Florida Agency Issues 94 Stop-Work Orders After Workers' Comp Compliance Sweep

As part of the statewide effort, teams of investigators from the agency made random site visits in Volusia, Brevard, Palm Beach, St. Johns, Flagler and Duval counties, ordering dozens of employers to stop working because employees were not properly covered by workers' compensation insurance, according to the Division of Workers' Compensation.

"Employers who avoid paying workers' compensation premiums contribute to the rise in workers' compensation rates and gain an unfair advantage over competitors," said Tom Gallagher, Florida's chief financial officer. "A healthy workers' compensation system is crucial to Florida's economic health, and we will continue to aggressively investigate instances of fraud and abuse." Under state law, businesses engaged in the construction industry with one or more employees must provide workers' compensation coverage, which protects workers who are injured or killed on the job.

During the sweep, investigators issued 94 stop-work orders to construction businesses, including general contractors and subcontractors, who were in violation of Florida's workers' compensation requirements. Thirteen stop-work orders were issued to employers who were paying their employees in cash and were not reporting these cash payments to their insurance carriers. Investigators also issued 110 requests for business records to employers in which non-compliance could not be readily determined at the job site.

Many of the contractors who were found to be in compliance thanked the investigators for their work, according to the Division of Workers' Compensation. According to the agency, many contractors said companies that don't protect their workers and have lower costs are constantly underbidding them on jobs.

Under a stop-work order, a business must immediately cease all business operations. The order is lifted once the employer obtains the proper coverage and pays a civil penalty equal to the amount of 1.5 times the workers' compensation premiums avoided. Florida employers who violate a stop-work order face a penalty of $1,000 per day of violation and also may face criminal charges.

During the 2003 legislative session, Florida lawmakers made several reforms to the state's workers' compensation system in an effort to stem the tide of rising premiums. As part of the reforms, the Division of Workers' Compensation was granted greater enforcement authority to ensure businesses provide coverage for their employees. Many of the violations uncovered during the April sweep fall under the new authority, the agency says.

To increase competition among businesses operating in Florida, the legislature in 2003 enacted the following reforms:

• Out-of-state businesses operating in Florida must pay Florida-approved workers' compensation rates for coverage. This measure was aimed at preventing non-Florida businesses from gaining an unfair advantage over locally owned businesses.
• Employers who misrepresent the number or classification of their employees are subject to an immediate stop-work order. Previously, a criminal investigation was required to take action against the employer.
• Employers wishing to exempt themselves from coverage requirements must obtain a new exemption, providing greater tracking ability to state regulators. This measure was aimed at preventing contractors from claiming that employees were subcontractors who were exempt from coverage, thereby avoiding payment of premiums and gaining an unfair advantage over competition.

"Florida workers deserve to be protected in case they are injured on the job," Gallagher said. "An employee without coverage who is seriously injured or disabled stands to lose not only his livelihood but also the benefits he needs for medical bills and recovery."