Question: Why have the rates for workers’ compensation in Florida gone down so much over the past few years?

In Florida, the workers compensation rates have fallen more than 50 percent since a 2003 reform measure tightened the definition of permanent disability, made it harder to collect benefits for mental impairment and also limited the fees of attorneys who represent injured workers to a maximum of 20 percent of the award they obtain for their client. Since 2007, there was an average rate reduction of 18 percent. Overall, Florida now has one of the lowest rates for workers compensation of any state in the country.

The attorney fee provision that accounted for a large part of the drop in rates is currently being challenged. Prior to 2003 attorneys charged hourly rates, which in some cases far exceeded the amount of money they collected for their client. Trial attorneys are arguing in court that the fee limitation is unconstitutional in that there are no similar restrictions on the fees of defense lawyers who represent the workers compensation insurer and they are asking the Florida Supreme Court to reinstate hourly rates. At the same time, injured workers with small claims complain that they cannot find attorneys to accept their cases. In the case before the court, Murray v. Mariner Health, the claimant’s attorney submitted a bill for 80 hours and asked the court to overrule the fee provision. The claimant received $3,224 in benefits. Oral arguments are scheduled for the fall of 2008. Could this be the end of Florida’s falling workers’ compensation rates?

Question: What class code do I now use for the workers’ compensation insurance on my janitorial business?

There were two classifications used for janitorial businesses in 2007 that are no longer in use:

9000 - This classification is assigned to insureds who contract with others to provide both commercial and/or residential janitorial services excluding washing of windows. This class does not include painting, maintenance, or repair on the customers’ premises. Code 9000 is assigned to cleaning and sanitizing rest rooms and the cleaning of interior walls as well as routine dusting, vacuuming of rugs and emptying ashtrays. It can also be assigned to residential chimney cleaners and residential boiler cleaners. The rate for this classification was 6.29 per $100 of payroll in 2007. Florida no longer uses this classification code.

9001 - This classification is assigned to insureds who contract with others to provide both commercial and/or residential janitorial services including washing of windows. This class does not include painting, maintenance, or repair on the customers’ premises. Code 9001 is assigned to cleaning or sanitizing rest rooms and the cleaning or washing of interior walls as well as routine dusting, vacuuming of rugs, emptying ashtrays and window washing at the same location. The rate for this classification was 9.90 per $100 of payroll in 2007. Florida no longer uses this classification code.

In 2008, all of these businesses are being reclassified to the following class codes:

9014 - This classification code is assigned to businesses primarily engaged in providing janitorial services for others that does not include window cleaning above ground level. Janitorial services are defined as keeping a building clean by routine dusting, mopping, vacuuming, waxing, or polishing of floors, emptying of trash, cleaning or washing of interior walls, and cleaning, sanitizing, and deodorizing of restrooms, and/or keeping a building clean and engaging in various types of maintenance or minor repair work for upkeep of a building. These maintenance or minor repair operations may include, but are not limited to, painting, cleaning windows, changing light bulbs, assisting occupants in the placement of furniture, replacing glass panes, clearing drains, and cleaning carpets. This classification code also includes the drivers of the business. The 2008 rate for the 9014 class code is $5.17 per $100 units of remuneration.

9170 - This classification code is assigned to businesses primarily engaged in providing janitorial services for others including window cleaning above ground level. Janitorial services are defined as keeping a building clean by routine dusting, vacuuming rugs, and emptying ashtrays, and/or keeping a building clean and engaging in various types of maintenance or minor repair work for upkeep of a building. Stated differently, a risk qualifies as a janitorial service if the risk engages exclusively in cleaning a building or performs maintenance or minor repair operations in addition to cleaning a building. This code also includes the drivers in the business. It also includes chimney cleaners and pressure washing businesses that conduct work above ground level. The 2008 rate for the 9170 class code is also $5.17 per $100 units of remuneration.

If you would like more information about either of these classifications or information on how your own employees should be classified, please do not hesitate to contact our office or request a workers’ compensation quote online.

Question: How did I get the premium discount on my workers compensation policy?

The premium discount is a factor allowed by the Florida government to lower the cost of larger workers compensation premiums. The discount was created to reflect the lower expenses incurred by the insurance carrier for handling large insureds. The premium discount factor varies for the size of the account and it is allowed on policies with a premium that exceeds $5,000.

Question: What is the charge for ‘expense constant’ listed on my workers’ compensation policy?

The expense constant is a fee applied to all Florida workers’ compensation policies regardless of premium size and it covers administrative expenses such as policy issuance, auditing, and recording. It is applied at the end of the premium calculations and therefore is not subject to experience modification. Currently, it is 200 dollars in the state Florida.

Question: What is remuneration?

Remuneration is the premium base used to calculate workers’ compensation premiums. It is generally referred to as payroll, but it includes more than the employees’ weekly paychecks. Remuneration is defined to mean money and substitutes for money and it includes the following:

• Wages or salaries, including retroactive wages and salaries
• Total cash received by employees for commissions, draws against commisssions, piecework, profit sharing, and incentive plans
• Bonuses, including stock bonus plans
• Pay for holidays, vacations, and sick leave
• Employees’ share of Social Security and similar statuatory plans even if paid by the employer

 Remuneration excludes some pay received by employees and the following can be deducted from the total remuneration:

• Overtime - the extra amount of pay above the regular wages may be excluded for overtime hours that are worked by employees.
• Tips
• Payments by employees for group insurance or pension plans
• Special awards for invention or discovery
• Severance Pay
• Executive officers have a minimum and maximum limits for their payroll if they are included on the policy
• Partners and Sole Proprietors have a fixed amount of payroll if they are included on the policy

When using remuneration to compute the manual premium on a workers’ compensation policy, you must use it in $100 units. Basically, just divide the total remuneration for each classification code by 100 before multiplying it by the class code’s corresponding rate.

Question: What happened to my sheet metal classification, 5538?

Effective January 1, 2008, NCCI discontinued the use of class code 5538 for Sheet Metal Work.  These types of accounts are reassigned to two new codes:

5535 - Sheet Metal Work – Installation & Drivers (applicable to the installation of sheet metal products

3069 - Sheet Metal Product MFG. (applicable to the manufacturing of sheet metal products by installers of sheet metal products)

Both codes are rated $11.99 according to NCCI’s 1/1/08 rates.  This is a $0.69 decrease from the $12.68 rate for code 5538.

Question: What are the class codes and workers compensation rates for employees doing carpentry?

There are five classification codes used for the workers comepnsation of carpentry businesses in Florida:

2802 - This classification is applicable to businesses whose operations consist of the manufacture and/or assembly of wood products in a shop. The products manufactured typically will not require a high degree of finishing work. If an insured engages in both carpentry shop and installation/erection operations, separate classifications may apply to each type of exposure. For example, preliminary shop carpentry performed by contractors in connection with the building of private residences may be assigned to Code 2802 while the actual building of the dwelling may be assigned to a carpentry construction classification such as Code 5645. Refer to the Basic Manual for rules governing this type of situation as well as the necessary record keeping requirements.The Florida rate for this classification in 2007 was 11.75 and in 2008 it is now 8.15 dollars for every 100 dollars of remuneration.

5437 - This classification code is intended primarily for specialist contractors performing interior carpentry finish or trim such as the installation of paneling, molding, cornices, parquet or finished wooden flooring, mantels, staircases, cabinets and counters. This classification code is not applicable to contractors who perform other carpentry operations in addition to ones listed above at the same job or location, and if other work is done, then the entire carpentry payroll must be assigned to the applicable carpentry construction classification. The Florida rate for this classification in 2007 was 13.01 and in 2008 it is now 10.47 dollars for every 100 dollars of remuneration.

5654 - This classification is assigned when all of the carpentry work in connection with the construction of a private residence is performed by employees of the same contractor, all work including the construction and erection of the sill, rough framework, rough floor, studs, joists, rafters, roof deck, all types of roofing materials, sidewall sheathing, siding, doors, wallboard installation, lathing, windows, stairs, finished flooring, cabinet installation, fencing, decking and all interior wood trim. Carpentry repair or remodeling of private residences is also contemplated under this classification when the work includes some framing or structural carpentry renovation of the premises that would ordinarily be assigned to Code 5645. The Florida rate for this classification in 2007 was 27.71 and in 2008 it is now 20.04 dollars for every 100 dollars of remuneration.

5651 - This classification code is used for carpentry work on dwellings for more than 2 families where all of the carpentry work in connection with the construction of the dwelling, that also must be three stories or less, is performed by employees of the same contractor. This work in this classification includes the construction and erection of the sill, rough framework, rough floor, studs, joists, rafters, roof decks, all types of roofing materials, sidewall sheathing, siding, doors, wallboard installation, lathing, windows, stairs, finished flooring, cabinet installation, decking, fencing and all interior wood trim. Carpentry repair or remodeling of dwellings three stories or less is also contemplated under this classification.  The Florida rate for this classification in 2007 was 17.61 and in 2008 it is now 13.05 dollars for every 100 dollars of remuneration.

5403 - This classification code covers general carpentry work not otherwise classified in NCCI’s Scopes Basic Manual. It contemplates carpentry work of a commercial and industrial nature such as buildings or structures and the construction and repair of dwellings and other buildings that exceed three stories in height. Code 5403 includes interior or exterior framing activities that involve the use of wood and/or light-gauge steel. This code also further applies to the wrecking of wooden buildings or structures including wooden bridges. The Florida rate for this classification in 2007 was 18.25 and in 2008 it is now 14.39 dollars for every 100 dollars of remuneration.

At FloridaWC.com, we can help classify your payroll into the appropriate classification code and would like to provide your construction business with quotes on Florida workers’ compensation insurance. Please give us a call or complete our online workers’ compensation quote request form to get started.

Question: I have a painting business, what should be the class code and workers compensation rates for my employees?

There are few classification codes for your employees depending on the type of work you perform. They are listed below along with the rates for each:

5474 - This classification code is the general painting classification. It contemplates exterior and interior painting of residential or commercial structures that are constructed of wood, concrete, stone or a combination thereof regardless of height. Commercial structures include but are not limited to office buildings, stores, theaters and auditoriums. Additionally, paperhanging conducted in connection with painting operations is assigned also assigned to this classification in addition to surface preparation and other work incidental to the painting process as well as the installation and dismantling of scaffolding or other equipment used to facilitate the painting process when performed in conjunction with an insured’s painting operations at a particular job site. The Florida rate for this classification in 2007 was 13.51 and in 2008 it is now 9.7 dollars for every 100 dollars of remuneration.

9501 - This classification is applied to employees engaged in the business of painting in the insured’s shop or those risks engaged in sign painting or lettering at a customer’s premises. Articles painted may include goods manufactured by others or component parts made from wood, metal, glass, leather or plastic. The operations include the preparation of the paint-receiving surface, which may involve degreasing, sanding or wire brushing; the application of paint by hand brushing, rolling, spraying or dipping; and drying in ovens using infrared lamps or natural ventilation. This classification also includes drivers, so employees that pick-up or deliver articles to be painted are included. The Florida rate for this classification in 2007 was 6.33 and in 2008 it is now 3.97 dollars for every 100 dollars of remuneration.

9505 - This classification is applied to employees engaged primarily in the painting or repainting of automobile or carriage bodies. The operations contemplate sanding, masking, spray painting and baking. The classification includes incidental body repair in the sense that dents that are hammered out or rust spots that are removed are considered to be normal operations preparatory to painting. Where these paint shops go beyond the minor renovating work and engage in structural repair, then they should be classified as a secondary business covered under code 8393 for Auto Body Repair. Specialist contractors engaged in the application of undercoating to automobiles utilizing either modified spray painting equipment or hand brushes have been assigned to this 9505 classification code as well as specialists engaged in painting pinstriping or other designs or artwork on automobile bodies. Refer to Code 9522 for insureds engaged in the business of affixing striping tape to vehicle bodies. Code 9505 is also applied to insureds engaged in painting conducted in conjunction with automobile, bus, truck or trailer body manufacturing or painting of bus, truck or trailer bodies that have been repaired by the body manufacturing plants. The Florida rate for this classification in 2007 was 7.61 and in 2008 it is now 6.67 dollars for every 100 dollars of remuneration.

5037 - This classification is applied to employees that paint metal structures which exceed two stories in height. For commercial structures, a “story” is defined as being fifteen (15) feet in height. The painting of metal structures falling within the scope of Code 5037 includes metal skeleton frameworks of buildings exceeding two stories; smokestacks; cross-country power line towers; radio towers; television towers; aircraft; aircraft beacon towers; and observation towers. This classification contemplates both the installation of scaffolding and the preparation of surfaces to be painted when these operations are performed by an insured in conjunction with an insured’s painting operations at a particular job site. Code 5037 is not intended to apply to painting the interior or exterior of buildings or other structures which are made of wood, concrete, stone or a combination thereof. This classification is also applied to contractors engaged in the painting of metal bridges of all types regardless of height and encompasses the painting of viaducts, railroad overpasses, trestles and elevated highways. The Florida rate for this classification in 2007 was 35.28 and in 2008 it is now 33.16 dollars for every 100 dollars of remuneration.

6874 and 6884 - Both of these classifications are used for employees that paint ship hulls.

 At FloridaWC.com, we can help classify your payroll into the appropriate classification code and would like to provide your painting business with quotes on Florida workers’ compensation insurance. Please give us a call or complete our online workers’ compensation quote request form to get started. Also, let us know if you have any other workers’ compensation questions.