New Construction Business In Florida? Avoid Workers Compensation Fines and Over Payments By Selecting The Right Setup.  

The last two years have been active ones in the Atlantic hurricane season, and the economic boom in Florida has also been a contributing factor leading to the opening of many new construction companies.  In fact, Stephen Sandherr, CEO of the trade group Associated General Contractors of America (AGC), was recently quoted in the Tampa Bay Times, “Construction firms are very optimistic about 2018 as demand for all types of construction services continue to expand.” 
Employment figures bear this out, as we pass the halfway point of 2018.  In fact, an incredible 75% of all construction firms surveyed indicated plans to hire and expand to keep up with the demand of a booming housing market, a strong economy fueling business expansion, and continued rebuilding efforts from storm damages in the last two years.  Not only are people rebuilding, the businesses they work in are as well, giving employees more discretionary income for home improvements and higher employment figures.

At the same time, the need for skilled workers has inspired many new construction companies to open for business and, in Florida especially, the laws in respect to worker’s compensation insurance are very clear.  We’ve dug into the rules about workers compensation in Florida to give new construction businesses as head start on what they need to know.  Of course, the interpretation of any law carries with it ramifications, so this is just an overview.  If you have any questions, then you should always consult with an attorney that specializes in worker’s compensation or clarify points of your coverage with your insurance company.

Workers Compensation Requirements

For starters, all construction companies with one or more employees and non-construction businesses with four or more employees (full-time or part-time, including corporate officers and LLC members) MUST have workers compensation insurance.   Agricultural businesses with six or more regular employees and/or 12 or more seasonal employees who work for more than 30 days must carry coverage.  Sub-contractors are responsible for providing coverage for their workers, but primary contractors are still responsible for ensuring that all sub-contractors meet the coverage requirements. 

Workers Comp Exceptions

Out-of-state employers must immediately notify their carrier that they have employees working in Florida, carry a Florida workers’ compensation policy, or have the out-of-state policy include Florida.  Under no circumstances are such companies to conduct business until they have the proper coverage.  While corporate officers are considered employees, they can choose to exempt themselves from coverage.  Sole proprietors and partners in the non-construction industry are not considered to be employees unless they choose to be.  Florida considers all members of an LLC to be considered as corporate officers or employees, unless they choose to be exempt.

Getting Started

In most cases, Worker’s Compensation Insurance is very strict in how it views the jobs and job descriptions of employees.  As with so many other things in business, you need to firmly document every task and consider each employee’s role in the business. 
In addition, most workers comp coverage will demand, at a minimum, the following items for documentation:

·         Years in Business
·         # of employees and Job description by employee
·         Estimate of the annual payroll by employee
·         Detailed description of the business operations
·         Owners names and % of ownership:
·         Are the owners included in Workers Comp coverage
·         Payroll Frequency

Class Codes to Make it Easier

The good news in all this is that worker’s insurance companies have taken the initiative to understand that the construction industry has tons of variables.  As a result, these carriers now use class codes to identify specific categories of work.  For instance, while your company may call a contractor supervisor one title while another considers him a foreman, an insurance company simply knows him as “5606.”  You can access a numerical class codes list right here.
This allows insurance companies to categorize various types of work into class codes to be able to effectively estimate workers compensation rates for the appropriate risk associated with the work being performed.  This allows for a very clear understanding of the work an individual should be performing.  An office manager, for example, likely provides lower risks than a laborer.  Of course, this is critical to understanding the coverage needs because there are two categories that will be assessed in any business – the type of work the company does and the role of each employee within the company.

The Next Step

Now that you understand who you employ and how the work is done, the next step is to select a provider.  In Florida, all  worker’s compensation rates are the same, the primary difference is the employee class codes.
See why you need to be so specific? 

At the same time, you also need to be completely upfront and honest in your assessments of employee job classes.  Misclassifying can result in fines, lawsuits, and audits, the results of which can be financially devastating and be retroactive for years.  It goes without saying that losing coverage due to dishonesty can make finding new coverage extremely difficult. 
One easy way to track down the right insurance company is to reach out within your network.  Many payroll and bookkeeping companies like Bookkeep With Us have relationships with workers compensation carriers and can make the necessary introductions to get you started with the best insurance faster than doing it yourself.


For the sake of your business and reputation, one rule stands out – always make sure your employees are properly classified.  Since you’ll be purchasing from a commercial provider, you’ll have several options for paying.  The premium itself will be based on the salaries of your employees, but depending on your needs, carrier, and risk, you may be able to pay as you go.  This is by far the easiest, as there are several apps on the market that integrate with QuickBooks, like AP Intego.  It’s most likely, though, that you’ll pay monthly installments or even the entire payment upfront. 

Wrapping It Up

With the boom in housing and commercial construction, many seasoned employees are opening the doors to their own businesses in the building trades.  As with any new venture, a clear understanding of the rules and laws will make or break the business.  In Florida, workers compensation, especially in the construction field, must be executed perfectly to make sure that you have the coverage you need and each employee classified properly in the event of an accident or claim.  In our experience, the best time to set these systems up and vet them is long before you need them.  If you have any doubts about your current workers compensation coverage, by all means, reach out to us and let us help you make sure!


By: Chris Groote

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