A condominium association on the beach in Hollywood has no employees on paper. A management company handles the books, a landscaping company cuts the grass and a pool company services the pool. The board also pays a retired resident a few hundred dollars a month to change light bulbs, fix gates and paint the stairwells, and in the summer it hires a part-time pool attendant for weekends. When the handyman falls from a ladder in the parking garage, the board learns that the association was his employer, it had no workers’ compensation, and his medical bills are now the association’s problem.
Workers’ compensation is easy to overlook in community associations and property management, because so much of the work is done by vendors and so many of the people involved are volunteers. But associations, apartment owners and management companies all employ people in physical jobs, and the question of who is responsible for an injured worker comes up more often than boards expect.
Does an Association Need Workers’ Compensation?
A homeowners or condominium association is an employer like any other business. If it pays people directly, such as maintenance staff, porters, front desk attendants, pool attendants or a handyman, those people are its employees, and Florida’s general rule applies: a non-construction employer needs workers’ compensation at four or more employees, counting part-time and seasonal staff. Our article on whether you need workers’ comp in Florida explains how the state counts.
Many associations have fewer than four direct employees, or none at all, and are not required to carry it. That does not mean they have no exposure. A worker the association pays directly, or one it treats as an independent contractor without really meeting the test, can still claim the association was his employer after an injury. Our article on 1099 workers and independent contractors in Florida explains how Florida decides. And without workers’ compensation, the association loses the protection from lawsuits that coverage normally gives an employer, which leaves the injury to be fought out under the association’s general liability policy, which usually excludes injuries to employees.
Who Employs the On-Site Staff?
In professionally managed communities, the answer is not always obvious. Some management companies employ the on-site manager, maintenance technicians and porters themselves and bill the association for their time. Others place staff on the association’s own payroll and simply manage them. The difference decides whose workers’ compensation policy responds when someone is hurt.
The management agreement should say clearly who the employer is, and the insurance should match it. If the management company is the employer, the association should ask for a certificate showing the management company’s workers’ compensation and confirm that it covers the staff working at the property. If the association is the employer, it needs its own policy, even if the management company runs payroll on its behalf. Our article on what CAMs should verify before a board signs an association management agreement covers the rest of that agreement.
Volunteers and Board Members
Board members who serve without pay are generally not employees, and neither are residents who volunteer for a community cleanup or a holiday event. The line changes when money is involved. A volunteer who receives regular payment, even a small stipend, may look like an employee, and a resident who is paid to do maintenance work is very likely an employee. Some carriers offer coverage for volunteers by endorsement, which can be worth considering for associations that rely on residents to do physical work. Our article on HOA board member liability covers the board’s other exposures, and our page on directors and officers liability covers the coverage that protects them.
Vendors Are the Bigger Exposure
Most physical work at a Florida community is done by vendors: roofers, painters, landscapers, pool companies, plumbers, electricians, pressure washers and handymen. When a vendor’s worker is hurt on the property and the vendor has no workers’ compensation, the injured worker often looks to the association or the property owner, usually through a premises liability claim against the association’s general liability. Associations that hire an uninsured handyman to save money are often taking on that exposure without realizing it.
The defense is simple and has to be done every time. Before any vendor starts work, collect a certificate of insurance showing general liability and workers’ compensation, or confirm the vendor’s exemption in the state database and remember that the exemption covers only the owner, not his crew. Require the association to be named as additional insured on the vendor’s liability policy, and keep the certificates on file. Our articles on HOA vendor insurance requirements, why apartment buildings require vendor certificates of insurance and who is liable for vendor injuries at apartment buildings cover this in detail, and our article on workers’ comp exemptions explains what an exemption does and does not cover.
Why Some Associations Buy a Policy Anyway
Many associations below the four-employee threshold buy a workers’ compensation policy anyway, often at or near the carrier’s minimum premium. It covers the occasional handyman or seasonal worker the association pays directly, it protects the association from a lawsuit if one of them is hurt, and it gives the board a clear answer when someone asks whether the association is covered. For an association that pays even one person to do physical work, the cost of a minimum policy is usually small compared with a single serious injury.
Workers’ Compensation for Property Management Companies
A property management company is usually a larger employer, and its workers’ compensation is more complex. Community association managers, leasing agents and office staff are generally rated in clerical or office classifications, while maintenance technicians, porters and groundskeepers fall into building maintenance or janitorial classes with much higher rates. Payroll has to be separated by job duty, or the auditor will usually rate more of it at the higher class. Our article on what to expect at a workers’ comp payroll audit explains where that money moves.
Management companies also face turnover among maintenance and porter staff, employees who move between several properties in a day, and contracts that require the management company to carry workers’ compensation at specific limits and name the association or owner as a certificate holder. The common injuries are falls from ladders, lifting strains, slips on wet floors, cuts and exposure to pool chemicals. Our page on property manager insurance and our article on slip and fall risk management for property managers cover the rest of the program.
Apartment Owners
Owners of apartment buildings face the same questions. An owner who employs an on-site manager, maintenance staff or a porter directly is their employer, and the four-employee rule applies. An owner who uses a management company should confirm whose employees the on-site staff are and get a certificate showing that they are covered. Apartment owners also hire a steady stream of vendors and turnover crews, and the same certificate discipline applies to every one of them. Our article on property manager insurance requirements for Florida apartments covers the management contract side.
What Boards, Owners and Managers Should Confirm
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Does the association or owner pay anyone directly for maintenance, front desk, pool or other work?
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Does the management agreement say clearly who employs the on-site staff, and does the insurance match?
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Is there a current certificate showing the management company’s workers’ compensation?
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Are volunteers and board members unpaid, or are any receiving regular payments?
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Do you collect certificates of insurance and check exemptions for every vendor before work starts?
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Would a minimum-premium policy protect the association from a lawsuit if a paid worker is hurt?
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For management companies, is payroll separated between office and maintenance staff?
Workers’ Compensation for Associations and Property Managers With Prestige
Community associations, property managers and apartment owners are among the clients Prestige Insurance Group works with most, across Miami, Fort Lauderdale, West Palm Beach, Orlando, Tampa and throughout Florida. We place workers’ compensation for associations that need only a minimum policy and for management companies with large maintenance staffs, and we work with over 100 MGAs and specialty markets. For the rest of the program, see our pages on HOA insurance, condominium association insurance and workers’ compensation insurance in Florida. Send us your management agreement and a list of anyone the association pays directly, and we will tell you where the exposure is. 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, the treatment of volunteers and the allocation of responsibility under management agreements vary and change over time. Refer to your policies, governing documents and management agreement, and consult qualified counsel regarding your association’s obligations.
