Published in Tampa Bay Business Journal
In the most recent legislative session, lawmakers made changes to the workers’ compensation laws in Florida which could result in significant reductions to the penalties issued to first-time violators. Specifically, there is a new provision added to the statute governing workers’ compensation violations that provides a potential 15% reduction to penalty assessments for first-time violators following the issuance of a stop work order, as long as the employer completes a workers’ compensation coverage and compliance tutorial.
The legislature also revised the audit period for employers that failed to secure workers’ compensation coverage with the exception of those who were found to materially understate or conceal payroll information, as well as employers who had previously been issued a stop work order or order of penalty assessment.
The new subsection to the workers’ compensation statutes can be found in Section 440.107(7)(d)(1)(c) which now provides:
For an employer who has not been previously issued a stop work order or order of penalty assessment, the department must reduce the final assessed penalty by 15 percent if the employer correctly answers at least 80 percent of the questions from an online workers’ compensation coverage and compliance tutorial, developed by the department, within 21 days after the employer’s receipt of the written request to produce business records for calculating the penalty under this subparagraph. The online tutorial must be taken in a department office location identified by rule.
It is important to note that the 25% penalty reduction available to employers that fully comply with a request for documentation remains in effect. Therefore, as of January 1, 2023, if a stop work order and penalty assessment is issued, employers that are first-time violators can obtain a 25% discount for fully complying with the request for documentation, and also a 15% discount if they request and successfully complete the new compliance tutorial offered under the statute.
Workers’ Compensation Requirements in Florida
In Florida, workers’ compensation insurance is required for all construction employers. The exception to this requirement is if the construction entity has no employees other than its owners, and each of the owners has an active workers’ compensation exemption with the Florida Division of Workers’ Compensation.
For non-construction employers, workers’ compensation insurance is required for companies with four or more employees, including any business owners. The Florida Administrative Code 69L-6.021 lists trades that are considered “construction industry.” There is a minimum requirement of six employees for agricultural employers in Florida.
The construction industry is particularly exposed to the workers’ compensation laws in Florida, as a construction employer is required to ensure that all individuals performing labor under its contract, including the employees of its subcontractors, are covered under a workers’ compensation policy or exempt from coverage. A construction employer’s failure to verify compliance with the workers’ compensation laws could expose that employer to increased workers’ compensation premiums or even a stop work order from the Division of Workers’ Compensation.
Penalties for Non-Compliance and Audit Period
Section 440.107 of the Florida Statutes requires the Florida Department of Financial Services, Division of Workers’ Compensation, to enforce workers’ compensation coverage requirements, and to also issue stop work orders, penalty assessment orders, and any other orders necessary to ensure employers’ compliance with these laws. As part of these responsibilities, State investigators are allowed to conduct random job site inspections which may include interviews of individuals found on-site.
If a stop work order is issued (statewide or job-site specific), the employer must cease its operations until it can demonstrate that it is in compliance with the workers’ compensation laws. In addition, the employer will be required to make a non-refundable $1,000 payment towards the future penalty in order to obtain a conditional release from the stop work order. Once the conditional release is issued, this will allow the employer to continue performing work until the order of penalty assessment is issued and enforced.
Prior to Jan. 1, 2023, all employers that were issued a stop work order were subject to an audit of all payroll records for the two-year period preceding the date of the stop work order. This audit period has now been reduced to the preceding 12-month period prior to the date of the stop work order. However, it should be noted that an employer that has previously been issued a stop work order or penalty assessment or an employer that has been found to have materially understated or concealed its payroll will be subject to the full two-year audit period.
It goes without saying that complying with the workers’ compensation laws can protect your company from much more than just a claim from an injured worker. The stop work orders, penalties and potential criminal ramifications resulting from an employer’s noncompliance with the workers’ compensation laws can have a detrimental impact on a business.
It is important to be aware of all statutory or administrative requirements to ensure your company is in compliance with the workers’ compensation laws in Florida.
About Mason Pokorny: Practicing primarily in construction law and workers’ compensation compliance, Mason Pokorny is a Partner in the Adams and Reese Tampa Office. He represents clients in matters pertaining to contract review, drafting, negotiation, lien law, bond law, building code violations, construction defect litigation, OSHA defense, bid protest litigation, workers’ compensation compliance and contractor licensing. Mason is recognized by his peers among the Florida Super Lawyers® Rising Stars and Best Lawyers® Ones to Watch in Construction Law, Labor and Employment Law: Management and Workers’ Compensation Law: Employers.