If you are a general contractor (or the contractor responsible for hiring subcontractors), please make sure to procure a worker’s compensation and employer’s liability insurance policy.  Also, don’t think you are “fully covered” if you have worker’s compensation through a professional employer’s organization, otherwise known as a PEO. If you go with a PEO, or are statutorily exempt from worker’s compensation, then you need to make sure ALL of the subcontractors you hire have worker’s compensation and employer’s liability insurance. No exception. Ever. The risk is much greater than any reward.

In construction under Florida law, the general contractor is deemed the “statutory employer” for purposes of worker’s compensation.  This means that if a subcontractor does not have worker’s compensation, then the general contractor’s worker’s compensation policy is required to cover injuries.  So, if a person under a subcontractor gets hurt, and the subcontractor does not have worker’s compensation insurance, then the general contractor is deemed the statutory employer for purposes of worker’s compensation.

What if the general contractor has worker’s compensation through a PEO? This does not matter as the general contractor is still deemed the statutory employer. But, unlike traditional worker’s compensation insurance, the general contractor won’t have insurance to cover the risk.  The reason being is that with a PEO, your employees get leased back to you so the leasing company is the company with worker’s compensation insurance, not the contractor. If a non-employee gets hurt, or someone not enrolled through the leasing company, there is NO worker’s compensation insurance for that hurt person. This means the general contractor, or the statutory employer, has liability for the injury risk but does not have insurance to cover the risk. To avoid this dynamic, consider two crucial things:

First, procure a worker’s compensation and employer’s liability policy. Not through a PEO, but in your company’s name.

Second, if you feel like the PEO is the most prudent option regardless of the risk, or don’t have employees and are otherwise statutorily exempt, then you need to make sure everyone you hire has worker’s compensation and employer’s liability insurance. Don’t make exceptions.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.