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Workers’ Compensation Reforms in Effect Oct. 1


CONTACT: Tami Torres
(850) 413-2842

TALLAHASSEE—Florida's Chief Financial Officer Tom Gallagher today announced that many reforms aimed at increasing the availability and affordability of workers' compensation go into effect October 1. Gallagher also noted that the Department of Financial Services, Division of Workers' Compensation, continues to inform affected businesses of their rights and responsibilities under the new law, SB 50-A, which passed during the first special session of 2003.

SB 50-A, sponsored by Representative Dennis Ross and Senator Charlie Clary, provided the department with increased authority to ensure that employers obtain and maintain required workers' compensation coverage. Under the new law, in addition to issuing a stop-work order to an employer whose coverage lapses, the department can now issue a stop-work order to an employer committing any of the following acts:

· Understating payroll in order to evade or reduce premium payments.

· Misrepresenting or concealing employee duties to avoid proper classification.

· Failure to provide business records to the department.

Stop-work orders now apply to all work sites of a sanctioned employer, and the fines have been increased for businesses not in compliance. Non-compliant employers will now be required to pay $1,000 for each day of non-compliance in addition to 1.5 times the amount of premium evaded.

"These measures are intended to help level the playing field for those businesses who follow the law," Gallagher said. "Employers who avoid paying premiums gain an unfair advantage and contribute to the rise in workers' compensation rates."

The new law also changes coverage exemptions currently available to employers in the construction industry. Effective January 1, 2004, all current construction exemptions will become invalid. New exemptions will be limited to a maximum of three corporate officers who must each hold at least a 10 percent share in the corporation.

"As these valuable reforms take effect, it's important for employers in the construction industry who now hold exemptions to be aware that all current exemptions will expire January 1, 2004," Gallagher said. "We are assisting those employers in taking the appropriate action to either secure a new exemption or to obtain workers' compensation coverage."

The individuals must also be registered with the Department of State's Division of Corporations and complete a new application to receive an exemption. The department is mailing applications to current exemption holders, and copies will also be available on the department's website at

As part of the department's continuing efforts to communicate with employers on the legislative changes, letters have been sent explaining the changes in compliance requirements and exemptions. In addition, a new online database has been developed to send automatic electronic notification to primary contractors, who sign up for the service, concerning changes to a subcontractor's workers' compensation coverage status. This free service is available at by clicking on the "Construction Policy Tracking Database" icon. The effort to create the online database was encouraged by Senator Bill Posey, chairman of the Senate Banking and Insurance Committee.

"This database is an excellent tool for contractors who need to receive updated policy information on the subcontractors they hire," Gallagher said. "If a subcontractor cancels its policy or fails to pay the required premium, the contractor will receive an email notification from the department."

The department is also holding town hall meetings around the state to provide information and answers to questions on the new legislation. Meetings were held recently in Jacksonville, Pensacola and Panama City. Additional meetings will be held in central and south Florida. Builders and contractors, insurance carrier representatives and agents, officials with city and county governments and other interested individuals are encouraged to attend.