QUICK NOTE: TYPES OF INSURANCE FOR CONSTRUCTION PROJECTS

I did a presentation on types of insurance for construction projects outside of builder’s risk insurance.   The presentation briefly discussed insurance beyond commercial general liability, commercial automobile liability, and workers compensation and employer’s liability insurance.

There are many other insurance products that are relied on and needed to cover the MANY risks that contractors face when dealing with a construction project.   Insurance is a major part of construction to cover risk and making sure you have the RIGHT insurance to cover the risks you face on a construction project cannot be understated.

When drafting and negotiating a construction contract, it is important to spend time on the insurance requirements including consulting with your insurance broker and lawyer to make sure the right language is included and/or you have the requested insurance.

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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.

YOU NEED TO BE A CONTRACTOR FOR WORKERS’ COMPENSATION IMMUNITY TO APPLY

If you are a contractor, you are aware of workers’ compensation immunity when it comes to injuries on the site; and, if not, you should be.  It is this workers’ compensation immunity (where workers compensation is the exclusive form of liability for an injured employee) which is why a contractor should generally always want to ensure its subcontractors have workers’ compensation insurance.   Workers’ compensation immunity would protect a contractor that is being sued by a subcontractor’s employees that are injured on the job.  For more information on workers’ compensation immunity, please check out this article and this article.

In this regard, Florida Statute s. 440.10(1)(b) provides:

In case a contractor sublets any part or parts of his or her contract work to a subcontractor or subcontractors, all of the employees of such contractor and subcontractor or subcontractors engaged on such contract work shall be deemed to be employed in one and the same business or establishment, and the contractor shall be liable for, and shall secure, the payment of compensation to all such employees, except to employees of a subcontractor who has secured such payment.

(If the subcontractor does not have workers’ compensation insurance, the contractor is deemed the statutory employer and its workers’ compensation insurance would apply. Otherwise, the subcontractor’s workers compensation insurance would apply.)

However, it is important to understand that workers’ compensation immunity applies to contractors, and not to owners.  For example, in Tampa Electric Co. v. Gansner, 45 Fla. L. Weekly D2358a (Fla. 2d DCA 2020), a public utility company hired an electrician to perform maintenance work at its generating facility.  Two of the electrician’s employees were injured when an access door at the generating facility blew open.  The injured employees and their families filed a personal injury lawsuit (negligence lawsuit) against the public utility company.  The public utility company asserted workers’ compensation immunity as an affirmative defense and moved for summary judgment on this defense.  The trial court denied the summary judgment finding that the public utility company “is not entitled to workers’ compensation immunity because it is not the statutory employer of either [of the injured employees of the electrician].”  Gansner, supra.

On appeal, the Second District agreed with the trial court.  The public utility company would be entitled to the protection of workers’ compensation immunity as the statutory employee of the injured employees of the electrician only if it was a contractor that sublet a portion of its work to the electrician.  The Second District reviewed authority that found that to be considered a contractor, the party’s “primary obligation in performing a job or providing a service must arise out of a contract [with a third party].”  Gansner, supra, (quotation and citation omitted).  Although the public utility company tried to come up with a creative argument based on the utility company’s work for its customers, the appellate court was not persuaded:

We therefore conclude that [the public utility company] is not the statutory employer of either [of the electrician’s injured employees]. Although [the public utility company] promises to exercise reasonable diligence to provide power to its customers pursuant to its tariff, nothing in the tariff — or in any other source that it has identified — imposes upon it a contractual obligation to its customers to maintain its electrical generating equipment. Instead, its obligation to maintain its equipment arises purely out of an administrative regulation and thus is not an obligation that it can “sublet” to a third party for purposes of section 440.10(1)(b) absent a concomitant contractual obligation. The trial court, therefore, correctly denied [the public utility company’s] motion for summary judgment based on workers’ compensation immunity.

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.

 

LIABILITY INSURER PRECLUDED FROM INTERVENING IN INSURED’S LAWSUIT

shutterstock_368505233There are cases where I honestly do no fully understand the insurer’s position because it cannot have its cake and eat it too.  The recent opinion in Houston Specialty Insurance Company v. Vaughn, 43 Fla. L. Weekly D1828a (Fla. 2d DCA 2018) is one of those cases because on one hand it tried hard to disclaim coverage and on the other hand tried to intervene in the underlying suit where it was not a named party.

 

This case dealt with a personal injury dispute where a laborer for a pressure washing company fell off of a roof and became a paraplegic.  The injured person sued the pressure washing company and its representatives.  The company and representatives tendered the case to its general liability insurer and the insurer–although it provided a defense under a reservation of rights—filed a separate action for declaratory relief based on an exclusion in the general liability policy that excluded coverage for the pressure washing company’s employees (because the general liability policy is not a workers compensation policy).   This is known as the employer’s liability exclusion that excludes coverage for bodily injury to an employee.  The insurer’s declaratory relief action sought a declaration that there was no coverage because the injured laborer was an employee of the pressure washing company.  The pressure washing company claimed he was an independent contractor, in which the policy did provide limited coverage pursuant to an endorsement.

 

The insurer also moved to intervene in the underlying action for the purpose of getting special interrogatories on the verdict form relative to the injured plaintiff’s employment status.  The pressure washing company objected because they did NOT want to inflate the damages by having the jury learn that insurance was involved, thereby prejudicing it, particularly if it was determined that there was no insurance coverage.  You cannot blame the insured in this instance, particularly because the injured plaintiff was probably all for having the insurer intervene so that the jury learned about the insured’s insurance. 

 

While the trial court granted the motion to intervene, after a number of events occurred (not discussed here), the trial court ultimately dismissed the intervention. The insurer appealed.

 

The appellate court affirmed the denial / dismissal of the insurer’s intervention in the underlying action.  The bottom line is that the insurer was not sued in the underlying action. It could not be sued by the injured plaintiff based on Florida’s non-joinder statute (Florida Statute 627.4136) that would prevent the injured plaintiff from suing the liability insurer directly until it gets a judgment against the insured.  Thus, the insurer had no direct and immediate interest in the dispute. Any judgment entered in the case would not be against the insurer—it would be entered against its insured.  Further, if the insured obtained a judgment and then sued the insurer, the insurer would not be deprived of appropriate legal defenses. 

 

As the appellate court explained, the insurer’s argument, if accepted, would be to eviscerate Florida’s non-joinder statute:

 

If the possibility of owing up to the policy limits based upon entry of an adverse judgment [against an insured] was itself a sufficient basis to allow intervention, insurers would be permitted the unhindered and unfettered opportunity to intervene in innumerable tort cases. That is exactly what Houston [insurer] wants; it seeks to interject itself directly into Mr. Vaughn’s [injured plaintiff’s] tort lawsuit. We cannot countenance such a result in light of the legislature’s intent [in Florida’s non-joinder statute] to prevent the introduction of such prejudicial information from being introduced to the jury.  After all, courts must continually be concerned that insurance coverage not be introduced to the jury because of its potential to adversely impact the issues of liability and damages. 

 

 

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.

 

WORKERS COMPENSATION IMMUNITY AND THE INTENTIONAL TORT EXCEPTION

 

shutterstock_251422126In prior articles, I discussed the benefit of workers compensation immunity for contractors.  Arguing around workers compensation immunity under the “intentional tort exception” is really hard – borderline impossible, in my opinion.  Nevertheless, injured workers still make an attempt to sue a contractor under the intentional tort exception to workers compensation immunity.  Most fail based on the seemingly impossible standard the injured worker must prove to establish the intentional tort exception.  A less onerous standard (although certainly onerous), as a recent case suggests, appears to be an injured worker suing a co-employee for the injury.

 

Florida Statute s. 440.11 discusses the intentional tort exception to workers compensation immunity.   Workers compensation shall be the exclusive remedy to an injured worker UNLESS the injured worker can establish a claim against the contractor or fellow-employee under the intentional tort exception as statutorily set forth below:

 

440.11 Exclusiveness of liability. — 

(1) The liability of an employer prescribed in s. 440.10 shall be exclusive and in place of all other liability . . . except as follows:

. . . .

(b) When an employer commits an intentional tort that causes the injury or death of the employee. For purposes of this paragraph, an employer’s actions shall be deemed to constitute an intentional tort and not an accident only when the employee proves, by clear and convincing evidence, that:

1.  The employer deliberately intended to injure the employee; or

2. The employer engaged in conduct that the employer knew, based on prior similar accidents or on explicit warnings specifically identifying a known danger, was virtually certain to result in injury or death to the employee, and the employee was not aware of the risk because the danger was not apparent and the employer deliberately concealed or misrepresented the danger so as to prevent the employee from exercising informed judgment about whether to perform the work.

 

The same immunities from liability enjoyed by an employer shall extend as well to each employee of the employer when the employee is acting in furtherance of the employer’s business and the injured employee is entitled to receive benefits under this statute. Such fellow-employee immunities shall not be applicable to an employee who acts, with respect to a fellow employee, with willful and wanton disregard or . . . with gross negligence when such acts result in injury or death or such acts proximately cause such injury or death . . . .

 

In Ramsey v. Dewitt Excavating, Inc., 43 Fla. L. Weekly D1366a (Fla. 5th DCA 2018), an employee was cleaning a cement-mixing pugmill with a fellow employee.  An accident happened while the employee was inside the mixing box causing his death.  While he was inside, his fellow-employee turned on the mixing box causing his death.  The employee’s estate sued both the employer and the fellow-employee for the wrongful death and argued under the intentional tort exception to get around workers compensation immunity.  

 

The trial court granted summary judgment on the issue of workers compensation immunity finding that the immunity barred the estate’s claims against the employer and the fellow-employee.

 

Intentional Tort Exception as to Employer

 

The appellate court affirmed the summary judgment as to the employer because the employee could NOT prove the virtually impossible burden in establishing the applicability of the intentional tort exception.

 

Three elements must be proved to establish the intentional tort exception to worker’s compensation immunity, and the failure to prove any one of the elements will prevent the exception from applying.  The elements are:

1) employer knowledge of a known danger . . . based upon prior similar accidents or explicit warnings specifically identifying the danger that was virtually certain to cause injury or death to the employee;

2) the employee was not aware of the danger . . . because it was not apparent; and

3) deliberate concealment or misrepresentation by the employer . . . preventing employee from exercising informed judgment as to whether to perform the work.

 

Ramsey, supra (internal citation omitted).

 

There was no evidence to suggest that the employee was not aware of the danger involved in cleaning the inside of the cement mixing box and that he had to be aware based on working on the machine in the past, which was inherently dangerous in of itself.  This alone supported the application of the workers compensation immunity and there likely would have been a lot more facts (or facts the employee’s estate would not be able to prove) supporting the immunity.

 

Intentional Tort Exception as to Fellow-Employee

 

The appellate court, however, reversed the summary judgment as to the fellow-employee finding that a jury could find that the fellow-employee acted with gross negligence causing the death of the employee.

 

In order to establish that Gubbins [fellow-employee] acted with gross negligence when he turned on the pug mill while Ramsey [employee] was still inside, the parents [representatives of estate] were required to present evidence as to each of the following three elements:

1) circumstances constituting an imminent or clear and present danger amounting to a more than normal or usual peril [;]

2) knowledge or awareness of the imminent danger on the part of . . . [Gubbins;] and

3) an act or omission [on the part of Gubbins] that evinces a conscious disregard of the consequences. 

Ramsey, supra.

 

 

 

The estate had evidence that the fellow-employee directed the decedent-employee inside the cement mixing box and then activated the box without utilizing any safety system or checking to see if the decedent-employee was still inside.  Based on this evidence, a jury could conclude that the fellow-employee was grossly negligent in activating the mixing box.

 

 

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.

 

HIRING SUBCONTRACTORS WITH WORKERS COMPENSATION INSURANCE

shutterstock_153987515You want to hear more on the POWER of statutory workers compensation immunity?  Well, here it is, because as I have mentioned in the past, workers compensation immunity is powerful reinforcing the importance for contractors to ensure the subcontractors they hire absolutely have workers compensation insurance.  Likewise, subcontractors want to ensure the subcontractors they hire also have workers compensation insurance.

 

In the case of Fisk Construction, Inc., v. Obando, 42 Fla. L. Weekly D2501b (Fla. 3d DCA 2017), a general contractor hired a roofer.  The roofer subcontracted a portion of its work to a sub-subcontractor.  A foreman of the sub-subcontractor than orally hired a laborer to perform a portion of the work the sub-subcontractor was responsible for performing.  The laborer got hurt and a lawsuit was filed.  The trial court ruled that the sub-subcontractor could not rely on workers compensation immunity as an affirmative defense finding that the sub-subcontractor waived and/or was estopped from asserting this defense.  There appeared to be an initial denial of workers compensation benefits that was later remedied by the sub-subcontractor’s workers compensation insurer agreeing to pay the laborer’s hospital bills and medical visits.  (Since the laborer was hired in an oral, handshake-type of deal, it could have been that executives of the sub-subcontractor had to investigate the laborer’s involvement at the project since he was not an employee of the company.)

 

On appeal, the Third District reversed holding that the sub-subcontractor could rely on workers compensation immunity as an affirmative defense.  “[A]n initial denial of liability or [workers compensation] benefits does not automatically estop an employer from asserting workers’ compensation immunity [as an affirmative defense].”  Fisk Construction, supra

 

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.

POWER OF WORKERS COMPENSATION IMMUNITY ON CONSTRUCTION PROJECT

shutterstock_104939294On construction projects, workers compensation immunity is real and it is powerful.  (See also this article.)  Workers compensation immunity is why all general contractors should have workers compensation insurance and they should ensure the subcontractors they hire have workers compensation insurance.  Workers compensation insurance becomes the exclusive form of liability for an injured worker thereby immunizing an employer (absent an intentional tort, which is very hard to prove as a means to circumvent workers compensation immunity).

 

If a general contractor, with workers compensation insurance, hires a subcontractor without workers compensation insurance, the general contractor’s workers compensation insurance will be responsible in the event an injury occurs to a subcontractor’s employee.  The general contractor becomes the statutory employer. 

 

If a general contractor, with or without workers compensation insurance, hires a subcontractor with workers compensation insurance, the subcontractor’s workers compensation insurance will be responsible in the event of an injury to that subcontractor’s employee (including any sub-subcontractor’s employees). This is a main reason why the general contractor wants to ensure the subcontractors it hires has workers compensation insurance.

 

An example of the benefit of workers compensation immunity can be found in the recent case of Gladden v. Fisher Thomas, Inc., 42 Fla. L. Weekly D2441a (Fla. 1st DCA 2017), dealing with a statutorily exempt corporate officer of a sub-subcontractor.  In this case, a general contractor hired two applicable subcontractors.  One of the subcontractors was a flooring subcontractor that subcontracted out a portion of its flooring work to an entity whose owner was statutorily exempt from workers compensation insurance.  This owner claimed he was injured through the actions of the other subcontractor and filed a lawsuit against the general contractor and the other subcontractor for negligence.  He claimed that workers compensation immunity should not apply because he was statutorily exempt from workers compensation.  Both the trial court and appellate court did not buy the owner’s argument.  The owner’s exemption from workers compensation insurance does not equate to an exemption from workers compensation immunity.  He is still bound by workers compensation immunity even if he is statutorily exempt.  His only recourse is confined to a claim against his company that did not procure workers compensation coverage.  That’s it.  “Since the corporate employer reaps the benefit of reduced workers’ compensation premiums for the exempt officer, it makes sense that there is a risk associated with the benefit.” Gladden, supra.

 

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.

 

NEED TO BE A “CONTRACTOR” TO BE PROTECTED BY WORKERS COMPENSATION IMMUNITY

imagesPreviously, I discussed the concept of “statutory employer” in the framework of workers compensation. Again, this concept is based on language in Florida Statute s. 440.10(1)(b) that provides:

 

 

In case a contractor sublets any part or parts of his or her contract work to a subcontractor or subcontractors, all of the employees of such contractor and subcontractor or subcontractors engaged on such contract work shall be deemed to be employed in one and the same business or establishment, and the contractor shall be liable for, and shall secure, the payment of compensation to all such employees, except to employees of a subcontractor who has secured such payment.

 

 

The recent case of Slora v. Sun ‘N Fun Fly-In, Inc., 40 Fla. L. Weekly D 1966a (Fla.2d DCA 2015) discussed the meanings of the term “contractor” and “contract work” as used in this section:

 

The statutory terms “contractor” and “contract work” plainly and unambiguously posit a party performing work pursuant to a contract with another. Thus, to be immune from tort liability as a contractor, a defendant’s primary obligation in performing a job or providing a service must arise out of a contract.

Slora, supra (quotation and citation omitted).

 

In this case, a company operated airshows for the general public.  To put on these airshows, the company had to fill out various forms and get approval from the Federal Aviation Authority. The Federal Aviation Authority required security to be provided at airshow events.  The company put on an airshow and hired a security company to provide the security services for the event.  During the airshow, however, an employee of the security company got hurt.  This employee sued the company that put on the airshow for her injuries.  The company argued it should be immune from such claim under workers compensation immunity that provides that contractors that comply with Florida Statute 440.10 are immune from tort liability (absent an intentional tort). 

 

The trial court agreed with the company and granted summary judgment in its favor finding it was immune from liability and could not be properly sued by the injured employee of the security company. The appellate court reversed based on the meanings of “contractor” and “contract” as used in Florida Statute s. 440.10.  Particularly, the appellate court held that there was no evidence that the Federal Aviation Authority contracted the company to put on the airshow event (or that the company undertook an implied obligation to the Federal Aviation Authority).  Thus, if the company was not contracted by the Federal Aviation Authority, it could not be a “contractor” as used in the statute since it was not performing work pursuant to a contract with another.  And, if the company was not a contractor per the statute, the company could not be immune from tort liability under workers compensation law.

 

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.

 

 

RENTAL EQUIPMENT SUPPLIER NOT PROTECTED BY WORKERS COMPENSATION (HORIZONTAL) IMMUNITY

imagesOh boy! When it comes to workers compensation immunity, suppliers, particularly rental equipment suppliers, better watch out as they are not entitled to the same safeguards as subcontractors when it comes to injuries on a construction project!

 

The Fourth District Court of Appeals in Ciceron v. Sunbelt Rentals, Inc., 40 Fla. L. Weekly D897a (Fla. 4th DCA 2015) rendered an opinion that is not favorable to suppliers when it comes to the protection of workers compensation immunity on a construction project.   In this case, an employee of the demolition subcontractor was injured from a scissor list that was utilized and rented by other subcontractors at the project. The employee sued the rental equipment supplier of the scissor list for negligence.  The supplier moved for summary judgment arguing that it has immunity from such tort claims.  The ultimate issue was whether workers compensation horizontal immunity barred the injured employee’s claim against the rental equipment supplier.

 

Horizontal Workers Compensation Immunity

 

I have previously written about workers compensation immunity on a construction project. Regarding what is commonly referred to as horizontal immunity: “Workers’ compensation immunity has been broadly expanded by the legislature to include subcontractors and sub-subcontractors working at a construction site, precluding an employee of one contracting entity injured on the job from suing another contracting entity working at the same construction site in tort.”  Ciceron, supra

 

To this point, Florida Statute s. 440.10(1)(e) states:

  

A subcontractor providing services in conjunction with a contractor on the same project or contract work is not liable for the payment of compensation to the employees of another subcontractor or the contractor on such contract work and is protected by the exclusiveness-of-liability provisions of s. 440.11 from any action at law or in admiralty on account of injury to an employee of another subcontractor, or of the contractor, provided that:

1. The subcontractor has secured workers’ compensation insurance for its employees or the contractor has secured such insurance on behalf of the subcontractor and its employees in accordance with paragraph (b); and

2. The subcontractor’s own gross negligence was not the major contributing cause of the injury.

 

This is referred to as horizontal immunity because one subcontractor is entitled to immunity for injuries caused to employees of another subcontractor.

 

In this case, however, because the supplier of the scissor list was not a “subcontractor,” the supplier was NOT entitled to immunity.  This meant that the injured demolition subcontractor’s employee was entitled to pursue its negligence claim against the supplier of the scissor lift and the supplier did not have immunity under the law.   If, on the other hand, the supplier was a “subcontractor,” then more than likely workers compensation horizontal immunity would have applied to bar the injured employee’s tort claim.

 

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.

 

 

 

 

 

WORKERS COMPENSATION (PART TWO) — STATUTORY EMPLOYER AND CONTRACTORS

imagesTo follow-up on the article Workers Compensation—Tidbits on Construction Projects, the recent opinion in Roof Painting By Hartzell, Inc./Summit Holdings-Claims Center v. Hernandez, 2015 WL 641199 (Fla. 1st DCA 2015) touches upon the application of a statutory employer in the construction context.

 

Here, a contractor was hired to provide pressure cleaning and related services.  The contractor, in turn, subcontracted the labor to perform the services through another company (e.g., subcontractor).   Both the contractor and subcontractor that provided the labor had workers compensation insurance.  A laborer (retained by the subcontractor) was injured in performing the pressure cleaning services.   The issue was which workers compensation carrier should be responsible: the subcontractor’s carrier or the contractor’s carrier.

 

Florida Statute s. 440.10(1)(b) provides:

 

In case a contractor sublets any part or parts of his or her contract work to a subcontractor or subcontractors, all of the employees of such contractor and subcontractor or subcontractors engaged on such contract work shall be deemed to be employed in one and the same business or establishment, and the contractor shall be liable for, and shall secure, the payment of compensation to all such employees, except to employees of a subcontractor who has secured such payment.

 

Since the injured laborer was hired by the subcontractor, the subcontractor’s workers compensation carrier should cover the injured laborer’s claim.

 

Section 440.10 forms what is referred to as the “statutory employer” concept.  For instance, if the subcontractor does not obtain applicable workers compensation insurance, then under this section, the general contractor is liable (as the general contractor is the statutory employer). It is this reason that contractors that subcontract a portion of their services to others need workers compensation coverage!

 

Importantly, contractors that comply with the requirements of section 440.10 are protected by the exclusiveness of liability provisions in Florida Statute s. 440.11. This means the contractor is immune from lawsuits (such as tort-related lawsuits) from injured workers with workers compensation being the exclusive form of liability absent any intentional tort committed by the contractorSee Fla.Stat. s. 440.11.  “Because section 440.11(1) of the Florida Statutes makes the liability to secure [workers] compensation imposed by section 440.10(1) the exclusive form of liability imposed by Chapter 440 on an employer, once an employer acquires and maintains workers’ compensation insurance for the benefit of its employees, it becomes immune from suit.” VMS, Inc. v. Alfonso, 147 So.3d 1071, 1073 (Fla. 3d DCA 2014).

 

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.

 

 

 

 

 

WORKERS COMPENSATION — TIDBITS ON CONSTRUCTION PROJECTS

imagesWorkers compensation is a “must have” insurance in the construction industry. 

 

Certain officers are entitled to be statutorily exempt from workers compensation (pursuant to Florida Statutes Chapter 440).  See Fla.Stat. s. 440.02(15).  But, if exempt, these officers are not entitled to receive workers compensation benefits.  The reason to obtain an exemption is to avoid paying premium for these officers.

 

For an applicant to receive a statutory exemption for a corporation:

-The corporation must be registered as an active Florida company (with Florida’s Division of Corporations).

-The applicant must be identified as an officer (with Florida’s Division of Corporations).

-The officer must own at least 10% of the corporation.

-No more than three officers can be exempt.

-The exemption is valid for 2 years.

 

For an applicant to receive a statutory exemption for a limited liability company, the above requirements pertaining to a corporation are applicable except for the applicant being required to be identified as an officer.

 

An applicant that satisfies the exemption requirements will receive a Certificate of Election to be Exempt that will identify the dates the exemption is in effect.

 

Notably, sole proprietors, independent contractors, and partners may also receive a Certificate of Election to be Exempt and not recover workers compensation benefits. See Fla.Stat. s. 440.05.

 

While there is a statutory exemption for the officer/owner-employee, there is not one for the nonofficer/nonowner-employee.  Thus, if the construction company relies on full time or part time nonofficer-employees, workers compensation is required for these employees.

 

Additionally, general contractors need to ensure that every subcontractor it hires has workers compensation or a valid Certificate of Election to be Exempt.

 

Florida Statute s. 440.10(1)(b) states:

 

In case a contractor sublets any part or parts of his contract work to a subcontractor or subcontractors, all of the employees of such contractor and subcontractor or subcontractors engaged on such contract work shall be deemed to be employed in one and the same business or establishment; and the contractor shall be liable for, and shall secure, the payment of compensation to all such employees, except to employees of a subcontractor who has secured such payment.

 

As also explained in Barrs v. LMF Construction, OJCC Case No. 10-002222KAS, 2010 WL 4270050 (Fl.Off.Judge Comp.Cl. 2010):

 

Under a statutory employer analysis a contractor is protected from workers’ compensation liability for the employees of a subcontractor, an independent contractor, or sole proprietor if an officer of a corporation or the subcontractor validly elects exemption from coverage by filing a written notice pursuant to Section 440.05 Fla. Statutes, 2009; or has otherwise secured the payment of compensation coverage as a subcontractor for the work performed by the subcontractor. This is a vertical analysis starting with the general contractor on top. The general is responsible unless those in the vertical chain below have either secured workers’ compensation coverage or are under a valid exemption.

  

For instance, in Smith v. Larry Rice Construction, 730 So.2d 336 (Fla. 1st DCA 1999), a general contractor was building a Taco Bell.  The general contractor subcontracted the framing to a subcontractor.  The subcontractor did not independently secure workers compensation benefits; rather, it leased employees from a labor leasing company that secured workers compensation for these laborers.  The subcontractor then engaged a sub-subcontractor –really, a sole proprietor and his crew as additional labor–to perform a portion of its framing scope of work. The sole proprietor / sub-subcontractor was injured on the project. While the sole proprietor / sub-subcontractor had a Certificate of Election to be Exempt, the exemption had expired at the time he was hurt. The sole proprietor sought workers compensation benefits but these benefits were denied. He argued that the general contractor constituted his statutory employer (per Fla.Stat. s. 440.10) and is liable for his workers compensation benefits.  The First District Court of Appeal agreed and found that the injured sole proprietor was a statutory employee of the general contractor and entitled to receive workers compensation benefits.

 

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.