Florida’s Workers Compensation insurance laws can be onerous and complicated to comply with for small and independent contractors. Generally, a business need only provide workers compensation for a direct employee—which under Section 440.02(18)(a) of the Florida Statutes is defined as:
“any person who receives remuneration from an employer for the performance of any work or service while engaged in any employment under any appointment or contract for hire or apprenticeship, express or implied, oral or written, whether lawfully or unlawfully employed, and includes, but is not limited to, aliens and minors.”
However, since construction is considered a high-risk industry, a contractor’s Workers Compensation obligations are much more expansive.
Workers Compensation Requirements for General Contractors
Under Florida Law, a general contractor is required to maintain workers compensation coverage on every employee on a jobsite. Often, complying with Workers Compensation laws and providing said coverage can price out smaller and independent contractors.
Consequently, several workarounds are commonly employed by contractors. For example, a contractor might lease its laborers from a personnel leasing company or engage 1099 subcontractors. However, the general contractor on a project remains ultimately liable should a laborer be hurt and make a workers compensation claim.
Section 440.10(1)(b) of the Chapter lays out liability for compensation, and states
“In case a contractor sublets any part or parts of his or her contract work to a subcontractor or subcontractors, all of the employees of such contractor and subcontractor or subcontractors engaged on such contract work shall be deemed to be employed in one and the same business or establishment, and the contractor shall be liable for, and shall secure, the payment of compensation to all such employees, except to employees of a subcontractor who has secured such payment.”
Basically, the general contractor has the duty to ensure that everyone on the job has workers compensation coverage. Thus, the general contract should ensure that part of the vetting process in hiring a subcontractor includes ensuring that the subcontractor provides its workers coverage. Additionally, a general contractor should regularly verify that this coverage is actually in place for any individuals working on its jobsite. In the event that a subcontractor does not provide coverage and one of its workers gets hurt, the general contractor is liable for the injuries.
Can the contractor seek payment from the subcontractor who failed to provide workers’ compensation coverage?
Subsection 440.10(d)1 does permit a general contractor to indemnify against a subcontractor that failed to provide covered: “If a contractor becomes liable for the payment of compensation to the employees of a subcontractor who has failed to secure such payment in violation of Section 440.38, the contractor or other third-party payor shall be entitled to recover from the subcontractor all benefits paid or payable plus interest…”
However, it is important to keep in mind this indemnity only takes place after the general contractor has had to pay out according to its liability to the state. Furthermore, in order to collect against the subcontractor who failed to provide coverage, the contractor must file a whole new lawsuit.
The Necessity of Due Diligence
In short, contractors should strive to avoid this headache with simple, upfront due diligence. If you are a general contractor, ensure that everyone on a worksite has Workers Compensation coverage, either directly through you, or through the subcontractor that directly employs them.
If you have questions about a general contractor’s requirement to maintain workers compensation coverage, contact the attorneys at Boatman Ricci for a consultation today.
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