Construction Stop-Work Order: How it Can Impact a Project
There are a number of reasons for the issuance of a construction stop work order. One of them is insurance related. Florida law requires employers in the construction industry to maintain workers’ compensation insurance for all employees at the job site or place of business. Failure to comply with this requirement can result in a stop-work order, which requires an employer to cease all operations at the worksite and at other locations where the employer is doing business.
Stop Work Without Workers’ Comp Insurance
The Division of Workers’ Compensation may conduct investigations, and will inspect business records and interview employees to determine if an employer has properly maintained workers’ compensation insurance. If an inspection reveals that a business is not in compliance with requirements, the State of Florida can issue a stop-work order. Stop work orders are also issued in cases where an employer may have a workers’ compensation policy but understates or conceals payroll, misrepresents or conceals employee duties or otherwise tries to avoid paying premiums.
Stop-work orders disrupt projects. They result in project delays as all work must stop until the order is released, which only happens when an employer provides evidence of compliance and pays a penalty. The penalty for violation is equal to 1.5 times the amount the employer would have paid in premiums within the preceding three-year period.