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Pay-As-You-Go Workers' Comp in Florida

No deposit. No year-end audit. Premium calculated on actual wages every payroll cycle.

Traditional Workers' Comp vs. Pay-as-You-Go

Traditional workers' comp requires you to estimate your annual payroll before the policy year begins. The carrier uses that estimate to calculate your annual premium, then asks for a deposit - typically 25-30% of the estimated premium - before coverage starts. You pay monthly installments throughout the year, and at the end of the year, an auditor checks your actual payroll against the estimate. If you paid more wages than estimated, you owe more premium. If less, you get a credit.

Pay-as-you-go flips this entirely. Instead of estimating upfront, premium is calculated each time you run payroll, based on the wages you actually paid that cycle. No estimate. No deposit. No audit. The premium flows out proportionally across the year instead of front-loaded with a large January check.

The Cash Flow Difference Is Real

Take a roofing company with $250,000 in annual payroll. Under a traditional policy with a rate of, say, $12/100, the annual premium is around $30,000. A 25% deposit means writing a $7,500 check before the first payroll of the year. Under pay-as-you-go, that $7,500 stays in your account in January. You pay premium when payroll runs - roughly $575/week on a weekly payroll cycle, or $1,150 every two weeks.

FactorTraditional PolicyPay-as-You-Go
January cash out $7,500 deposit (example above) $0 - no deposit
Premium basis Estimated annual payroll Actual wages each payroll cycle
Year-end audit Yes - potential for large unexpected bill None
Payroll spikes Audit problem at year end Premium adjusts automatically that cycle
Slow periods Still paying monthly installments on estimate Lower premium automatically during slow payrolls
New hire mid-year May trigger audit adjustment Premium adjusts with the next payroll cycle

How It Works Through a PEO

The most reliable mechanism for pay-as-you-go workers' comp is through a PEO (Professional Employer Organization). Your employees are co-employed under the PEO's umbrella, and payroll runs through the PEO's system. When payroll is processed, the workers' comp premium is calculated simultaneously on that actual payroll and pulled as part of the same transaction. You fund one account each payroll cycle - wages plus employer taxes plus workers' comp premium - and everything else is handled.

This integration is what makes PAYG reliable. There's no separate manual reporting step that could be missed or estimated. The payroll data and the premium calculation are the same data run at the same time.

Why Florida Contractors Especially Benefit

Florida construction payroll is notoriously variable. A roofing company might have 8 employees in February and 25 in October after a hurricane season claim-up. A landscaping company thins out in summer heat and peaks in spring and fall. A pool contractor runs skeleton crews in July and full crews in March. Under traditional policies, these swings create chronic mismatch between estimated and actual payroll - and chronic audit exposure.

Pay-as-you-go simply doesn't have this problem. The premium for your 8-person February crew is calculated on 8 people's wages. The premium for your 25-person October crew is calculated on 25 people's wages. Each cycle is self-contained. No reconciliation needed at year end.

Storm restoration contractors: Pay-as-you-go is practically designed for your situation. When work surges after a storm, premium increases automatically with your payroll. When the surge ends and crews shrink, premium drops back down. No audit trap. No mid-year adjustment calls. It just tracks the actual work.

Who Benefits Most from PAYG

Not every contractor has the same need for pay-as-you-go, but it's particularly valuable for:

  • Seasonal businesses - Landscaping, irrigation, pool service, outdoor construction. Payroll swings predictably with season; PAYG premium tracks it automatically.
  • Storm restoration and emergency contractors - Surge work with unpredictable timing. PAYG scales with the work.
  • New businesses without deposit capital - The deposit requirement on a standard policy is a real barrier to entry. PAYG removes it entirely.
  • Construction with variable crew sizes - Subcontracting, project-based staffing, day labor supplements. Payroll varies week to week; PAYG is built for this.
  • Contractors who've been burned by audit bills - If you've received a large year-end audit bill before, PAYG is the structural fix rather than just trying harder at estimation.

Frequently Asked Questions - Pay-as-You-Go Workers' Comp

Through a PEO program, yes - pay-as-you-go is available for essentially all Florida industries and class codes, including high-hazard construction trades like roofing, framing, and concrete. Some very high-risk or very small accounts may have limited options, but PAYG through a PEO is the broadest access point available. Direct-write carriers also offer PAYG for some standard accounts, but they typically restrict it to lower-risk classifications and established businesses with a track record.
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Yes. You can start a PEO-based PAYG program any time. If you have an existing standard policy, switching mid-year triggers an audit for the partial year on the old policy. That's a one-time event - the old carrier calculates premium for the months you were covered, applies your deposit, and sends a bill or refund. Going forward, you're on PAYG and there's no future audit. If you're approaching renewal on a standard policy, that's the cleanest time to switch - the existing audit resolves as part of normal renewal.
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The base rate is the same - you're still paying the Florida filed rate for your class code. What you're giving up is the deposit requirement and the audit risk. For some very low-mod accounts, the total cost of a standard policy might be marginally lower because their individual mod gives them a discount that a group rate doesn't match. For most contractors - especially those with mods at or above 1.0, variable payroll, or audit exposure from uninsured subs - PAYG typically costs the same or less when you account for the full picture.
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Workers' comp premium is calculated on straight-time wages - overtime premium is typically excluded from the payroll base used for WC calculations under NCCI rules. Bonuses and other supplemental pay are generally included. A PEO payroll system handles these distinctions automatically based on pay type coding. You don't need to manually separate overtime from straight time for workers' comp purposes - the system does it.
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Nothing special. The PAYG calculation for that payroll cycle only includes wages actually paid to that employee during that cycle. If they worked two days out of a two-week pay period before being let go, only those two days' wages are in the premium calculation. The premium automatically reflects the actual payroll, including terminations, hires, and changes in hours. This is a significant practical advantage over standard policies, where employee turnover creates estimation errors that accumulate into audit exposure.
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PAYG vs. Traditional - At a Glance

No upfront deposit

No year-end audit bill

Premium tracks actual payroll

Scales with seasonal swings

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