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.
31
32 Be It Enacted by the Legislature of the State of Florida:
33
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.