Bill Text: FL S0820 | 2021 | Regular Session | Introduced
Bill Title: Workers' Compensation Insurance for Employee Leasing Companies
Spectrum: Partisan Bill (Republican 1-0)
Status: (Failed) 2021-04-30 - Died in Banking and Insurance [S0820 Detail]
Download: Florida-2021-S0820-Introduced.html
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 companyor coemployed with another43entity, 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” hasshall havethe same meaning as 50 providedset forthin 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 personperforming services for a client company 60lessee under an employee leasing arrangement. 61(d) “Lessee” means an entity which obtains all or part of62its workforce from another entity through an employee leasing63arrangement or which employs the services of an entity through64an employee leasing arrangement.65(e) “Lessor” means an employee leasing company, as set66forth in part XI of chapter 468, engaged in the business of or67holding itself out as being in the business of employee leasing.68A 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 insureror service71carrier, 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 companyA lessorthat 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 companylessor. The insurer of the employee leasing company 84lessormay, 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 companylessorto provide a complete description of the employee 89 leasing company’s and the client company’s respectivelessor’s90 operations. 91 (b) Requiring periodic reporting by the employee leasing 92 companylessorof 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 companieslesseesto submit to the 96 insurercarrierInternal 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’slessor’soperations. 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 companyA lessorthat 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 companylesseeupon 128 termination of the employee leasing arrangementrelationship. 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 accruedaccruingduring 132 the term of the leasing arrangement which wasisused to 133 calculate an experience rating modification factor for a client 134 companylessee upon termination of the leasing relationship135shall continue to be used in the future experience ratings of136the lessor. Such information mustshallinclude: 137 (a) The client company’slessee’scorporate name. 138 (b) The client company’slessee’staxpayer or employer 139 identification number. 140 (c) Payroll summaries and class codes applicable to each 141 client companylessee, and, if requested by the insurer, a 142 listing of all leased employees associated with a given client 143 companylessee. 144 (d) Claims information grouped by client companylessee, 145 and any other information maintained by or readily available to 146 the employee leasing company whichlessorthatis necessary for 147 the calculation of an experience rating modification factor for 148 each client companylessee. 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’slessor’sinsurance policy, provided 153 that the insurer provides the employee leasing companyhas been154provideda reasonable opportunity to cure the violation. If an 155 employee leasing company receiveshas receivednotice 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 companieslesseesfor 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 companylessee is166terminated, the client companylesseeshall 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 arrangementlessee relationshipprior 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 affectshall not have any178effect onthe statutory obligation, if any, of a client company 179lesseeto secure workers’ compensation coverage for employees 180 that the client companylesseedoes notcoemploy orlease 181 pursuant to an employee leasing arrangement. 182 (9)(8)A client company maylessee shallnot enter into an 183 employee leasing relationship or be eligible for workers’ 184 compensation coverage in the voluntary market if the client 185 companylesseeowes its current or a prior insurer any premium 186 for workers’ compensation insurance, or if the client company 187lesseeowes 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 companya lessormay rely on a sworn statement 192 by the client companylesseethat the client companylesseehas 193 met any and all prior premium or fee obligations, unless the 194 employee leasing companylessorhas 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 auditsThe audits shall be201conductedto ensure that all sources of payment by employee 202 leasing companies and client companieslessorsto 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 companieslessorsbased 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 companya lessoror a 215 client companylesseefails 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 companyinsuredshall pay a premium to the insurer not to exceed 219 three times the most recent estimated annual premium. However, 220 the employee leasing companylessoris 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 223lessee. 224 Section 2. This act shall take effect July 1, 2021.