The 2023 Florida Statutes (including Special Session C)

Title XXXI
LABOR

Chapter 440
WORKERS' COMPENSATION

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F.S. 440.381

440.381 Application for coverage; reporting payroll; payroll audit procedures; penalties.—

(1) Applications by an employer to a carrier for coverage required by s. 440.38 must be made on a form prescribed by the Financial Services Commission. The Financial Services Commission shall adopt rules for applications for coverage required by s. 440.38. The rules must provide that an application include information on the employer, the type of business, past and prospective payroll, estimated revenue, previous workers’ compensation experience, employee classification, employee names, and any other information necessary to enable a carrier to accurately underwrite the applicant. The rules must include a provision that a carrier or self-insurance fund may require that an employer update an application monthly to reflect any change in the required application information.

(2) Submission of an application that contains false, misleading, or incomplete information provided with the purpose of avoiding or reducing the amount of premiums for workers’ compensation coverage is a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. The application must contain a statement that the filing of an application containing false, misleading, or incomplete information provided with the purpose of avoiding or reducing the amount of premiums for workers’ compensation coverage is a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. The application must contain a sworn statement by the employer attesting to the accuracy of the information submitted and acknowledging the provisions of former s. 440.37(4). The application must contain a sworn statement by the agent attesting that the agent explained to the employer or officer the classification codes that are used for premium calculations. The sworn statements by the employer and the agent are not required to be notarized.

(3) The Financial Services Commission, in consultation with the department, shall establish by rule minimum requirements for audits of payroll and classifications to ensure that the appropriate premium is charged for workers’ compensation coverage. The rules must ensure that audits performed by both carriers and employers are adequate to provide that all sources of payments to employees, subcontractors, and independent contractors are reviewed and that the accuracy of classification of employees is verified. The rules must require that employers in all classes other than the construction class be audited at least biennially and may provide for more frequent audits of employers in specified classifications based on factors such as amount of premium, type of business, loss ratios, or other relevant factors. Employers in the construction class, generating more than the amount of premium required to be experience rated must be audited at least annually. The annual audits required for construction classes must consist of physical onsite audits for policies only if the estimated annual premium is $10,000 or more. Payroll verification audit rules must include, but need not be limited to, the use of state and federal reports of employee income, payroll and other accounting records, certificates of insurance maintained by subcontractors, and duties of employees. At the completion of an audit, the employer or officer of the corporation and the auditor must print and sign their names on the audit document and attach proof of identification to the audit document.

(4) Each employer must submit a copy of the quarterly earnings report required by chapter 443 at the end of each quarter to the carrier and submit self-audits supported by the quarterly earnings reports required by chapter 443 and the rules adopted by the Department of Economic Opportunity or by the state agency providing reemployment assistance tax collection services under contract with the Department of Economic Opportunity through an interagency agreement pursuant to s. 443.1316. The reports must include a sworn statement by an officer or principal of the employer attesting to the accuracy of the information contained in the report.

(5) Employers shall make available all records necessary for the payroll verification audit and permit the auditor to make a physical inspection of the employer’s operation. If the employer fails upon request of the auditor to provide access to the documents specified in this section and the carrier cannot complete the audit as a result, the employer shall pay $500 to the carrier to defray the costs of the audits.

(6)(a) If an employer understates or conceals payroll, or misrepresents or conceals employee duties so as to avoid proper classification for premium calculations, or misrepresents or conceals information pertinent to the computation and application of an experience rating modification factor, the employer, or the employer’s agent or attorney, shall pay to the insurance carrier a penalty of 10 times the amount of the difference in premium paid and the amount the employer should have paid and reasonable attorney’s fees. The penalty may be enforced in the circuit courts of this state.

(b) If the department determines that an employer has materially understated or concealed payroll, has materially misrepresented or concealed employee duties so as to avoid proper classification for premium calculations, or has materially misrepresented or concealed information pertinent to the computation and application of an experience rating modification factor, the department shall immediately notify the employer’s carrier of such determination. The carrier shall commence a physical onsite audit of the employer within 30 days after receiving notification from the department. If the carrier fails to commence the audit as required by this section, the department shall contract with auditing professionals to conduct the audit at the carrier’s expense. A copy of the carrier’s audit of the employer shall be provided to the department upon completion. The carrier is not required to conduct the physical onsite audit of the employer as set forth in this paragraph if the carrier gives written notice of cancellation to the employer within 30 days after receiving notification from the department of the material misrepresentation, understatement, or concealment and an audit is conducted in conjunction with the cancellation.

(7) If an employee suffering a compensable injury was not reported as earning wages on the last quarterly earnings report filed with the Department of Economic Opportunity or the state agency providing reemployment assistance tax collection services under contract with the Department of Economic Opportunity through an interagency agreement pursuant to s. 443.1316 before the accident, the employer shall indemnify the carrier for all workers’ compensation benefits paid to or on behalf of the employee unless the employer establishes that the employee was hired after the filing of the quarterly report, in which case the employer and employee shall attest to the fact that the employee was employed by the employer at the time of the injury. Failure of the employer to indemnify the insurer within 21 days after demand by the insurer is grounds for the insurer to immediately cancel coverage. Any action for indemnification brought by the carrier is cognizable in the circuit court having jurisdiction where the employer or carrier resides or transacts business. The insurer is entitled to a reasonable attorney’s fee if it recovers any portion of the benefits paid in the action.

(8) If an employer fails to provide reasonable access to payroll records for a payroll verification audit, the employer shall pay a premium to the carrier or self-insurer not to exceed three times the most recent estimated annual premium.

History.—s. 32, ch. 90-201; s. 30, ch. 91-1; s. 37, ch. 93-415; s. 122, ch. 97-103; s. 66, ch. 2001-62; s. 41, ch. 2002-194; s. 14, ch. 2002-236; s. 12, ch. 2003-36; s. 484, ch. 2003-261; s. 28, ch. 2003-412; s. 350, ch. 2011-142; s. 68, ch. 2012-30; s. 3, ch. 2019-108; s. 15, ch. 2022-138.

F.S. 440.381 on Google Scholar

F.S. 440.381 on Casetext

Amendments to 440.381

Arrestable Offenses / Crimes under Fla. Stat. 440.381

Level: Degree
Misdemeanor/Felony: First/Second/Third

S440.381 2 - FRAUD - RENUMBERED. SEE REC # 8707 - F: S

S440.381 2 - FRAUD - SUBMIT MISLEADING WORK COMP APPLICATION - F: T

Annotations, Discussions, Cases:

Cases from cite.case.law:

J. BEND, Jr. v. SHAMROCK SERVICES, 59 So. 3d 153 (Fla. Dist. Ct. App. 2011)

. . . See 440.381(1)-(8), Fla. Stat. (2007). . . . See § 440.381(3), Fla. Stat. (2007). . . . See § 440.381(8), Fla. Stat. (2007). . . . See § 440.381(7), Fla. Stat. (2007). . . . See § 440.381(7), Fla. Stat. (2007). . . .

STATE v. ARNAL,, 941 So. 2d 556 (Fla. Dist. Ct. App. 2006)

. . . written statement, or to knowingly omit or conceal material information, required by s. 440.185 or s. 440.381 . . .

AMERICAN HOME ASSURANCE CO. a v. THE PHINEAS CORP. a, 347 F. Supp. 2d 1231 (M.D. Fla. 2004)

. . . .” § 440.381(3), Fla. Stat. (2000); F.A.C. Rule 4-189.003(4) (2000). . . . (Dkt. 240, tab B(l) at p. 5); § 440.381, Fla. . . .

CUSTOM REMODELING DRYWALL CORPORATION, v. FLORIDA WORKERS COMPENSATION JUA, INC., 762 So. 2d 1059 (Fla. Dist. Ct. App. 2000)

. . . See § 440.381, Fla. Stat. (1997); Gonzalez Eng’g, Inc. v. . . .

FLORIDA WORKERS COMPENSATION JOINT UNDERWRITING ASSOCIATION v. MUNDELL, 765 So. 2d 151 (Fla. Dist. Ct. App. 2000)

. . . for the reason that Countywide had failed to submit a quarterly earnings report required by section 440.381 . . .

LIMEROCK INDUSTRIES, INC. a v. PRIDGEON,, 743 So. 2d 176 (Fla. Dist. Ct. App. 1999)

. . . premium payable under the policy, the appellant failed to comply with the procedures mandated by section 440.381 . . .

AMOS, v. STATE, 711 So. 2d 1197 (Fla. Dist. Ct. App. 1998)

. . . makes any false or misleading statement or representation, whether written or' oral, required by s. 440.381 . . . commits a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. 440.381 . . . written statement, or to knowingly omit or conceal material information, required by s. 440.185 or s.'440.381 . . .

H H DESIGN BUILDERS, INC. v. TRAVELERS INDEMNITY COMPANY,, 639 So. 2d 697 (Fla. Dist. Ct. App. 1994)

. . . At this point, Travelers’ counsel asked the court to take judicial notice of section 440.381(8), Florida . . .

PERKINS, v. A. PERKINS DRYWALL A. PERKINS DRYWALL, v. CIGNA PROPERTY AND CASUALTY COMPANIES,, 615 So. 2d 187 (Fla. Dist. Ct. App. 1993)

. . . See section 440.381(6), Florida Statutes (Supp.1990). . . . Section 440.381(6) states: If an employer intentionally understates payroll or misrepresents employee . . .