Employers must purchase Workers’ Compensation insurance for their employees in Florida. Furthermore, under certain circumstances, independent contractors must also be afforded this coverage. Employers or contractors who fail to provide necessary coverage can face significant penalties.
In July of 2023, the state of Florida implemented new rules that affect penalties for employers who do not obtain Workers’ Compensation insurance. For help navigating these new rules, employers should seek support and guidance from an experienced insurance broker.
New Workers’ Compensation Rules Take Effect in Florida
In July of 2023, a series of new Florida Workers’ Comp insurance rules came into effect. The changes were made by the Florida Division of Workers’ Compensation and had been in development for several months. One of the primary reasons behind these changes was the need to align with new state laws. The rule revisions officially took effect on July 18.
Among the notable modifications are new requirements for the conditional release of a stop-work order after an employer has obtained insurance coverage and has either paid the required penalties or entered into an agreement for monthly installment payments.
Additionally, there is now a provision for a 15% penalty reduction if employers choose to complete an online course at one of the division’s district offices. Penalties will also be applied to employers who were cited but managed to achieve compliance before a stop-work order was officially issued.
Furthermore, specific rules have been established for contractors regarding how they should go about obtaining evidence that subcontractors have secured Workers’ Compensation insurance or have opted for exemption from the insurance requirements. The Division of Workers’ Compensation has introduced a new form for calculating penalties and new methods for determining payroll when employers fail to provide adequate business records.
Also, corporate officers who wish to be exempt from Workers’ Compensation requirements must now follow new procedures and make use of new forms. This includes completing an online Workers’ Compensation coverage and compliance tutorial and submitting a Form DFS-F4-DWC-250 as part of the certification process.
Lastly, the rule revisions encompass new definitions and information related to out-of-compliance worksites, providing a comprehensive update to the existing regulations in the state of Florida.
Do Independent Contractors Get Workers’ Compensation Coverage in Florida?
Independent contractors are considered self-employed individuals or businesses in their own right and are not considered employees of the companies or individuals they provide services to.
Companies that work in the construction industry or a construction-related field have to purchase worker’s compensation insurance if they employ even one person. The one person that is employed may be a full-time or part-time employee, or it may be a general contractor, subcontractor, or 1099 contractor.
The requirement that all employees and contractors must have worker’s compensation insurance applies exclusively to businesses engaged in construction-related activities. Still, there are situations where contractors in other fields must be covered.
For instance, businesses and contractors that do work in the agricultural industry must get worker’s compensation insurance if they employ at least six people full-time or twelve people seasonally. Meanwhile, businesses and contractors that do work in industries that are not construction or agriculture must get worker’s compensation policies if they have four or more employees or contractors.
If you are an employer who is confused about your obligations to your workers, then it is crucial that you seek advice from an insurance broker. That way, you may be able to avoid penalties for failing to obtain the requisite Workers’ Compensation coverage.
How Do You Determine Whether Someone is an Independent Contractor in Florida?
There are several factors that will be analyzed when determining whether someone is an independent contractor in Florida. For example, any of the following may be considered:
Control Over Work
The degree of control that the hiring entity exercises over the work performed is a crucial factor in determining whether someone is classified as an independent contractor. If the hiring entity dictates the specific methods, schedules, or locations for the work, this suggests a higher level of control and may lean toward an employer-employee relationship. Independent contractors typically have more autonomy in deciding how they complete their tasks. They are generally responsible for determining their work methods, schedules, and locations, which reflects their independence.
Nature of Work and Business Integration
The nature of the work and its connection to the hiring entity’s core business operations is another significant consideration. If the services provided by the individual are essential to the day-to-day operations of the business, it may indicate an employee relationship. In contrast, if the work is specialized or supplementary, such as hiring a graphic designer for a one-time project, it leans towards an independent contractor classification.
Method of Payment
How an individual is compensated is another important factor. Independent contractors are usually paid based on a per-project or per-job basis. They are responsible for handling their own taxes, including self-employment taxes. In contrast, employees typically receive regular paychecks with income tax and other deductions withheld by the employer. This distinction in payment methods highlights the difference in tax responsibilities between independent contractors and employees.
Provision of Tools and Equipment
The provision of tools and equipment is also a relevant factor. If the hiring entity provides the necessary tools, materials, or equipment for the work, it may suggest an employee relationship. Employees often use tools and equipment provided by the employer as part of their job. Independent contractors, on the other hand, typically use their own tools and equipment, reinforcing their independent status.
Duration and Permanence of Relationship
The duration and permanence of the working relationship between the individual and the hiring entity are considered when determining employment status. A long-term, ongoing relationship may indicate an employer-employee arrangement. In contrast, a short-term or project-based engagement suggests independent contractor status. For instance, hiring someone for a single, well-defined project, with no expectation of ongoing work, is more likely to be seen as an independent contractor relationship.
The right to terminate the working relationship, with or without cause, is also a relevant factor. Independent contractors often have contracts that specify the terms of termination, including notice periods and conditions. Employees, on the other hand, may be subject to specific termination policies outlined by the employer, such as progressive discipline procedures. The presence of contractual provisions related to termination can influence the classification of the individual’s status.
Ability to Work for Others
The extent to which the individual can work for other clients or businesses is also a consideration. Independent contractors typically have the freedom to provide services to multiple clients simultaneously. They are not exclusive to a single employer. In contrast, employees may have contractual agreements or restrictions that limit their ability to work for other entities while employed. The ability to engage in multiple client relationships is a hallmark of independent contractor status, reflecting their independent business operations.