Unemployment Tax Rates in Florida are Increasing

The Office of Economic and Demographic Research (EDR) has recently published the attached forecast summary on Florida’s Unemployment Compensation Trust Fund for 2021 and beyond. Suzanne Hurst, Deputy Director of Florida Association of Professional Employer Organizations (FAPEO) offers the following review of these figures.

The Office of Economic and Demographic Research (EDR) is a research arm of the Legislature principally concerned with forecasting economic and social trends that affect policy making, revenues, and appropriations.

The figures below come from the attached summary provided by the Office of Economic and Demographic Research (EDR). This document provides historic context, current figures and forecasted figures for benefit charges, collections and rates for Florida’s Unemployment Compensation Trust Fund.  This important information is provided to you for your cash flow planning. 

Unemployment Tax Rates – Minimum Tax Rate

2020 – .10%

2021 – .29%

2022 – 1.15%  (forecasted)

2023 – 1.11% (forecasted)

2024 – .56% (forecasted)

2025 – .10% (forecasted)

Your Florida PEO Lobbyist, David Daniel, is presenting a detailed briefing at a meeting Friday of state-wide business interests about possible solutions to impact of social costs from benefit payments related to the pandemic.  Your FAPEO board has created multiple proposals that could lower rates as early as this year.  We will continue to advocate for common sense solutions that protect Florida’s small employers as everyone struggles during these economic times. 

We will keep you up to date on all developments as these proposals move through the lawmaking process. 

Legislative Activity Update – FL Senate Bill 292

The state of Florida has passed Senate Bill 292.  This bill is responsible for defining the terms “loss run statement” and “provide”; requiring surplus lines and authorized insurers, respectively, to provide insureds either a loss run statement or certain information within a certain time frame after receipt of the insured’s written request.  This also requires insurers to provide notice to the agent of record after providing a loss run statement and prohibits insurers from charging a fee to prepare and provide one loss run statement annually.

Effective Date: 1/1/2021
Last Action: 6/22/2020 – Chapter No. 2020-51
Bill Text: Web Page | PDF

See the source image

Florida – Effective January 1, 2021, FL law changes for providing Loss Runs to the insured as well as notification to the Agent of Record.

  • An insurer shall provide loss runs to an insured within 15 calendar days after receipt of the insured’s written request.
  • Loss runs provided must contain the claims history with the insurer for the preceding 5 years or if history is less than 5 years then all years must be provided to the insured.
  • They can be electronically provided, allowing access through a secure website login or generate documents and mail.
  • The insurer must notify the Agent of Record that loss runs were provided to the insured at the time they are provided.
  • An insurer is not required to provide loss reserve information.

 

Florida Workers’ Compensation Rates Get No Legislative Relief

There will be a certain increase in Florida workers’ compensation rates this coming year as the Florida legislature failed to pass anything to address the Castellanos and Westphal cases that lead to a 14.5% rate increase on 12.1.16.  The 14.5% was at the low end of the range that NCCI used in recommending n increase.

  •  Paul R. Hughes

Florida Fails to Pass Workers’ Compensation Reform

Florida businesses shouldn’t expect relief for workers’ compensation rates, this year at least. The Florida Legislature failed to pass legislation this session addressing 2016 decisions by the Florida Supreme Court that sent the state’s workers’ comp system into disarray and led to a rate increase of 14.5 percent.

After much back and forth between the House and Senate over their respective bills, it came down to attorney fees, which the industry says are to blame for the majority of the rate increase.

Lawmakers sought to reform the state’s workers’ comp system through two bills – House Bill 7085 and Senate Bill 1582 – in response to decisions by the Florida Supreme Court that found aspects of the Florida Workers’ Comp Act unconstitutional.

[Lawmakers also failed to pass other closely-watched insurance reforms addressing insurance claims (assignment of benefits) abuse. Read more on the failed AOB legislation.]

Debate over the Senate and House bill went on throughout the final legislative day on Friday with the House, in an attempt to lure the Senate to its side, passing an amendment capping attorney fees at $180 an hour on approval by a judge of compensation claims. The Senate version of the bill capped attorney fees at $250 an hour versus the House’s previous $150 an hour cap. On Friday, the Senate voted not to lower the cap in its bill to $200 an hour, but the House still tried later to compromise with the $180 cap.

Another key difference in the Senate version was a provision moving Florida to a loss-cost system. Rep. Danny Burgess, who sponsored the House bill, told House members “the jury’s still out” on whether a loss cost system leads to a premium reduction, based on data from states that had switched to this model.

Burgess said he hoped the Senate would agree to the attorney fee compromise so lawmakers could get “something across the finish line.”

“The bill, as it stands today is on the end of the rope,” he told House members Friday. “[We are] trying to provide substantial reform to address rising rates from recent court decisions…We have to solve this problem before us. Every small business in the state of Florida is watching us now.”

The Florida Supreme Court’s decisions that caused the upheaval came in two cases – Castellanos v. Next Door Company and Westphal v. City of St. Petersburg. The biggest cost driver behind the 14.5 percent rate increase, according to the National Council on Compensation Insurance (NCCI), was Castellanos. That decision found the state’s mandatory attorneys’ fee schedule for workers’ compensation cases eliminated the right of a claimant to get a reasonable attorney’s fee — a “critical feature” of the workers’ compensation law. The impact of the Castellanos decision equaled 10.1 percent of the 14.5 rate increase, while Westphal accounted for 2.2 percent.

Burgess said the House version could offer up to a 5 percent reduction in rates and the Senate’s version would offer only about a 1 percent reduction.

The insurance industry supported the House version, agreeing that attorney fees are the main cost driver behind rate increases. The Property Casualty Insurers Association of America (PCI) said the bill would have addressed “decisions by the Florida Supreme Court rulings that could cause workers compensation rates to increase by 14.5 percent in the state, costing Florida job creators more than $1.5 billion.”

But ultimately, the two branches couldn’t reach an agreement before time ran out for lawmakers on Friday night.

Florida businesses now have the rate increase to contend with and the possibility of additional rate increases next year. An actuary from NCCI told the Florida House at a hearing last month that it is reasonable to expect that there would be continued pressure on rates without legislative reform.

The Florida Chamber of Commerce called lawmakers’ failure to enact reform a “failed fix to Florida’s broken workers’ comp system” and said it was a missed opportunity by lawmakers to make Florida more competitive.