The Florida Business Owner’s Guide to Workers’ Compensation Insurance

Dec 29, 2023

What is Worker’s Compensation?

Workers’ Compensation Insurance provides money and medical care for workers injured or ill due to their jobs.

Employers pay for this insurance and never ask their employees to contribute.

Though there’s no determination of fault when it comes to workers’ compensation, the injured employee will lose their right to receive benefits if it is found they were intoxicated at the time of their injury.

Who needs Workers’ Compensation Insurance?

In Florida, most employers are mandated to provide Worker’s Compensation Insurance for their employees, with few exceptions based on the nature of the business or the number of employees.

Generally, Florida law requires that businesses with four or more full- or part-time employees have workers’ compensation coverage.

  • Construction and Manufacturing: High-risk industries prone to workplace accidents and injuries, making Worker’s Compensation Insurance essential.
  • Healthcare: Hospitals, clinics, and medical facilities where employees may be exposed to various occupational hazards.
  • Hospitality and Service Industry: Restaurants, hotels, and service-oriented businesses where employees might face injury risks.
  • Transportation and Delivery Services: Trucking companies, courier services, and delivery firms where employees are exposed to accidents on the road.
  • Agricultural: Businesses employing six regular employees or 12 or more seasonal workers engaged for over 30 days must offer insurance coverage.

Why is Workers’ Compensation Important?

It’s essential for businesses, both big and small, to have workers’ compensation coverage for several reasons:

  1. It helps pay legal fees if an injured employee files a lawsuit against the business, as workers’ compensation coverage often includes employer’s liability insurance.
  2. Workers’ compensation insurance coverage reduces the risk of lawsuits against business owners.
  3. This coverage helps provide an incentive for keeping the workplace safe to avoid needing workers’ compensation coverage.
  4. Employees are compensated for medical bills, recovery costs, and more for their work-related injuries.
  5. In the unfortunate event of work-related death, employees’ families are compensated for funeral expenses and can receive death benefits.

Of course, as Florida has specific requirements for businesses regarding workers’ compensation insurance, it’s in the company’s best interest to get coverage to avoid breaking any rules.

Related Article: General Business Liability Insurance

How can Florida-based businesses save money on workers’ compensation insurance?

If your business is based in Florida, and you’re looking to save big money on workers’ compensation coverage, here are some things to consider:

  • Be sure to classify your employees correctly. For example, an employee who works at a desk all day will require less insurance expenses than an employee who operates heavy machinery daily.
  • A documented safety program can help reduce risks as employees are regularly educated on workplace safety. Thus reducing the costs of premiums!
  • Set workplace safety goals (record of days with no workplace accidents, for example) and implement a reward system to encourage safe practices in the workplace,
  • Keep a close eye on claim history and evaluate your past claims for potential patterns. 

Are you ready to find the most suitable insurance to protect your American Dream?

Contact Delgado Insurance today! 

Workers’ Compensation Frequently Asked Questions (FAQs)

Q: Is workers’ comp on W-2?

A: Workers’ compensation is not reported on an employee’s W-2 form. However, employers need to maintain records and documentation related to workers’ compensation claims and payments made to employees as part of their insurance coverage. 

Q: How is workers’ comp reported to the IRS?

A: Workers’ compensation benefits are typically not taxable at the federal level. Therefore, the IRS does not require reporting workers’ compensation benefits as income. Whether the benefits are received through an insurance company or an employer’s self-funded plan, they are generally not included as taxable income on an employee’s federal tax return. 

Additionally, employers are not required to report to the IRS workers’ compensation benefits paid to employees on any specific form or document. 

Q: Is workers’ comp a required employee deduction?

A: Workers’ compensation insurance is typically paid for entirely by the employer. It’s not deducted from an employee’s paycheck. 

Q: Is workers’ comp an expense or liability?

 A: Workers’ compensation is both an expense and a liability for a business.

1.   Expense: The premiums paid by the employer for workers’ compensation insurance are considered an operating expense. These premiums are a cost incurred by the business to protect its employees against work-related injuries or illnesses. The expense is recorded as part of the company’s operating costs.

2.   Liability: Workers’ compensation also represents a liability for the business. Suppose an employee is injured or becomes ill due to work-related reasons. In that case, the company is responsible for providing compensation, including medical expenses, lost wages, and potentially other benefits, as outlined by the workers’ compensation insurance policy. Until these obligations are fulfilled, they represent a liability on the company’s balance sheet.

Q: Who is exempt from workers comp in Florida?

A: In Florida, specific categories of workers or types of employment may be exempt from the requirement to carry workers’ compensation insurance. Some exemptions include:

1.   Business Owners: Sole proprietors, partners in a partnership, and corporate officers may choose to exempt themselves from workers’ compensation coverage unless they work in the construction industry.

2.   Independent Contractors: Workers classified as independent contractors rather than employees may not be covered by workers’ compensation if they meet specific criteria outlined by Florida law.

3.   Casual Labor: Some casual or domestic workers, such as babysitters, domestic servants, or certain agricultural laborers, might be exempt from coverage.

4.   Certain Real Estate Agents: Real estate licensees working as independent contractors might be exempt if they meet specific criteria outlined in Florida statutes.

5.   Certain Construction Industry Exemptions: Some exemptions apply to specific workers in the construction industry based on the number of employees or the nature of their work.

It’s important to note that exemptions and rules can vary based on specific criteria, industry regulations, and the nature of the employment. Consulting with a legal or insurance professional well-versed in Florida’s workers’ compensation laws can help accurately determine exemptions and compliance requirements.

Q: Does a single-member LLC need workers’ compensation insurance in Florida?

A: In Florida, the requirement for workers’ compensation insurance for a single-member LLC can depend on various factors:

1.   No Employees: If the single-member LLC has no employees (other than the owner), Florida law typically does not mandate workers’ compensation insurance. As the sole employee, the owner might not be required to carry this coverage.

2.   Employees Other Than the Owner: If the single-member LLC hires additional employees (not the owner), workers’ compensation insurance is generally required in Florida. The law often necessitates coverage even with just one employee other than the owner.

However, laws and regulations can evolve, and specific situations might have exceptions or particular circumstances. It’s advisable to consult with an insurance professional or legal advisor familiar with Florida’s workers’ compensation laws to ensure compliance based on the LLC’s unique circumstances.

Q: Do 1099 employees need workers’ comp in Florida?

 A: In Florida, workers classified as independent contractors and receiving a 1099 form (rather than a W-2) are generally not considered employees. As such, they are typically not required to be covered under the employer’s workers’ compensation insurance.

Employers are generally not obligated to provide workers’ compensation coverage for independent contractors. These contractors are usually responsible for their insurance, including any coverage for work-related injuries or illnesses they might encounter while performing their contracted duties.

However, misclassifying workers as independent contractors when they should legally be classified as employees could lead to legal and financial consequences for the employer. It’s essential for businesses to accurately determine the classification of their workers based on specific criteria outlined by Florida law to ensure compliance and avoid potential penalties.