A landscaping company in Ocala pays its workers’ compensation deposit based on estimated payroll and forgets about it until the audit letter arrives. The auditor finds checks to four subcontractors over the year. Two carried their own coverage, one had an exemption that had expired in the spring and one never had anything at all. The payments to the last two are added to the company’s payroll at the landscaping rate, and the final bill is several times the original deposit.
Few things surprise Florida landscaping owners more than the audit. The premium on the original policy is only an estimate, and what the company actually owes is decided after the year ends, based on what it paid and to whom. Subcontractors and day labor are where most of the difference comes from.
Why the audit matters
Workers’ compensation is priced on payroll, by classification. At the end of the policy term, the carrier audits the records and calculates the actual premium. If payroll was higher than estimated, or if money went to people the auditor treats as employees, the company owes the difference. Because landscaping carries a high rate, small mistakes become large bills.
Uninsured subcontractors become your payroll
Florida holds the contractor responsible for workers’ compensation on subcontractors that do not carry their own. If a subcontractor has no policy and no valid exemption, the auditor can treat what you paid it as your payroll and charge premium on it. If one of its workers is hurt on your job, the claim can come to your policy. This applies to tree work, irrigation, hardscaping and any crew you bring in during a busy season.
The protection is simple: collect a certificate of insurance or a copy of a current exemption before the subcontractor starts work, check that it is still valid when you pay, and keep the records together. Exemptions belong to specific individuals and expire, so a copy from two years ago does not help.
Day labor and cash payments
Workers picked up for a day, paid in cash or paid through someone else are still workers in the eyes of the auditor. Without records, the auditor has to estimate, and estimates rarely favor the company. Paying temporary help through payroll, or through a staffing company that provides its own coverage and certificates, keeps that labor visible and properly classified.
Office payroll and classification
Administrative staff who never go into the field can be classified at a much lower rate, but only when the records show their duties and pay separately. An owner who does estimates in the office and also runs a crew on Saturdays is a classification question worth discussing with the agent. Hardscape, tree and irrigation payroll may fall under different classifications from maintenance, so tracking hours by type of work pays off at audit. Our article on how much landscaping insurance costs in Florida explains how classification moves the price.
Storm season
Hurricane cleanup is when payroll jumps, temporary workers arrive and subcontractors get hired in a hurry. It is also the most dangerous work of the year. A verification process that still works during the busiest week, and a quick call to adjust the payroll estimate when storm work becomes a large share of revenue, keep the audit from becoming a second disaster.
Preparing for the audit
Keep payroll reports by classification, a list of subcontractors with their certificates or exemptions, 1099s, and records of any cash payments. Respond to the audit request promptly, because a carrier that cannot complete an audit may estimate on its own terms. If the result looks wrong, it can be disputed with documentation. Our page on workers’ compensation insurance covers the basics.
Worth confirming on your policy
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That a certificate or current exemption is on file for every subcontractor before work begins
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That exemptions are checked again before you pay
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That day labor is paid through payroll or a staffing company that provides coverage
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That office payroll is classified separately, with records to support it
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That payroll is tracked by type of work, including tree, irrigation and hardscape
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That your payroll estimate is updated when storm work or new crews change it
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That audit records are organized before the audit request arrives
Talk to us
Prestige Insurance Group works with landscaping, tree service and irrigation companies across Florida. Send us your last audit, your current policy and your subcontractor list, and we will show you where the audit numbers came from and how to keep the next one predictable.
Call the office nearest you. Se habla español.
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Miami: 305-969-8776
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Orlando: 407-993-2331
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Stuart: 772-247-3788
This article is general information, not legal advice. Coverage forms, exclusions and carrier appetite vary and change over time, and licensing requirements differ by county and city. Prestige Insurance Group, Florida agency license L057894.
