misdemeanor, punishable by one year of imprisonment.
Attorneys, physicians, insurance carriers, rating bureaus, insurance agents, insurance brokers and contractors guilty of fraud may also face administrative sanctions from their licensing authorities.
Reducing The Cost Of Workers’ Compensation Insurance
Workers’ compensation insurance premiums are determined primarily by the employer’s industry. For example, workers’ compensation insurance premiums are more expensive for a construction or manufacturing company than for a professional services firm. However, employers across all industries can take steps to reduce the cost of maintaining workers’ compensation insurance.
The easiest and often most effective way to reduce frequent workers’ compensation claims is implementing a quality safety program. Safety programs can help employers identify safety issues that employees face on a daily basis. Safety programs should also establish safe work practices and educate employees on how to reduce risk. When creating a safety plan, employers should analyze the factors that cause frequent claims.
Implementing programs to put injured employees back to work, even in a temporary role, can help reduce workers’ compensation premiums, increase the employer’s overall output and raise the injured employee’s morale.
Fraud is expensive and can drastically raise workers’ compensation premiums. If an employer suspects that an employee has submitted a fraudulent workers’ compensation claim, the matter should be promptly reported to the FDWC for an investigation.
Contact ARCW Insurance or visit the FDWC website for more information on workers’ compensation laws in Florida.