STATE WRAPS UP WORKERS’ COMPENSATION COMPLIANCE SWEEP
June 18, 2004 State of Florida Press Release

Florida’s Chief Financial Officer Tom Gallagher announced the completion of a sweep of construction sites across Florida to verify that employers are complying with state workers’ compensation insurance laws. As part of the statewide effort, investigators with the Department of Financial Service’s Division of Workers’ Compensation made random site visits, ordering dozens of employers to stop work because employees were not properly covered by workers’ compensation insurance.

“Employers who avoid paying workers’ compensation premiums contribute to the rise in workers’ compensation rates and gain an unfair advantage over competitors,” said Gallagher. “A healthy workers’ compensation system is crucial to Florida’s economy, and we will continue to aggressively investigate instances of fraud and abuse.”

During the sweep, investigators issued several dozen Stop Work Orders (SWOs) to construction businesses, including general contractors and sub-contractors, who are in violation of Florida’s workers’ compensation requirements. Under state law, businesses engaged in the construction industry with one or more employees must provide workers’ compensation coverage, which protects workers who are injured or killed on the job.

Under an SWO, a business must immediately cease all business operations. The SWO is lifted once the employer obtains the proper coverage and pays a civil penalty equal to the amount of 1.5 times the workers’ compensation premiums avoided. Employers who violate a Stop Work Order face a penalty of $1,000 per day of violation and may also face criminal charges.

During the 2003 legislative session, lawmakers made several important reforms to the workers’ compensation system in an effort to stem the tide of rising premiums. As part of the reforms, the Division of Workers’ Compensation was granted greater enforcement authority to ensure businesses provide coverage for their employees. Many of the violations uncovered during this week’s sweep fall under the new authority.

To increase competition among businesses operating in Florida, the Legislature in 2003 required that:

• Out-of-state businesses operating in Florida must pay Florida-approved workers’ compensation rates for coverage. This prevents non-Florida businesses from gaining an unfair advantage over locally-owned businesses.
   
• Employers who misrepresent the number or classification of their employees be subject to an immediate Stop Work Order. Previously, a criminal investigation was required to take action against the employer.
   
• Employers wishing to exempt themselves from coverage requirements obtain a new exemption, providing greater tracking ability to state regulators. This measure was aimed at preventing contractors from claiming that employees were subcontractors who were exempt from coverage, thereby avoiding payment of premiums and gaining an unfair advantage over competition.

“Florida workers deserve to be protected in case they are injured on the job,” Gallagher said. “An employee without coverage who is seriously injured or disabled stands to lose not only his livelihood but also the benefits he needs for medical bills and recovery.”

Below are examples of Stop Work Orders issued this week. Statewide, investigators made contact with over 900 businesses, including subcontractors, and issued more than 75 SWOs. Final information, including penalty amounts, will be available after investigators review submitted business records.

In Naples, investigators visited a residential construction site where a concrete subcontractor was using 11 employees. A check of the employer’s policy revealed that only four employees were covered by workers’ compensation insurance. Had one of the non-covered employees suffered an injury, he could have faced no benefits.

On a visit to a beachfront condominium construction site in Panama City, investigators shut down two subcontractors for failing to secure the proper coverage. One of the subcontractors had purchased coverage but with employees classified as janitorial workers. Investigators observed the employees performing construction-related tasks on the third floor of the unfinished condominium.

At a Pasco County residential construction site, investigators discovered a carpentry subcontractor with five employees who had no coverage. Investigators also cited the general contractor for failing to ensure that all subcontractors appropriately insured their employees.         

Talk to an experienced staff member or  have them contact you  for a quote or discussion about getting immediate compliance for your company!