Running a business in Florida comes with a lot of responsibility, including keeping employees safe and following state insurance requirements. At some point, many business owners hear about the Florida workers’ comp exemption. It might sound like a way to avoid buying workers’ comp insurance, but that is not what it actually does.
The Florida workers’ comp exemption is a legal option that allows certain owners or officers of a business to remove themselves from workers compensation coverage. Understanding how the exemption works can help business owners meet state requirements, reduce risk, and avoid costly penalties.
Who Can Apply for a Workers’ Compensation Exemption in Florida?
Florida allows certain business owners to apply for a workers’ compensation exemption, but the rules depend on the type of business you run.
For most non-construction companies, the exemption is available to corporate officers and LLC members who own at least ten percent of the business.
Construction businesses have different guidelines. Only a limited number of officers or LLC members can apply, and the business must be active and in good standing. The state also places limits on how many owners can be exempt at the same time.
When an owner chooses to file for an exemption, they are opting out of coverage under the company’s workers’ compensation policy. This also means they are giving up the right to benefits if they are injured on the job.
To receive the exemption, you must apply with the State of Florida and renew it according to state requirements. It is not automatic, and it is not based on job title alone.
What the Exemption Does Not Do
Many business owners misunderstand the purpose of the exemption. It’s important to know what it does not do.
The workers’ compensation exemption does not:
Remove the legal requirement to provide coverage for employees
Extend to workers who are not listed on the exemption certificate
Protect the business from liability for non-exempt workers
Allow a business to stop carrying insurance simply because an owner opted out
The exemption applies only to the individual who files and is approved. It does not apply to the company as a whole.
When Workers’ Compensation Insurance Is Still Required
Florida requires workers’ compensation insurance based on your industry and the number of employees you have. The rules are different depending on the type of business.
For non-construction companies, coverage is required when there are 4 or more employees. This includes full time, part time, and certain temporary workers.
Construction companies have stricter guidelines. Coverage is required as soon as there is at least 1 employee, even if they are part time or temporary. There are no minimum thresholds based on employee count.
Agricultural businesses have their own requirements. Coverage is generally required when there are at least 6 regular employees, or 12 or more seasonal workers.
If your business meets any of these thresholds, you must carry workers’ compensation insurance even if the owners are exempt. Part-time and seasonal workers count toward that total, so businesses that hire temporary help may still be required to carry coverage.
Independent Contractors and Misclassification
Independent contractors can be covered differently depending on state law. In some cases, they may not need to be included in your workers’ compensation policy. However, misclassification is a common issue.
A worker may be considered an employee if they:
Work primarily for your business
Take instruction or direction from you
Use tools or equipment you provide
Follow a schedule you set
If a worker is injured and should have been classified as an employee, the business may be responsible for medical costs, lost wages, and penalties.
Why Some Businesses Choose to Carry Coverage Even With an Exemption
Some owners file for an exemption because they do not want to pay premiums for their own coverage. Yet even when an owner is exempt, many businesses choose to carry coverage for several reasons.
Protection From Unexpected Costs
Workplace injuries can result in:
Medical bills
Wage replacement
Rehabilitation costs
Legal fees
These costs can be difficult for a business to absorb without coverage.
Ability to Secure Contracts
Many contractors, vendors, and clients require proof of workers’ compensation insurance. Companies without coverage may have difficulty obtaining work.
Financial Stability
Workers’ compensation insurance provides predictable costs and reduces risk. Without insurance, a single injury can lead to significant financial strain.
Employee Retention and Trust
Employees who feel protected are often more confident in their workplace. Coverage can support morale and retention.
What You Should Consider Before Applying for an Exemption
If you are thinking about applying for a workers’ compensation exemption, consider the following questions.
Do you have any non-exempt employees?
Do you hire seasonal, part time, or temporary workers?
Are you in the construction industry?
Do clients require proof of coverage?
Could your business afford an injury claim without insurance?
For many business owners, carrying insurance is a safer and more reliable option than relying on an exemption alone.
Protect Your Business With the Right Coverage
The Florida workers’ comp exemption allows certain business owners to exclude themselves from coverage. It does not eliminate the requirement to provide insurance for non exempt workers. If you have employees or plan to hire in the future, you may still need workers’ compensation insurance.
If you have questions about eligibility, requirements, or coverage options, the team at Darr Schackow Insurance can help you navigate the process. We work with Florida businesses to identify risks, understand state regulations, and select coverage that fits their needs.
Contact us to learn more or request a quote.