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Why Every Florida Construction Contractor Needs to Be Honest When Obtaining Workers’ Compensation Insurance


Every Florida construction firm needs to carry workers’ compensation insurance, even if they have just one employee. This is a much stricter rule than applies to most Florida businesses. Non-construction businesses are only required to carry workers’ compensation insurance if they have at least four employees. In addition, the general contractor on a construction project must ensure all subcontractors provide proof they have obtained the necessary workers’ compensation insurance before those subcontractors start work.

The actual rate for workers’ compensation insurance will vary based on the classification code for a given group of employees. This rate is then applied to each $100 of payroll to determine the actual insurance premium. For example, if the rate for a masonry worker is $2.00 and the total payroll for all masonry workers on a project is $500,000, then the contractor’s workers’ compensation insurance premium would be $10,000.

Florida CFO Announces Arrest of Miami Contractor on Charges of Insurance Fraud

It should go without saying, but as a contractor, you should never deliberately under-report your payroll in order to obtain a lower workers’ compensation insurance premium. This is fraud. More to the point, it is criminal fraud, and you will be subject to prosecution.

Indeed, Florida Chief Financial Officer (CFO) Jimmy Patronis recently announced the arrest of a Miami construction firm owner for allegedly understating his payroll in this manner. The CFO said an investigation by his office’s Bureau of Investigative and Forensic Services determined that the construction firm owner “allegedly reported an annual estimated remuneration of $92,400 in payroll on his company’s workers’ compensation insurance policy for four workers.” But in fact, the contractor’s actual payroll for the four workers was actually more than $442,000.

As a result, the CFO said the contractor “evaded paying almost $74,000 in insurance premiums.”

It is, of course, important to remember that just because someone is arrested and charged with a crime, they are still presumed innocent until proven guilty at trial. However, if the contractor in this case is ultimately convicted of insurance fraud, he faces a maximum prison sentence of seven years, according to the CFO’s office.

Get Advice from a Florida Construction Lawyer Today

Many Florida construction contractors are forced to deal with tight finances. But that is no excuse for failing to follow the law when it comes to workers’ compensation insurance. Whatever money you might save in the short term, the potential civil and criminal consequences of fraud are simply not worth it.

It is also worth noting that maintaining proper workers’ compensation insurance benefits a contractor by protecting them against employee lawsuits for work-related injuries and illnesses. It is therefore in your best interest as a contractor to accurately report your payroll and other relevant information when applying for insurance. The last thing you want is to face a multi-million dollar personal injury claim from an injured worker because you did not follow the law and protect yourself.

If you need legal advice and representation from an experienced Florida construction attorney, contact Linkhorst Law Firm, P.A., to schedule a case analysis with a member of our team today.




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