Bill Text: FL S1658 | 2024 | Regular Session | Introduced


Bill Title: Workers' Compensation Insurance for Employee Leasing Companies

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2024-03-08 - Died in Banking and Insurance [S1658 Detail]

Download: Florida-2024-S1658-Introduced.html
       Florida Senate - 2024                                    SB 1658
       
       
        
       By Senator Perry
       
       
       
       
       
       9-01123-24                                            20241658__
    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 specified provisions governing
    5         workers’ compensation insurance; defining the terms
    6         “client company” and “employee leasing company”;
    7         revising definitions; deleting the definitions of the
    8         terms “lessee” and “lessor”; authorizing the insurer
    9         of an employee leasing company to require that the
   10         employee leasing company and client company provide
   11         certain information and to audit the operations of the
   12         employee leasing company and client company; requiring
   13         the insurer of an employee leasing company to provide
   14         workers’ compensation coverage to all employees of the
   15         client company under certain conditions; specifying
   16         when a person is an employee of an employee leasing
   17         company; providing that the failure by a client
   18         company to report a leased employee’s hiring to an
   19         employee leasing company may not serve as a basis for
   20         the denial of workers’ compensation benefits for an
   21         unreported client company employee; providing that
   22         such failure does not preclude the charging of
   23         additional premiums by an employee leasing company’s
   24         insurer against a client company for workers’
   25         compensation coverage; requiring insurers to conduct
   26         annual audits of employee leasing companies and client
   27         companies for certain purposes; applying penalties for
   28         an employee leasing company’s or client company’s
   29         failure to provide reasonable access to certain
   30         records; conforming provisions to changes made by the
   31         act; making technical changes; providing an effective
   32         date.
   33          
   34  Be It Enacted by the Legislature of the State of Florida:
   35  
   36         Section 1. Section 627.192, Florida Statutes, is amended to
   37  read:
   38         627.192 Workers’ compensation insurance; employee leasing
   39  arrangements.—
   40         (1) The purpose of this section is to ensure that an
   41  employer who leases some or all of its workers properly obtains
   42  workers’ compensation insurance coverage in compliance with
   43  chapter 440 for all of its employees, including those leased
   44  from an employee leasing company or coemployed with another
   45  entity, and that premium paid by an employee leasing company is
   46  commensurate with exposure and anticipated claim experience for
   47  all employees.
   48         (2) For purposes of the Florida Insurance Code:
   49         (a) “Client company” has the same meaning as provided in s.
   50  468.520(6).
   51         (b) “Employee leasing” has shall have the same meaning as
   52  provided set forth in s. 468.520(4).
   53         (c) “Employee leasing company” has the same meaning as
   54  provided in s. 468.520(5).
   55         (d)(b) “Experience rating modification factor” means a
   56  factor applied to a premium to reflect a risk’s variation from
   57  the average risk. The experience modification is determined by
   58  comparing actual losses to expected losses, using the risk’s own
   59  past experience.
   60         (e)(c) “Leased employee” means an employee as defined in s.
   61  440.02(18) a person performing services for a client company
   62  lessee under an employee leasing arrangement.
   63         (d) “Lessee” means an entity which obtains all or part of
   64  its workforce from another entity through an employee leasing
   65  arrangement or which employs the services of an entity through
   66  an employee leasing arrangement.
   67         (e) “Lessor” means an employee leasing company, as set
   68  forth in part XI of chapter 468, engaged in the business of or
   69  holding itself out as being in the business of employee leasing.
   70  A lessor may also be referred to as an employee leasing company.
   71         (f) “Premium subject to dispute” means that the insured has
   72  provided a written notice of dispute to the insurer or service
   73  carrier, has initiated any applicable proceeding for resolving
   74  such disputes as prescribed by law or rating organization
   75  procedures approved by the office, or has initiated litigation
   76  regarding the premium dispute. The insured must have detailed
   77  the specific areas of dispute and provided an estimate of the
   78  premium the insured believes to be correct. The insured must
   79  have paid any undisputed portion of the bill.
   80         (3) An employee leasing company A lessor that obtains
   81  coverage in the voluntary workers’ compensation market may
   82  elect, with the voluntary market insurer’s knowledge and
   83  consent, to secure the coverage on leased employees through a
   84  workers’ compensation policy issued to the employee leasing
   85  company lessor. The insurer of the employee leasing company
   86  lessor may, in its discretion, take all reasonable steps to
   87  ascertain exposure under the policy and collect the appropriate
   88  premium by:
   89         (a) Requiring the employee leasing company and the client
   90  company lessor to provide a complete description of the employee
   91  leasing company’s and the client company’s respective lessor’s
   92  operations.
   93         (b) Requiring periodic reporting by the employee leasing
   94  company lessor of covered client companies’ lessees’ payroll,
   95  classifications, claims information, loss data, and
   96  jurisdictions with exposure. This reporting may be supplemented
   97  by a requirement for client companies lessees to submit to the
   98  insurer carrier Internal Revenue Service Form 941 or its
   99  equivalent on a quarterly basis.
  100         (c) Auditing the employee leasing company’s or the client
  101  company’s lessor’s operations.
  102         (d) Using other reasonable measures to determine the
  103  appropriate premium.
  104         (4)(a)During the contract period of an employee leasing
  105  arrangement with a client company, the insurer of an employee
  106  leasing company must provide workers’ compensation coverage for
  107  all leased and nonleased employees of the client company if the
  108  client company fails to secure and maintain separate workers’
  109  compensation coverage as required by this section and ss. 440.10
  110  and 440.38. A person is such an employee of the employee leasing
  111  company upon the earliest of the following:
  112         1. The hiring of such person by the client company;
  113         2. The commencement of work for the client company by such
  114  person; or
  115         3.The hiring of the person directly by the employee
  116  leasing company.
  117         (b) The failure by a client company to report a leased
  118  employee’s hiring to an employee leasing company may not serve
  119  as a basis for the denial of workers’ compensation benefits for
  120  such unreported employee of a client company and does not
  121  preclude the charging of additional premiums and penalties by an
  122  employee leasing company’s insurer against a client company for
  123  workers’ compensation coverage as provided by s. 440.381.
  124         (5)An employee leasing company A lessor that applies for
  125  coverage or is covered through the voluntary market shall also
  126  maintain and furnish to the insurer on an annual basis, and as
  127  the insurer may otherwise reasonably require, sufficient
  128  information to permit the calculation of an experience rating
  129  modification factor for each client company lessee upon
  130  termination of the employee leasing arrangement relationship.
  131  For calculating future experience ratings of an employee leasing
  132  company upon termination of a leasing arrangement, an insurer
  133  shall continue using information that accrued accruing during
  134  the term of the leasing arrangement which was is used to
  135  calculate an experience rating modification factor for a client
  136  company lessee upon termination of the leasing relationship
  137  shall continue to be used in the future experience ratings of
  138  the lessor. Such information must shall include:
  139         (a) The client company’s lessee’s corporate name.
  140         (b) The client company’s lessee’s taxpayer or employer
  141  identification number.
  142         (c) Payroll summaries and class codes applicable to each
  143  client company lessee, and, if requested by the insurer, a
  144  listing of all leased employees associated with a given client
  145  company lessee.
  146         (d) Claims information grouped by client company lessee,
  147  and any other information maintained by or readily available to
  148  the employee leasing company which lessor that is necessary for
  149  the calculation of an experience rating modification factor for
  150  each client company lessee.
  151         (6)(5) In addition to any other provision of law, any
  152  material violation of this section by an employee leasing
  153  company is grounds for cancellation or nonrenewal of the
  154  employee leasing company’s lessor’s insurance policy, provided
  155  that the insurer provides the employee leasing company has been
  156  provided a reasonable opportunity to cure the violation. If an
  157  employee leasing company receives has received notice that its
  158  workers’ compensation insurance policy will be canceled or
  159  nonrenewed, the leasing company must shall notify by certified
  160  mail, within 15 days after receipt of the notice, all of the
  161  client companies lessees for which there is an employee leasing
  162  arrangement covered under the policy to be canceled, except
  163  notice is not required if the employee leasing company has
  164  obtained another insurance policy with an effective date that is
  165  the same as the date of cancellation or nonrenewal.
  166         (7)(6) If an employee leasing company terminates the
  167  employee leasing arrangement with a client company lessee is
  168  terminated, the client company must lessee shall be assigned an
  169  experience rating modification factor which reflects its
  170  experience during the experience period specified by the
  171  approved experience rating plan, including, if applicable,
  172  experience incurred for leased employees under the employee
  173  leasing arrangements. The employee leasing company shall notify
  174  the insurer of its intent to terminate any employee leasing
  175  arrangement lessee relationship prior to termination when
  176  feasible. When prior notice is not feasible, the employee
  177  leasing company shall notify its insurer within 5 working days
  178  following actual termination.
  179         (8)(7) This section does not affect shall not have any
  180  effect on the statutory obligation, if any, of a client company
  181  lessee to secure workers’ compensation coverage for employees
  182  that the client company lessee does not coemploy or lease
  183  pursuant to an employee leasing arrangement.
  184         (9)(8) A client company may lessee shall not enter into an
  185  employee leasing arrangement relationship or be eligible for
  186  workers’ compensation coverage in the voluntary market if the
  187  client company lessee owes its current or a prior insurer any
  188  premium for workers’ compensation insurance, or if the client
  189  company lessee owes its current or prior employee leasing
  190  company amounts due under the service agreement, except for
  191  premium or amounts due that are subject to dispute. For the
  192  purposes of this section and compliance with other laws and
  193  regulations, an employee leasing company a lessor may rely on a
  194  sworn statement by the client company lessee that the client
  195  company lessee has met any and all prior premium or fee
  196  obligations, unless the employee leasing company lessor has
  197  actual knowledge to the contrary.
  198         (10)(9) Insurers shall conduct annual audits of payroll and
  199  classifications of employee leasing companies and client
  200  companies in compliance with s. 440.381 in order to ensure that
  201  the appropriate premium is charged for workers’ compensation
  202  coverage. Insurers shall conduct audits The audits shall be
  203  conducted to ensure that all sources of payment by employee
  204  leasing companies and client companies lessors to employees,
  205  subcontractors, and independent contractors have been reviewed
  206  and the accuracy of classifications of employees has been
  207  verified. Insurers may provide for more frequent audits of
  208  employee leasing companies and client companies lessors based on
  209  such factors as amount of premium, type of business, loss
  210  ratios, or other relevant factors. Payroll and classification
  211  verification audit rules of insurers must include, but need not
  212  be limited to, use by the insurer of state and federal reports
  213  of employee income, payroll and other accounting records,
  214  certificates of insurance maintained by subcontractors, and
  215  duties of employees.
  216         (11)(10) If an employee leasing company a lessor or a
  217  client company lessee fails to provide reasonable access to
  218  payroll and classification records for a payroll and
  219  classification audit, the employee leasing company or the client
  220  company must insured shall pay a premium to the insurer not to
  221  exceed three times the most recent estimated annual premium.
  222  However, the employee leasing company lessor is not subject to
  223  such penalty if the failure to obtain the needed records is the
  224  direct result of the acts or omissions of the client company
  225  lessee.
  226         Section 2. This act shall take effect July 1, 2024.

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