With the State Budget in crisis mode, different State Agencies having been working overtime to raise revenues. If your worksite has been audited by the Division of Workers’ Compensation then you have experienced first hand the stress and expense that comes with it.
If an investigator from the Florida Division of Workers’ Compensation has paid a visit to audit your worksite, you found that they typically shoot and ask questions later. They operate under the premise that you are guilty until proven innocent. You will immediately be asked for certificates of insurance or exemptions from all of your subcontractors and will usually be asked to provide three years worth of bank statements. If you have not exempted yourself as an officer of your business then they typically will impute the highest wages possible to determine your personal remuneration in order to calculate your penalty. The investigators will often use your bank statements to calculate penalties based on checks written to vendors or other facilities not even associated with your business. Essentially, they make you prove that everyone who received a check from you was not your employee before your penalty will be reduced.
It is also common for a Florida Workers’ Compensation Investigator to audit your worksite and improperly code the type of work they perform. This can result in substantially increased penalty calculations.
To help safeguard against being assessed with penalties improperly, you should consider engaging in the following practices:
1. If you are a contractor, purchase an umbrella workers’ compensation policy. If you are a contractor then you are considered the employer of everyone on the worksite. All of the employees of your subcontractors are considered your employees as well if they are not covered by another policy of your subcontractor.
2. Do not rely on your leasing company or payroll company to provide workers’ compensation coverage to employees on the worksite that are not your payroll that you run through the payroll company. If you review your client service agreement carefully you will see that only those employees on payroll and approved by the leasing company will be covered.
3. Keep business expenses separate from personal expenses. This will help avoid checks written to people of businesses in your personal life from being dragged into a penalty calculation by a Florida State Workers’ Compensation investigator.
4. Check subcontractor exemptions carefully and verify their certificates of workers’ compensation insurance are valid through the website of Florida Department of Financial Services.