STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL SERVICES, DIVISION OF WORKERS' COMPENSATION,

Petitioner,

vs.

SIGN AND VEHICLE WRAPS, INC.,

Respondent.

/

Case No. 15-3418

RECOMMENDED ORDER

On August 12, 2015, a hearing in this case was held by video teleconferencing at sites in Tallahassee and Orlando, Florida, before D. R. Alexander, Administrative Law Judge, Division of Administrative Hearings (DOAH).

APPEARANCES

For Petitioner: Alexander R. Brick, Esquire

Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399-4229

For Respondent: Alfida Diaz1/

Sign and Vehicle Wraps, Inc. Suite 7

1011 West Lancaster Road Orlando, Florida 32809-5838

STATEMENT OF THE ISSUE

The issue is whether the Stop-Work Order and Second Amended Order of Penalty Assessment issued by Petitioner, Department of

Financial Services, Division of Workers' Compensation (Division), on March 15, 2015, and June 3, 2015, respectively, should be upheld.

PRELIMINARY STATEMENT

This proceeding arose from the requirement that, except for exempt employees, employers in the construction industry must secure workers' compensation insurance for all employees. After a Stop-Work Order, Order of Penalty Assessment, and Amended Order of Penalty of Assessment were served on Respondent for failing to obtain coverage that meets the requirements of chapter 440, Florida Statutes (2015), Respondent timely requested a hearing to dispute this action. The matter was referred by the Division to DOAH to resolve the dispute. The Division later issued a Second Amended Order of Penalty Assessment, which reduced the proposed penalty assessment from

$18,413.28 to $9,389.94. As clarified by Respondent at hearing, it disputes only three items in the latest assessment.

At the final hearing, the Division presented two witnesses.

Division Exhibits 1 through 11 were accepted in evidence. Respondent presented one witness.

A one-volume Transcript of the hearing has been prepared.

The Division submitted a proposed recommended order (PRO), which has been considered in the preparation of this Recommended Order.

FINDINGS OF FACT

1. The Division is the state agency responsible for enforcing the various requirements of chapter 440.

2. Respondent is a small Florida corporation with offices located at Suite 7, 1011 West Lancaster Road, Orlando, Florida. Among other things, it is engaged in the business of installing, repairing, and maintaining signs. Each of these activities falls within the statutory definition of "construction industry." See § 440.02(8), Fla. Stat. The office consists of an enclosed area and warehouse area where sign-making machinery is kept.

3. On March 17, 2015, while driving on Simpson Road in Kissimmee, Kirk Glover, a Division compliance inspector, observed a truck with a hydraulic lift in front of a Metro PCS store. Respondent's name and telephone number were embossed on the hood of the truck. The use of a truck with a hydraulic lift for installing signs is considered a construction activity in the context of workers' compensation insurance.

4. Mr. Glover observed one individual in the bucket of the lift "working on a sign" that was affixed to the building. A second individual was standing on the ground "directing the individual in the bucket." The individual on the ground (who is identified in the record as "Pinaida" but whose name is Pineda)2/ did not identify himself, but acknowledged that he worked for

   
   

   Respondent. The individual in the bucket identified himself as Marcos Escoto and confirmed that he also worked for Respondent.

5. Mr. Glover contacted Respondent's owners who told him that they build and install signs, the truck had been purchased approximately one year earlier, and they used Escoto and Pineda "to install signs."

6. An employer engaged in construction activities is required to obtain workers' compensation insurance coverage for the benefit of its employees unless exempted or otherwise excluded under chapter 440. The firm had no exemptions during the audit period. A follow-up investigation by Mr. Glover confirmed that Respondent did not have workers' compensation insurance for any employee during the audit period from February 5, 2014, through March 17, 2015. (An older policy was canceled on February 5, 2014.) Because Respondent had no insurance, a Stop-Work Order was issued on March 17, 2015.

7. The Division later issued an initial penalty assessment, as twice amended. The latest assessment is

   $9,389.94. The penalty assessment is an amount equal to two times the amount Respondent would have paid in premiums when applying the approved manual rates to Respondent's payroll during the periods for which it failed to secure insurance coverage within the preceding two-year period.

   
   

8. Before preparing its penalty assessment, the Division requested various business and payroll records from Respondent, which does not contest the authenticity or accuracy of the records. After the records were produced, the Division calculated a penalty assessment that identified each worker during the audit period and assigned the worker a class code, depending on the type of work performed. Respondent disputes only three items in the latest penalty assessment.

9. A class code is a numerical code, usually four digits, assigned to differentiate between the various job duties or scope of work performed by the employees. The codes were derived from the Scopes Manual Classifications (Manual), a publication that lists all of the various jobs that may be performed in the context of workers' compensation. The Manual is produced by the National Council on Compensation Insurance, Inc., an authoritative data collecting and disseminating organization for workers' compensation.

10. The Manual provides that code 9554 applies to employees engaged in the "installation, maintenance, repair, removal or replacement of signs that are not otherwise classified." The code is all-inclusive in its scope and contemplates "all operations related to the erection, maintenance and repair of this type of advertising media provided that this activity takes place away from a shop." It

    
    

    includes the pulling of permits for work on new signs. Code 3064 is assigned to employees who are engaged in the production of sheet metal signs, including the manufacturing of electronic signs. At issue here is the assignment of code 9554 to Marcos Escoto and an entity identified in the assessment as JLS Construction, and the assignment of code 3064 to another employee, Edgar Del Valle.

11. Although the record in this case is somewhat sketchy, Respondent contends that Edgar Del Valle is a vinyl installer in the shop and does not work on outdoor signs. It argues that his classification code should be 4299, a code with a lower rate that is assigned, among other things, to certain aspects of vinyl sign manufacturing operations. It also contends that Marcos Escoto, who was observed by Mr. Glover installing a sign on March 17, 2015, should be assigned a classification code of 8810, as he was merely "checking" the sign and not doing actual installation work. Code 8810 is assigned to clerical office employees and carries a lower rate than 9554. Finally, Respondent points out that the employee identified as "JLS Construction" is actually named "JAL Construction." Respondent contends that because its only task is to pull permits before outdoor work on new signs is performed, it should be treated as a vendor, rather than an employee, and removed from the penalty assessment.

    
    

12. If an employee performs work that deals with more than one class code, the employee is assigned the highest class code. In this case, even if Mr. Escoto sometimes performs non- construction activities, he was observed working on a sign. Code 9554 includes work that relates to the installation, removal, repair, or replacement of any sign that hangs outside a building. Therefore, the assignment of code 9554 was correct.

13. At hearing, a Division auditor testified that she "received additional records from the employer who stated that Edgar conducts wrap installation," work that is considered a construction activity in the Manual. See Pet'r Ex. 10, p. 92. This was not disputed by Respondent. Therefore, even though Edgar Del Valle may be engaged in other vinyl sign production activities, the assignment of code 3064 was correct.

14. The Division agrees that the correct name of the corporation that pulls permits is JAL Construction, and not JLS Construction. In its PRO, it also agreed that JAL Construction has an exemption from coverage requirements. Accordingly, the assessment should be reduced by $74.04.

15. Finally, at hearing the Division agreed that the penalty assessment should be adjusted downward by $285.26 because employee Lucy Cordova was assigned an incorrect code.

16. As amended herein, the final assessment should be

    
    

    $9,030.64.

    
    

    CONCLUSIONS OF LAW

    
    

17. The Division is responsible for enforcing the requirement that employers subject to chapter 440 secure the payment of workers' compensation by obtaining workers' compensation coverage for their employees "that meets the requirements of [chapter 440] and the Florida Insurance Code."

    § 440.107(1), Fla. Stat.

    
    

18. Because administrative penalties are penal in nature, the Division is required to prove by clear and convincing evidence that Respondent violated the Workers' Compensation Law during the relevant time period and that the penalty assessment is correct. Dep't of Banking & Fin. v. Osborne Stern & Co., 670

    So. 2d 932, 935 (Fla. 1995).

    
    

19. By clear and convincing evidence, the Division has established that Respondent failed to have workers' compensation insurance on its employees engaged in construction activities during the audit period and owes a penalty assessment of

$9,030.64.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Department of Financial Services enter a final order assessing Respondent with a penalty of $9,030.64.

DONE AND ENTERED this 14th day of October, 2015, in Tallahassee, Leon County, Florida.

S

D. R. ALEXANDER Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 14th day of October, 2015.

ENDNOTES

1/ Ms. Diaz identified herself at hearing as Respondent's office manager. Division records indicate that she is also one of the three owners of the business. See Pet'r Ex. 7, p. 40.

2/ The penalty assessment includes an individual named Jairo Pineda, but no one named Pinaida. The compliance investigator misspelled the name of the employee at hearing.

COPIES FURNISHED:

Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed)

Alexander R. Brick, Esquire Department of Financial Services

200 East Gaines Street Tallahassee, Florida 32399-4229 (eServed)

Alfida Diaz

Sign and Vehicle Wraps, Inc. Suite 7

1011 West Lancaster Road Orlando, Florida 32809-5838

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days of the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will render a final order in this matter.

Docket for Case No: 15-003418

Orders for Case No: 15-003418