A bakery in Ocala has run for two years with the owner, two full-time bakers and a part-time cashier on weekends. In October the owner hires a second part-time cashier for the holiday season and thinks nothing of it. That hire is the business’s fourth employee, and from that day Florida requires it to carry workers’ compensation. Nobody tells the owner, and the first person who mentions it is a state compliance investigator three months later.
Most Florida business owners know there is an employee count that triggers workers’ compensation. Far fewer know how the state actually counts, and that is where businesses fall out of compliance without realizing it.
The Short Answer: It Depends on Your Industry
Florida sets the requirement by type of business, not by a single number. A non-construction business must carry workers’ compensation once it has four or more employees, whether they are full-time or part-time. A construction business must carry it with one or more employees, and in most cases the owners count too. Agricultural employers have their own thresholds, based on how many regular and seasonal workers they employ and for how long.
The rest of this article is about the details behind those numbers, because the details are where most businesses get caught. For the coverage itself, see our page on workers’ compensation insurance in Florida.
How Florida Counts Employees
The four-employee rule counts people, not hours. A part-time employee who works ten hours a week counts the same as a full-time employee, and there is no full-time-equivalent math that lets two part-timers count as one. A restaurant with two full-time cooks and two part-time servers has four employees. So does a dental office with three clinical staff and a part-time receptionist, or a salon with three stylists on payroll and a weekend shampoo assistant.
Seasonal and temporary workers count while they are employed, which is why so many businesses cross the line during their busy season. Family members count when they are paid as employees. Workers paid on a 1099 can count as well, because Florida looks at the actual working relationship rather than the label on the paperwork. If the business controls how and when the work is done, supplies the tools and pays by the hour, the state may treat that person as an employee regardless of how the payment is reported.
The threshold is also not a one-time test. A business that drops to three employees in a slow month and goes back to four in a busy one is required to have coverage whenever it is at four, and an audit or an investigation will look at the whole period, not just the day someone checks.
Do Owners Count?
In a non-construction business, corporate officers and LLC members are counted as employees unless they file for an exemption with the Florida Division of Workers’ Compensation. An officer who holds a valid exemption is not counted toward the four, which is how a small business with several owners and a couple of employees can stay under the threshold. The exemption has to be filed and approved, though; it does not exist just because the owner decided not to be covered. The state keeps a database of exemptions, and that database is what an investigator or a general contractor checks.
Sole proprietors and partners in non-construction businesses are generally not counted as employees, which also means they are not covered unless they choose to be. That choice deserves thought, because an owner who works alongside employees and gets hurt has no workers’ compensation benefits and no employer to look to.
Construction Is Different
Construction is where the rules are strictest. Coverage is required at one employee, and owners are generally included unless they hold a valid construction exemption. Construction exemptions are limited to officers of corporations and members of LLCs who meet ownership requirements, and only a limited number of officers per company can be exempt. A construction business with one employee and an exempt owner still needs coverage for that employee.
Contractors also carry responsibility for their subcontractors. If a sub does not have its own coverage, the sub’s workers can be treated as the contractor’s employees, and their payroll can be added to the contractor’s policy at audit. An exemption certificate from a sub covers only that sub’s owner, not anyone working with him. Our guide to workers’ compensation for Florida contractors covers these rules in detail, and our Spanish-language guides explain workers’ comp para contratistas and la exención para contratistas. Landscapers, who often wonder whether they fall under the construction rules, can read our guide to workers’ comp para landscapers.
Special Situations
A few situations come up often enough to mention. Volunteers are generally not employees, although the details matter for churches and nonprofits; see our article on whether church volunteers are covered by workers’ compensation. Household employees such as nannies, housekeepers and caregivers raise their own questions, covered in our article on insurance for household staff. Workers supplied by an employee leasing company or professional employer organization are usually covered under the leasing company’s policy, but only for the workers it actually pays; see our article on PEO workers’ comp. And out-of-state employers working on Florida construction projects generally need coverage that specifically includes Florida.
What Happens If You Are Required and Do Not Have It
Florida enforces this requirement actively. Compliance investigators visit job sites and businesses, check the state’s coverage and exemption records, and follow up on tips and injury reports. A business found without required coverage can receive a stop-work order that shuts it down the same day, and it stays closed until coverage is in place and the penalty is resolved. The penalty is calculated from the premium the business should have paid over a look-back period, multiplied, so the cost of going without coverage is far higher than the premium itself.
The bigger risk is an injury. An employer without required coverage can be sued directly by an injured employee, without the protections workers’ compensation normally gives employers, and can be held responsible for the employee’s medical bills and lost wages. Our articles on stop-work orders and what happens when a workers’ comp inspector visits explain how those visits unfold.
When You Are Not Required but Should Consider It
Some businesses below the threshold buy workers’ compensation anyway, and often for good reasons. Workers’ compensation is generally the exclusive remedy for a covered workplace injury, which protects the employer from a lawsuit over that injury. General liability policies exclude injuries to your own employees, so a business with three employees and no workers’ compensation has no insurance for the most likely injury it will face. Landlords, general contractors, property managers and government contracts often require workers’ compensation regardless of headcount, and a business that wants that work needs the certificate. Our article on what your contract requires from your insurance covers those requirements.
Coverage for a small business is also often less expensive than owners expect, especially for office and retail classes. Our guide to how much workers’ compensation costs in Florida explains how the premium is calculated.
What Florida Business Owners Should Confirm
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Is your business construction or non-construction for workers’ compensation purposes?
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How many employees do you have at your busiest time of year, counting part-time and seasonal staff?
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Are any 1099 workers really employees under Florida’s test?
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Are owner and officer exemptions filed and showing in the state database?
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If you are in construction, do all of your subcontractors carry their own coverage?
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Do your leases or contracts require workers’ compensation regardless of headcount?
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If you are below the threshold, what would an employee injury cost you without coverage?
Workers’ Compensation Insurance With Prestige
Prestige Insurance Group places workers’ compensation for businesses of every size across Miami, Fort Lauderdale, West Palm Beach, Orlando, Tampa and throughout Florida, from a four-person office to contractors in high-hazard classes. We work with over 100 MGAs and specialty markets, so a business that is hard to place still has options outside the state’s market of last resort. If you are not sure whether you are required to carry it, or whether your exemptions are filed correctly, send us your payroll and a short description of what your employees do, and we will give you a straight answer. Call the office nearest you. Se habla español.
Miami: 305-969-8776 Orlando: 407-993-2331
General information only, not legal advice. Florida workers’ compensation requirements, exemption rules and penalties are set by statute and rule and change over time. Confirm current requirements with the Florida Division of Workers’ Compensation and consult qualified counsel regarding your obligations.
