Florida State Law:
Who Is Eligible For Workers’ Comp Exemption?
Workers’ compensation is a type of insurance that most business owners hold to cover the costs associated with employee workplace injuries and illnesses. If someone you employ gets hurt or develops an illness while performing their work duties, a workers’ comp plan pays for medical bills, lost wages, and other costs.
Workers’ comp insurance is essential for protecting both employers and employees from the costs of accidents, and generally speaking, Florida state law requires it. However, some exemptions apply in Florida, and there are reasons you may not need to provide coverage to certain individuals. But even if you, a partner, or an employee qualifies for an exemption, you’ll want to weigh the risks and benefits of not including them on your workers’ comp plan.
Florida Workers’ Comp Rules and Regulations
The Division of Workers’ Compensation within the Department of Financial Services regulates workers’ compensation in Florida. Per state law, businesses outside of the construction or agriculture industries with four or more employees must have this form of insurance to protect workers. Construction businesses need to have workers’ comp insurance even if they have just one employee. Agricultural businesses must have it if they have six employees or 12 temporary employees who work more than 30 days in one season but less than 45 days in a calendar year.
Florida law also dictates how much coverage you must carry. In general, companies must meet the minimum coverage requirement of $100,000 per occurrence, $100,000 per illness or disease, and $500,000 in total coverage. You can choose to extend those amounts and cover up to $500,000 per incident and illness and $1,000,000 aggregate.
The cost of workers’ compensation insurance in Florida varies and depends on your payroll and the nature of the work employees conduct. The riskier the work, the more costly the insurance. Florida uses the National Council on Compensation Insurance codes to classify businesses. These codes inform the costs of insurance premiums.
Penalties for not carrying the required workers’ comp insurance can be severe. You may become subject to a stop-work order, which could mean significant financial losses. Violations of a stop-work order can lead to criminal charges and penalty fees, costing you more than twice the amount of your insurance premium.
Under Florida, certain employers and employees can receive workers’ comp coverage exemptions. The main reason to take advantage of an exemption is to save money on the costs of insurance. The risks include paying a significant sum out of your own pocket, and an employee suing the company, triggering legal expenses.
Even if you are self-employed or a sole proprietor, not having coverage for yourself can be costly. Depending on your health insurance policy, your injuries may not be covered if they occurred at your workplace. In this situation, you would have to pay your medical costs.
To apply for an exemption in Florida, complete an application for a Notice of Election to Be Exempt through the Division of Workers’ Compensation. You can also renew your exemption on the Division’s website.
Sole proprietors and partners in Florida can choose to exempt themselves from workers’ compensation coverage if they file the Notice of Election to Be Exempt. For officers of corporations and LLCs, exemption requirements are more involved:
- Construction Corporations – The corporation must register with the state’s Division of Corporation. The person applying must be listed as an officer and own at least 10 percent of the corporation. No more than three officers can be exempt, and those who are must pay a $50 fee.
- Construction LLCs – The rules for officers of construction LLCs are the same as those for corporations.
- Non-construction Corporations – For non-construction businesses, the corporation must have proper registration, and applicants must own 10 percent or more of the company. There is no limit to the number of officers claiming exemption or fee.
- Non-construction LLCs – For LLCs, registration is required, and officers must own 10 percent of the business or more to apply. No more than ten LLC members can claim exemption, and there is no fee.
In all categories, applicants must not have any association with a stop-work order or a working in violation order, or the state will deny the exemption. If you apply and submit the fee but do not meet eligibility for exemption, you will be denied and forfeit the fee.
Save Time and Money by Understanding the Law
Purchasing business insurance comes down to risk analysis. What will cost more, the price of carrying insurance, or the expenses associated with an injury or illness for someone unprotected? Workers’ compensation insurance may seem pricey, but the costs of not having it or violating Florida’s laws can be much higher. Before making important decisions about coverage, make sure you understand the state-specific rules, requirements, and exemptions.