In the past two articles of this series the topics have waxed poetic with the creative titles Resilience and Iceland. They both dealt with the relevance of proactive planning and risk management in one’s personal and business affairs.
This piece attends to a topic far more prosaic, but of immediate and direct relevance to Florida’s businesses during the upcoming year. Budgeting.
There are two developments of consequences in that regard.
First with the ‘bad news’. Florida’s unemployment compensation tax rates will trend upwards for various employers. As described in The Center Square:
The Florida Department of Revenue (FDOR) will increase the unemployment tax rate in January for the vast majority of the state’s employers, according to a Florida Chamber of Commerce news release.
The maximum rate, paid by relatively few large businesses with a greater propensity for layoffs, will remain 5.4% for the first $7,000 in wages, or $378 per employee, the chamber said.
Most Florida businesses’ unemployment tax rates, however, especially those with a three-year history of no layoffs, are closer to the minimum than the maximum levy.
Businesses that pay the state’s minimum unemployment tax rate – 0.1 percent or $7 per employee – will pay $20.30 for each worker under the FDOR’s 2021 structure, according to the Chamber, which announced the increase without challenge or confirmation from the department.
This increase will serve to replenish the Unemployment Compensation Trust Fund, which was substantially drawn down during the ongoing pandemic. 1
Now, on a happier note, to the ‘good news’. Also reported in The Center Square is that Florida’s workers’ compensation rates will trend downward during the coming year.
Florida workers’ compensation insurance rates will decrease by an average of 6.6% effective Jan. 1…
The decrease is the fourth consecutive year Florida workers’ compensation premiums have declined and is nearly 1 percentage point more than the 5.7% reduction recommended by the National Council on Compensation Insurance (NCCI), which sets rates for the insurance industry.
Specific (and again useful) information about Florida’s workers’ compensation insurance program.
What are Florida’s employers to do with these ‘mixed blessings’? The first thing they should do is pull out the documentation from their past several years (at least three) of reports regarding both types of mandatory insurances, because part of the algorithm for calculation of future rates is the prior history of claims and reserves. Once that information is well in-tow, managers should reach out to their insurance agents to review their past histories, dispute errors when found (which should actually be an ongoing activity), and discuss premium predictions for the upcoming year. 2 And then they should run the numbers on their budgets to determine the net effect. [Important note: These activities should be conducted annually at the beginning of the fourth quarter. Put a reminder on the recurring calendar now so as not to forget…]
Consistent with the overall proactive risk management theme of this series, preparedness is core to operating effective, efficient, and economical businesses.
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2 This is somewhat predicated on the business’s being required to pay workers’ compensation premiums. Some business enterprises can be exempted from that requirement, provided they meet specific criteria. Determine if a business is eligible for an exemption.
Information about Bogin, Munns & Munns’ own response to Coronavirus readiness.
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– For more information, call Philip N. Kabler of the Gainesville, FL office of Bogin, Munns & Munns at 352.332.7688, where he practices in the areas of business, banking, real estate, and equine law. He has taught business and real estate law courses at the University of Florida Warrington College of Business Administration and Levin College of Law and is the President-Elect of the Eighth Judicial Circuit Bar Association.
NOTICE: The article above is not intended to serve as legal advice, and you should not rely on it as such. It is offered only as general information. You should consult with a duly licensed attorney regarding your Florida legal matter, as every situation is unique. Please know that merely reading this article, subscribing to this blog, or otherwise contacting Bogin, Munns & Munns does not establish an attorney-client relationship with our firm. Should you seek legal representation from Bogin, Munns & Munns, any such representation must first be agreed to by the firm and confirmed in a written agreement.