Florida Senate - 2021                                     SB 820
       By Senator Perry
       8-00206C-21                                            2021820__
    1                        A bill to be entitled                      
    2         An act relating to workers’ compensation insurance for
    3         employee leasing companies; amending s. 627.192, F.S.;
    4         revising the purpose of the section; adding, deleting,
    5         and revising definitions for purposes of the Florida
    6         Insurance Code; authorizing the insurer of an employee
    7         leasing company to require that the employee leasing
    8         company and client company provide certain information
    9         and to audit the operations of the employee leasing
   10         company and client company; requiring that the insurer
   11         of an employee leasing company provide workers’
   12         compensation coverage to all employees of the client
   13         company under certain conditions; specifying when a
   14         person is an employee of an employee leasing company;
   15         providing that the failure by a client company to
   16         report a leased employee’s hiring to an employee
   17         leasing company may not serve as a basis for the
   18         denial of workers’ compensation benefits for an
   19         unreported client company employee; providing that
   20         such failure does not preclude the charging of
   21         additional premiums by an employee leasing company’s
   22         insurer against a client company for workers’
   23         compensation coverage; requiring insurers to conduct
   24         annual audits of employee leasing companies and client
   25         companies for certain purposes; applying penalties for
   26         an employee leasing company’s or client company’s
   27         failure to provide reasonable access to certain
   28         records; conforming provisions to changes made to the
   29         act; making technical changes; providing an effective
   30         date.
   32  Be It Enacted by the Legislature of the State of Florida:
   34         Section 1. Section 627.192, Florida Statutes, is amended to
   35  read:
   36         627.192 Workers’ compensation insurance; employee leasing
   37  arrangements.—
   38         (1) The purpose of this section is to ensure that an
   39  employer who leases some or all of its workers properly obtains
   40  workers’ compensation insurance coverage in compliance with
   41  chapter 440 for all of its employees, including those leased
   42  from an employee leasing company or coemployed with another
   43  entity, and that premium paid by an employee leasing company is
   44  commensurate with exposure and anticipated claim experience for
   45  all employees.
   46         (2) For purposes of the Florida Insurance Code:
   47         (a) “Client company” has the same meaning as provided in s.
   48  468.520(6).
   49         (b) “Employee leasing” has shall have the same meaning as
   50  provided set forth in s. 468.520(4).
   51         (c) “Employee leasing company” has the same meaning as
   52  provided in s. 468.520(5).
   53         (d)(b) “Experience rating modification factor” means a
   54  factor applied to a premium to reflect a risk’s variation from
   55  the average risk. The experience modification is determined by
   56  comparing actual losses to expected losses, using the risk’s own
   57  past experience.
   58         (e)(c) “Leased employee” means an employee as defined in s.
   59  440.02(15) a person performing services for a client company
   60  lessee under an employee leasing arrangement.
   61         (d) “Lessee” means an entity which obtains all or part of
   62  its workforce from another entity through an employee leasing
   63  arrangement or which employs the services of an entity through
   64  an employee leasing arrangement.
   65         (e) “Lessor” means an employee leasing company, as set
   66  forth in part XI of chapter 468, engaged in the business of or
   67  holding itself out as being in the business of employee leasing.
   68  A lessor may also be referred to as an employee leasing company.
   69         (f) “Premium subject to dispute” means that the insured has
   70  provided a written notice of dispute to the insurer or service
   71  carrier, has initiated any applicable proceeding for resolving
   72  such disputes as prescribed by law or rating organization
   73  procedures approved by the office, or has initiated litigation
   74  regarding the premium dispute. The insured must have detailed
   75  the specific areas of dispute and provided an estimate of the
   76  premium the insured believes to be correct. The insured must
   77  have paid any undisputed portion of the bill.
   78         (3) An employee leasing company A lessor that obtains
   79  coverage in the voluntary workers’ compensation market may
   80  elect, with the voluntary market insurer’s knowledge and
   81  consent, to secure the coverage on leased employees through a
   82  workers’ compensation policy issued to the employee leasing
   83  company lessor. The insurer of the employee leasing company
   84  lessor may, in its discretion, take all reasonable steps to
   85  ascertain exposure under the policy and collect the appropriate
   86  premium by:
   87         (a) Requiring the employee leasing company and the client
   88  company lessor to provide a complete description of the employee
   89  leasing company’s and the client company’s respective lessor’s
   90  operations.
   91         (b) Requiring periodic reporting by the employee leasing
   92  company lessor of covered client companies’ lessees’ payroll,
   93  classifications, claims information, loss data, and
   94  jurisdictions with exposure. This reporting may be supplemented
   95  by a requirement for client companies lessees to submit to the
   96  insurer carrier Internal Revenue Service Form 941 or its
   97  equivalent on a quarterly basis.
   98         (c) Auditing the employee leasing company’s or the client
   99  company’s lessor’s operations.
  100         (d) Using other reasonable measures to determine the
  101  appropriate premium.
  102         (4)(a)During the contract period of an employee leasing
  103  arrangement with a client company, the insurer of an employee
  104  leasing company must provide workers’ compensation coverage for
  105  all leased and nonleased employees of the client company if the
  106  client company fails to secure and maintain separate workers’
  107  compensation coverage as required by this section and ss. 440.10
  108  and 440.38. A person is such an employee of the employee leasing
  109  company upon the earliest of the following:
  110         1. The hiring of such person by the client company;
  111         2. The commencement of work for the client company by such
  112  person; or
  113         3.The hiring of the person directly by the employee
  114  leasing company.
  115         (b) The failure by a client company to report a leased
  116  employee’s hiring to an employee leasing company may not serve
  117  as a basis for the denial of workers’ compensation benefits for
  118  such unreported employee of a client company and does not
  119  preclude the charging of additional premiums and penalties by an
  120  employee leasing company’s insurer against a client company for
  121  workers’ compensation coverage as provided by s. 440.381.
  122         (5)An employee leasing company A lessor that applies for
  123  coverage or is covered through the voluntary market shall also
  124  maintain and furnish to the insurer on an annual basis, and as
  125  the insurer may otherwise reasonably require, sufficient
  126  information to permit the calculation of an experience rating
  127  modification factor for each client company lessee upon
  128  termination of the employee leasing arrangement relationship.
  129  For calculating future experience ratings of an employee leasing
  130  company upon termination of a leasing arrangement, an insurer
  131  shall continue using information that accrued accruing during
  132  the term of the leasing arrangement which was is used to
  133  calculate an experience rating modification factor for a client
  134  company lessee upon termination of the leasing relationship
  135  shall continue to be used in the future experience ratings of
  136  the lessor. Such information must shall include:
  137         (a) The client company’s lessee’s corporate name.
  138         (b) The client company’s lessee’s taxpayer or employer
  139  identification number.
  140         (c) Payroll summaries and class codes applicable to each
  141  client company lessee, and, if requested by the insurer, a
  142  listing of all leased employees associated with a given client
  143  company lessee.
  144         (d) Claims information grouped by client company lessee,
  145  and any other information maintained by or readily available to
  146  the employee leasing company which lessor that is necessary for
  147  the calculation of an experience rating modification factor for
  148  each client company lessee.
  149         (6)(5) In addition to any other provision of law, any
  150  material violation of this section by an employee leasing
  151  company is grounds for cancellation or nonrenewal of the
  152  employee leasing company’s lessor’s insurance policy, provided
  153  that the insurer provides the employee leasing company has been
  154  provided a reasonable opportunity to cure the violation. If an
  155  employee leasing company receives has received notice that its
  156  workers’ compensation insurance policy will be canceled or
  157  nonrenewed, the leasing company shall notify by certified mail,
  158  within 15 days after receipt of the notice, all of the client
  159  companies lessees for which there is an employee leasing
  160  arrangement covered under the policy to be canceled, except
  161  notice is not required if the employee leasing company has
  162  obtained another insurance policy with an effective date that is
  163  the same as the date of cancellation or nonrenewal.
  164         (7)(6) If an employee leasing company terminates the
  165  employee leasing arrangement with a client company lessee is
  166  terminated, the client company lessee shall be assigned an
  167  experience rating modification factor which reflects its
  168  experience during the experience period specified by the
  169  approved experience rating plan, including, if applicable,
  170  experience incurred for leased employees under the employee
  171  leasing arrangements. The employee leasing company shall notify
  172  the insurer of its intent to terminate any employee leasing
  173  arrangement lessee relationship prior to termination when
  174  feasible. When prior notice is not feasible, the employee
  175  leasing company shall notify its insurer within 5 working days
  176  following actual termination.
  177         (8)(7) This section does not affect shall not have any
  178  effect on the statutory obligation, if any, of a client company
  179  lessee to secure workers’ compensation coverage for employees
  180  that the client company lessee does not coemploy or lease
  181  pursuant to an employee leasing arrangement.
  182         (9)(8) A client company may lessee shall not enter into an
  183  employee leasing relationship or be eligible for workers’
  184  compensation coverage in the voluntary market if the client
  185  company lessee owes its current or a prior insurer any premium
  186  for workers’ compensation insurance, or if the client company
  187  lessee owes its current or prior employee leasing company
  188  amounts due under the service agreement, except for premium or
  189  amounts due that are subject to dispute. For the purposes of
  190  this section and compliance with other laws and regulations, an
  191  employee leasing company a lessor may rely on a sworn statement
  192  by the client company lessee that the client company lessee has
  193  met any and all prior premium or fee obligations, unless the
  194  employee leasing company lessor has actual knowledge to the
  195  contrary.
  196         (10)(9) Insurers shall conduct annual audits of payroll and
  197  classifications of employee leasing companies and client
  198  companies in compliance with s. 440.381 in order to ensure that
  199  the appropriate premium is charged for workers’ compensation
  200  coverage. Insurers shall conduct audits The audits shall be
  201  conducted to ensure that all sources of payment by employee
  202  leasing companies and client companies lessors to employees,
  203  subcontractors, and independent contractors have been reviewed
  204  and the accuracy of classifications of employees has been
  205  verified. Insurers may provide for more frequent audits of
  206  employee leasing companies and client companies lessors based on
  207  such factors as amount of premium, type of business, loss
  208  ratios, or other relevant factors. Payroll and classification
  209  verification audit rules of insurers must include, but need not
  210  be limited to, use by the insurer of state and federal reports
  211  of employee income, payroll and other accounting records,
  212  certificates of insurance maintained by subcontractors, and
  213  duties of employees.
  214         (11)(10) If an employee leasing company a lessor or a
  215  client company lessee fails to provide reasonable access to
  216  payroll and classification records for a payroll and
  217  classification audit, the employee leasing company or the client
  218  company insured shall pay a premium to the insurer not to exceed
  219  three times the most recent estimated annual premium. However,
  220  the employee leasing company lessor is not subject to such
  221  penalty if the failure to obtain the needed records is the
  222  direct result of the acts or omissions of the client company
  223  lessee.
  224         Section 2. This act shall take effect July 1, 2021.