STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF FINANCIAL SERVICES, DIVISION OF WORKERS’ COMPENSATION,
Petitioner,
vs.
LEONARD SMITH, d/b/a SITE DEVELOPMENT AND PIPELINE CONSTRUCTION, INC.,
Respondent.
/
Case No. 19-2533
RECOMMENDED ORDER
The final hearing in this matter was conducted before
J. Bruce Culpepper, Administrative Law Judge of the Division of Administrative Hearings, pursuant to sections 120.569 and 120.57(1), Florida Statutes (2017),1/ on July 23, 2019, by video teleconference at sites in Tallahassee and Tampa, Florida.
APPEARANCES
For Petitioner: Kyle Christopher, Esquire
Florida Department of Financial Services Office of the General Counsel
Hartman Building
2012 Capital Circle Southeast Tallahassee, Florida 32399
For Respondent: Leonard Smith, pro se
Site Development & Pipeline Construction, Inc.
403 South Parsons Avenue Seffner, Florida 33584
STATEMENT OF THE ISSUES
Whether Leonard Smith, d/b/a Site Development & Pipeline Construction, Inc., violated the provisions of chapter 440, Florida Statutes, by failing to secure the payment of workers’ compensation coverage for its employees; and, if so, what penalty
is appropriate.
PRELIMINARY STATEMENT
The Department of Financial Services, Division of Workers’ Compensation (the “Department”), served its Amended Order of Penalty Assessment on Respondent, Leonard Smith, d/b/a Site Development & Pipeline Construction, Inc. (“Respondent”), on October 13, 2017.
On July 11, 2017, Respondent submitted a letter to the Department requesting an administrative hearing. On August 1, 2017, the Department dismissed Respondent’s request, without prejudice. Respondent filed a second request for a hearing on August 17, 2017, sufficiently alleging a dispute regarding whether the Department correctly calculated the penalty in the Amended Order of Penalty Assessment.
The Department referred this matter to the Division of Administrative Hearings (“DOAH”) on May 15, 2019, and requested an Administrative Law Judge conduct a chapter 120 evidentiary hearing.
The final hearing was held on July 23, 2019. The Department presented the testimony of Cristina Brigantty (a compliance investigator) and Lynne Murcia (a penalty audit supervisor). The Department’s Exhibits 1 through 10 and 12 through 19 were admitted into evidence. Leonard Smith testified on Respondent’s behalf. Respondent also presented the testimony of Joe Smith.
Respondent did not offer any exhibits.
A one-volume Transcript of the final hearing was filed with DOAH on August 12, 2019. At the close of the hearing, the parties were advised of a ten-day timeframe following receipt of the hearing transcript at DOAH to file post-hearing submittals. The Department timely filed a Proposed Recommended Order, which was duly considered in preparing this Recommended Order.
FINDINGS OF FACT
The Department is the state agency charged with enforcing workers’ compensation coverage requirements in Florida, including the requirement that employers secure the payment of workers’ compensation coverage for their employees. See
§ 440.107(3), Fla. Stat.
Leonard Smith is an 85-year-old retired contractor.
Respondent’s corporate records with the Florida Division of Corporations record that Leonard Smith is Respondent’s owner, president, and registered agent. Respondent was incorporated in February 2014. The company was administratively dissolved in
September 2015. However, Leonard Smith still does business using Respondent’s name.
On June 13, 2017, Cristina Brigantty, a compliance investigator with the Department, conducted a random workers’ compensation check at a worksite located at 499 Lorraine Leland Street in Dunedin, Florida. At the site, Investigator Brigantty observed an individual operating a compact excavator/tractor commonly called a “Bobcat” (the manufacturer’s name). The Bobcat operator was moving soil and appeared to be grading the site in preparation for the pouring of concrete.
Investigator Brigantty approached the individual operating the Bobcat and requested his name. The driver identified himself as Joe Smith. Joe Smith also relayed to Investigator Brigantty that he was just hired by Leonard Smith (no relation) to work on the site. Joe Smith added that he expected to work approximately ten hours and be paid around
$2,000 from Leonard Smith for the job. Joe Smith then provided Investigator Brigantty with Leonard Smith’s business card and phone number.
At the final hearing, Investigator Brigantty testified that her duties for the Department include inspecting businesses to determine whether the business has obtained the required workers’ compensation insurance coverage. Investigator Brigantty explained that a business that performs construction-related work
must have workers’ compensation coverage. Therefore, Investigator Brigantty believed that Respondent should have secured sufficient workers’ compensation coverage for its employee (Joe Smith).
After learning Leonard Smith’s name, Investigator Brigantty searched the Department’s Coverage and Compliance Automated System (“CCAS”) database. CCAS is a Department database that tracks workers’ compensation insurance coverage. CCAS contains coverage data from insurance carriers, as well as any workers’ compensation exemptions on file with the Department. Insurance providers are required to report coverage and cancellation information, which the Department uses to update CCAS.
While reviewing CCAS, Inspector Brigantty initially noted that the Department did not have on file any request from Leonard Smith, Respondent’s owner-of-record, for an exemption from workers’ compensation coverage. An exemption is a method by which a business’s corporate officer may exempt him or herself from the requirements of chapter 440. See § 440.05, Fla. Stat.
Thereafter, based on her research of the information in CCAS, Inspector Brigantty concluded that Respondent did not have a valid exemption for a corporate officer (Leonard Smith) on June 13, 2017. Neither did Respondent carry any workers’ compensation coverage for Joe Smith.
After determining that Respondent had not obtained workers’ compensation coverage for Joe Smith on the date of her visit, Investigator Brigantty called Leonard Smith. In the ensuing conversation, Leonard Smith told her that Joe Smith was working for him at the jobsite.
On June 22, 2017, Investigator Brigantty issued a Stop- Work Order to Respondent. With the Stop-Work Order, Investigator Brigantty also served Respondent with a Request for Production of Business Records for Penalty Assessment Calculation. Through this document, the Department requested several categories of business records from Respondent for the period of June 14, 2015, through June 13, 2017. The requested documents pertained to: employer identification, payroll documents, account documents, disbursements, workers’ compensation coverage, professional employer organization, temporary labor service, exemptions, subcontractors, and subcontractor’s workers’ compensation coverage.
Based on its investigation, the Department determined that Respondent failed to secure adequate workers’ compensation coverage for its employees. Therefore, the Department proceeded to calculate a penalty based on Respondent’s lack of compliance with chapter 440.
The Penalty Calculation:
Lynne Murcia, the penalty auditor who determined the penalty the Department seeks to impose on Respondent, testified regarding her computation. Ms. Murcia explained that the penalty essentially consists of the “evaded” premium amount, or the actual amount the employer would have paid in workers’ compensation insurance for the uncovered employees, multiplied by two.
To calculate the appropriate penalty for Respondent’s failure to secure workers’ compensation coverage, the Department first ascertained Respondent’s period of non-compliance. In determining this time frame, the Department referred to Florida Administrative Code Rule 69L-6.028(2), which directs that:
The employer’s time period or periods of non- compliance means the time period(s) within the two years preceding the date the stop- work order was issued to the employer within which the employer failed to secure the payment of compensation pursuant to chapter 440, F.S., and must be either the same time period as set forth in the business records request for the calculation of penalty or an alternative time period or period(s) as determined by the Department, whichever is less. The employer may provide the Department with records from other sources, including, but not limited to, the Department of State, Division of Corporations, the Department of Business and Professional Regulation, licensing offices, and building permitting offices to show an alternative time period or period(s) of non-compliance.
Based on these instructions, the Department deduced that Respondent’s period of non-compliance was from June 14, 2015, through June 13, 2017, which was the two-year period preceding the date of the Stop-Work Order.2/ (This two-year period was also the time for which the Department requested business records from Respondent.)
After determining Respondent’s period of non- compliance, the Department then calculated the monetary penalty it should impose upon Respondent. In accordance with section 440.107(7)(d)1., the Department must assess against an employer:
a penalty equal to 2 times the amount the employer would have paid in premium when applying approved manual rates to the employer’s payroll during periods for which it failed to secure the payment of workers’ compensation required by this chapter within the preceding 2-year period or $1,000, whichever is greater.
Therefore, the Department reviewed the business records Respondent provided to ascertain the amount of Respondent’s payroll during the two-year period of non-compliance.
In response to the Department’s request for documents, Respondent produced a number of financial records. These records consisted primarily of bank statements and cancelled checks. The documentation Respondent submitted, however, was not comprehensive enough for the Department to determine all the wages Respondent paid to its employees, or the work they
performed for the period of June 13, 2015, through June 14, 2017. Specifically, Respondent failed to provide complete bank statements or the corresponding check images for the periods of January 1 through April 30, 2016; June 1 through July 31, 2016; and June 1 through June 13, 2017. Consequently, the Department determined that Respondent did not provide business records sufficient for it to calculate Respondent’s complete payroll or the actual employee wages it paid over the two-year period of non-compliance. Therefore, the Department exercised its option to “impute” Respondent’s weekly payroll from June 13, 2015, through June 14, 2017.
In addition to Joe Smith, the Department imputed wages for several other individuals and entities it identified in Respondent’s business records. Based on Respondent’s financial records, between June 14, 2015, and June 13, 2017, Respondent made payments to Earl Cockeranoham, “J.M.L.,” Martin Moore, “Peterson,” and Robert Tamburan. The Department also identified a subcontractor Respondent paid in 2015 named Roger’s Dirt Works, Inc. The Department further determined that at the time of the transaction, Roger’s Dirt Works, Inc., had neither workers’ compensation coverage, nor an exemption for a corporate officer. (Roger’s Dirt Works, Inc., subsequently obtained a valid exemption.) Therefore, the Department included Roger’s Dirt
Works, Inc., in the penalty for the period of June 14 through December 31, 2015.
The Department also added to Respondent’s payroll “uninsured labor” for the full period of non-compliance.
Ms. Murcia relayed that “uninsured labor” reflects undesignated cash transactions for which the recipient was not identified or “validated” by Respondent’s business records and receipts. See
Fla. Admin. Code R. 69L-6.035(1)(k). Respondent’s financial records revealed four separate cash payments totaling $6,892.
Finally, the Department included Leonard Smith in all periods of non-compliance. The Department explained that Leonard Smith was registered as a corporate officer of Respondent. However, he did not have an active workers’ compensation exemption on file. Therefore, Respondent was also required to carry workers’ compensation for himself. See Fla. Admin. Code R. 69L-6.028(3)(b).
To calculate Respondent’s imputed weekly payroll, section 440.107(7)(e) directs that the gross payroll for an employer who provides insufficient business records is imputed at the statewide average weekly wage multiplied by 1.5 for each employee for the period requested for the calculation of the penalty. Therefore, the Department obtained the statewide average weekly wage effective at the time of the Stop-Work Order ($886.46)3/ for each identified employee, corporate officer, and
subcontractor, then multiplied that number by 1.5. See
§ 440.107(7)(e), Fla. Stat.; and Fla. Admin. Code R. 69L- 6.028(3)(a).
To calculate a penalty based on an imputed payroll, the Department assigns an employer’s employees the highest rated workers’ compensation classification code. The classification code is based on either the business records submitted or the investigator’s observation of the employees’ activities. In this case, the business records Respondent provided to the Department were not sufficient to categorize the exact type of work that Joe Smith, or any of the other identified employees, performed for Respondent over the two-year period of non-compliance. However, during her investigation of the jobsite on June 13, 2017, Investigator Brigantty observed Joe Smith engaging in activities consistent with excavating, such as filling, backfilling, and moving earth.
According to the Scopes Manual issued by the National Council on Compensation Insurance, Inc. (“NCCI”), class code 6217 is the “Excavation and Drivers” classification.4/ Consequently, the Department applied class code 6217 to all Respondent’s employees and officer for the entire penalty period. See Fla.
Admin. Code R. 69L-6.028(3)(b) and 69L-6.021(2)(mmm)(excavation is classified as “construction activity”). Therefore, to calculate the premium amount for the workers’ compensation
insurance Respondent should have paid for its employees, the Department applied the manual rates corresponding to class code 6217.
Thereafter, based on: 1) the total periods of non- compliance, 2) Respondent’s calculated payroll for the periods of non-compliance, and 3) the estimated premium for workers’ compensation insurance, the Department issued the Amended Order of Penalty Assessment (“Penalty Assessment”) on October 13, 2017. The Penalty Assessment imposed a penalty of $42,407.08 against Respondent.
Ms. Murcia explained that the initial penalty amount was calculated without the benefit of Respondent’s business records. However, after Respondent began providing its financial records in October 2017, the Department reduced its penalty assessment three times. On November 30, 2018, the Department served a 2nd Amended Order of Penalty Assessment, which adjusted the penalty down to $11,958.46. On May 29, 2019 (following leave by the undersigned), the Department produced a 3rd Amended Order of Penalty Assessment, which further reduced the penalty to
$8,443.96. Finally, at the final hearing (in light of Leonard Smith’s deposition), the Department introduced a 4th Amended Order of Penalty Assessment with a revised (and final) penalty amount of $8,366.44.
At the final hearing, Leonard Smith was adamant that Joe Smith was not his employee on June 13, 2017, or at any point. Instead, Leonard Smith explained that he is just a “broker” to help place workers with construction projects. Leonard Smith claimed that for the last nine years, he simply does estimating and consulting for other small contractors. Consequently, because he no longer engages in construction work or employs any workers, Leonard Smith asserted that he does not need to carry workers’ compensation insurance.
Regarding the work that Investigator Brigantty witnessed on June 13, 2017, Leonard Smith testified that a church contacted him about supplying, filling, and spreading dirt on its property. Leonard Smith explained that the church was to pay him
$12,840.00 for the job.
Leonard Smith referred to Joe Smith as a “private contractor.” Leonard Smith relayed that he met Joe Smith in June 2017. Joe Smith expressed that he was looking for work. Leonard Smith told him about the job in Dunedin, Florida. On June 13, 2017, Leonard Smith met Joe Smith, who had brought his Bobcat, at the church and discussed the job. Leonard Smith then left him to complete the work.
Leonard Smith insisted that he never “paid” Joe Smith.
Instead, he simply agreed to share the money the church was
giving him for the job. Leonard Smith called his own portion a “consulting fee.”
On June 23, 2017, after he had received the $12,840.00 from the church, Leonard Smith wrote a check to Joe Smith for
$3,440.00.
Joe Smith never worked for Respondent or Leonard Smith before or since June 13, 2017.
Regarding the payment to Earl Cockeranoham recorded in Respondent’s business records, Leonard Smith testified that
Mr. Cockeranoham never worked for him. Instead, the money he paid to Mr. Cockeranoham in 2015 ($460.00) was for work
Mr. Cockeranoham performed for the same church.
Regarding evidence of a payment to Martin Moore, Leonard Smith testified that he paid Mr. Moore $500.00 in 2016 for Mr. Moore’s rent. Leonard Smith denied that he paid
Mr. Moore for construction work. Respondent further testified that Respondent had known Mr. Moore a long time.
Joe Smith testified at the final hearing regarding his understanding of his employment relationship with Respondent on June 13, 2017. Initially, Joe Smith explained that he had been out of work for several months and was looking for a job when he met Leonard Smith in June 2017. Leonard Smith offered him the work at the church spreading soil. Joe Smith relayed that he owned the Bobcat and brought it with him to the jobsite.
Joe Smith stated that, on June 13, 2017, he met Leonard Smith at the church. There, Leonard Smith informed him that he was to bring an area of land up to proper elevation. They also discussed how they would split payment for the job. Joe Smith understood that the church was going to pay Leonard Smith. Then, Leonard Smith was going to give him his share.
Joe Smith confirmed that Leonard Smith sent him approximately $3,000.00 several weeks after the job. Joe Smith also conceded that he was not covered by workers’ compensation on June 13, 2017. Joe Smith further testified that Investigator Brigantty showed up at the worksite the day he started working.
Finally, at the final hearing, Joe Smith was dismayed that he had created this issue regarding workers’ compensation coverage. He expressed that he was simply looking for work, and Leonard Smith was kind enough to help him out. Joe Smith did not want to get anyone in trouble.
Based on the competent substantial evidence in the record, the Department demonstrated, by clear and convincing evidence, that Respondent failed to secure workers’ compensation insurance coverage or workers’ compensation exemptions for its “employees” for the periods of June 14, 2015, through June 13, 2017. Accordingly, the Department met its burden of proving that Respondent violated chapter 440 and should be penalized. (As more fully addressed below, the evidence in the record does not
sufficiently establish that either Earl Cockeranoham or Martin Moore were “employees” of Respondent under chapter 440.
Therefore, they should not be included in the penalty
calculation.)
CONCLUSIONS OF LAW
DOAH has jurisdiction over the parties to, and subject matter of, this proceeding pursuant to sections 120.569 and 120.57(1).
38. Under sections 440.10(1)(a), 440.107(2), and 440.38, every employer is required to obtain workers’ compensation coverage for the benefit of its employees, unless exempted or otherwise excluded under chapter 440. See Twin City Roofing
Constr. Specialists, Inc. v. Dep’t of Fin. Servs., 969 So. 2d 563,
564 (Fla. 1st DCA 2007)(“Florida law requires any company performing construction to secure the payment of workers’ compensation.”). Strict compliance with the workers’ compensation law by the employer is required. See C & L Trucking v. Corbett,
546 So. 2d 1185, 1186 (Fla. 5th DCA 1989).
“Construction industry” means “for-profit activities involving any building, clearing, filling, excavation, or substantial improvement in the size or use of any structure or the appearance of any land.” § 440.02(8), Fla. Stat.
“Employer” is defined as “every person carrying on any employment.” § 440.02(16)(a), Fla. Stat.
“Employment,” with respect to the construction industry, includes “all private employment in which one or more employees are employed by the same employer.” § 440.02(17)(b)2., Fla. Stat.
“Employee” means “any person who receives remuneration from an employer for the performance of any work or service while engaged in any employment under any appointment or contract for hire or apprenticeship, express or implied, oral or written, whether lawfully or unlawfully employed.” “Employee” also includes “any person who is an officer of a corporation and who performs services for remuneration for such corporation within this state.” § 440.02(15)(a) and (b), Fla. Stat.
In addition, under section 440.02(15)(c), “employee” encompasses:
All persons who are being paid by a construction contractor as a subcontractor, unless the subcontractor has validly elected an exemption as permitted by this chapter, or has otherwise secured the payment of compensation coverage as a subcontractor, consistent with s. 440.10, for work performed by or as a subcontractor.
An independent contractor working or performing services in the construction industry.
A sole proprietor who engages in the construction industry.
Regarding a contractor’s relationship and responsibility for subcontractors, section 440.10(1) states:
In case a contractor sublets any part or parts of his or her contract work to a subcontractor or subcontractors, all of the employees of such contractor and subcontractor or subcontractors engaged on such contract work shall be deemed to be employed in one and the same business or establishment, and the contractor shall be liable for, and shall secure, the payment of compensation to all such employees, except to employees of a subcontractor who has secured such payment.
A contractor shall require a subcontractor to provide evidence of workers’ compensation insurance. A subcontractor who is a corporation and has an officer who elects to be exempt as permitted under this chapter shall provide a copy of his or her certificate of exemption to the contractor.
Section 440.107(7) establishes the method to calculate the penalty the Department shall impose on an employer based on its failure to secure workers’ compensation coverage in violation of chapter 440. Section 440.107(7)(d)1., states:
In addition to any penalty, stop-work order, or injunction, the department shall assess against any employer who has failed to secure the payment of compensation as required by this chapter a penalty equal to 2 times the amount the employer would have paid in premium when applying approved manual rates to the employer’s payroll during periods for which it failed to secure the payment of workers’ compensation required by this chapter within the preceding 2-year period or $1,000, whichever is greater.
This provision does not provide the Department authority to reduce the amount of the statutory penalty.
Because administrative fines are penal in nature, the Department has the burden to prove, by clear and convincing evidence, that Respondent violated chapter 440 by failing to secure the payment of workers’ compensation, and that the penalty proposed to be assessed is correct. See Dep’t of Banking & Fin.,
Div. of Sec. & Investor Prot. v. Osborne Stern & Co., 670 So. 2d
932, 935 (Fla. 1996). Clear and convincing evidence requires “more proof than a ‘preponderance of the evidence’ but less than ‘beyond and to the exclusion of a reasonable doubt.’” In re
Graziano, 696 So. 2d 744, 753 (Fla. 1997).
Turning to the facts in this matter, the Department proved, by clear and convincing evidence, that Respondent violated chapter 440, as charged in the Stop-Work Order, by failing to provide workers’ compensation coverage for its employees as required by chapter 440.
The Department also demonstrated that it properly applied the procedure mandated by section 440.107(7)(d)1. and (e) to calculate Respondent’s penalty. The Department correctly calculated the appropriate penalty to impose on
Respondent in its 4th Amended Order of Penalty Assessment, with the exception of two entries detailed below.
Florida law requires Respondent, as an “employer,” to maintain and produce business records which allow the Department to determine its payroll. § 440.107(5), Fla. Stat.; see also
440.107(3)(c), Fla. Stat.; and Fla. Admin. Code R. 69L-6.015(1). The testimony establishes that Respondent failed to provide business records sufficient to enable the Department to determine its payroll for the two-year period of non-compliance requested for the penalty calculation.
Because Respondent’s business records were out of compliance and incomplete, the Department is required to impute Respondent’s payroll. See Twin City, 969 So. 2d at 566.
Rule 69L-6.028 sets forth the method for imputing an employer’s payroll and provides:
When an employer fails to provide business records sufficient to enable the Department to determine the employer’s payroll for the time period requested in the business records request for purposes of calculating the penalty pursuant to paragraph 440.107(7)(d), F.S., the imputed weekly payroll for each current and former employee, corporate officer, sole proprietor or partner identified by the Department during its investigation will be the statewide average weekly wage as defined in subsection 440.12(2), F.S., that is in effect at the time the stop-work order was issued to the employer, multiplied by 1.5.
If a portion of the period of non- compliance includes a partial week of non- compliance, the imputed weekly payroll for such partial week of non-compliance will be prorated from the imputed weekly payroll for a full week.
The imputed weekly payroll for each employee, corporate officer, sole proprietor, and partner will be assigned to the highest rated workers’ compensation classification
code for an employee based upon records or the investigator’s physical observation of any employee’s activities.
See also § 440.107(7)(e), Fla. Stat.
Regarding which employees should be included in Respondent’s imputed weekly payroll, the evidence identifies six individuals and entities Respondent “employed” over the two-year period of non-compliance. Initially, Joe Smith qualifies as an “employee” under chapter 440. While Leonard Smith tenaciously argued that he did not hire Joe Smith, both men agreed that Leonard Smith directly paid Joe Smith for his work moving soil at the church. In addition to giving him “remuneration,” Leonard Smith told Joe Smith about the job, met Joe Smith at the jobsite before he began working, and instructed Joe Smith on his specific job responsibilities. Based on these facts, Respondent constitutes an “employer,” and Joe Smith his “employee” for whom Respondent was required to provide workers’ compensation coverage.5/
The Department also demonstrated that Respondent employed at least five other “employees” in the construction industry between June 14, 2015, and June 13, 2017. Respondent’s financial records reveal that Respondent paid for services rendered by certain individuals identified as “J.M.L.,” “Peterson,” and Robert Tamburan.
The evidence further establishes that Roger’s Dirt Works, Inc., was Respondent’s “employee” for the period of June 14 through December 31, 2015. Respondent’s financial records show that Respondent paid Roger’s Dirt Works, Inc., $3,480.00 in 2015. Section 440.02(15)(c)2. directs that the employer is responsible to ensure that workers’ compensation insurance covers “all persons who are being paid by a construction contractor as a subcontractor.” No evidence shows that Roger’s Dirt Works, Inc., had validly elected an exemption from chapter 440 for the period of June 14 through December 31, 2015.
The Department also proved that “uninsured labor” should be included in Respondent’s imputed payroll. Respondent’s business records document cash payments to one or more unnamed recipients between 2015 and 2017. Rule 69L-6.035(1)(k) requires the Department to include unidentified “cash withdrawal amounts” for purposes of determining payroll for calculating a penalty pursuant to section 440.107(7)(d)1.
Finally, Respondent’s corporate officer, Leonard Smith, should be included in the penalty calculation for the two-year period of non-compliance. Leonard Smith admitted that he received “remuneration” for his services to the church on June 13, 2017. See § 440.02(15)(b), Fla. Stat. Leonard Smith did not produce evidence that he held a valid exemption from the workers’ compensation coverage requirements under chapter 440.
Conversely, the Department did not establish that either Earl Cockeranoham or Martin Moore should be included in the penalty calculation. Based on the testimony at the final hearing, the Department did not prove, by clear and convincing evidence, that the money Respondent paid to either of these individuals was for the performance of some work or service in Respondent’s construction business. Therefore, the final penalty calculation, as determined in the 4th Amended Order of Penalty Assessment, must be reduced by $71.58 and $75.80, respectively.
Finally, the Department correctly applied NCCI classification code 6217 to Respondent’s imputed payroll. Class code 6217 covers “excavating and drivers.” The work Investigator Brigantty observed Joe Smith conduct on June 13, 2017, meets the NCCI definition of “excavating.”
Accordingly, based on the evidence and testimony produced at the final hearing, the Department proved, by clear and convincing evidence, that the penalty calculated in the
4th Amended Order of Penalty Assessment, adjusted down to
$8,219.66 per paragraph 56 above, is the appropriate penalty that should be assessed against Respondent pursuant to section 440.107(7)(d)1. and (e) and rule 69L-6.028.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services,
Division of Workers’ Compensation, enter a final order determining that Respondent, Leonard Smith, d/b/a Site Development & Pipeline Construction, Inc., violated the requirement in chapter 440 to secure workers’ compensation coverage, and imposing a total penalty of $8,219.06.
DONE AND ENTERED this 13th day of September, 2019, in Tallahassee, Leon County, Florida.
S
J. BRUCE CULPEPPER 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 13th day of September, 2019.
ENDNOTES
1/ All statutory references are to Florida Statutes (2017), which was the law in effect at the time of Respondent’s alleged violation and, therefore, applies to this proceeding.
2/ The Stop-Work Order was formally served on Leonard Smith by certified mail on June 22, 2017. The Stop-Work Order records that its “issuance date” was June 14, 2017.
3/ The Department obtained this figure from the Florida Department of Economic Opportunity, which determined that the statewide average weekly wage paid by employers beginning on January 1, 2017, equaled $886.46.
4/ The Scopes Manual classification codes are four-digit codes assigned to various occupations by the NCCI to assist in the calculation of workers’ compensation insurance premiums. The Department has adopted the Scopes Manual through rule 69L- 6.021(1).
5/ The Department asserts that a weekly payroll for Joe Smith should be imputed for the entire two-year period of non- compliance. The competent substantial facts, however, establish that Joe Smith only worked one day for Respondent (June 13, 2017). At the final hearing, the Department explained that, because Respondent’s business records were not sufficient to enable the Department to confirm the exact dates that Joe Smith was Respondent’s “employee,” it is authorized to calculate a penalty for Joe Smith from June 14, 2015, through June 13, 2017. The penalty the Department seeks based solely on Respondent’s failure to secure workers’ compensation coverage for Joe Smith is
$5,615.48, approximately 68 percent of the total fine. While this penalty appears inequitable based on Joe Smith’s one day of work, the language of chapter 440 allows this severe result.
COPIES FURNISHED:
Kyle Christopher, Esquire
Florida Department of Financial Services Office of the General Counsel
Hartman Building
2012 Capital Circle Southeast Tallahassee, Florida 32399 (eServed)
Leonard Smith
Site Development & Pipeline Construction, Inc.
403 South Parsons Avenue Seffner, Florida 33584
Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services
200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed)
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within
15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.
| Issue Date | Document | Summary |
|---|---|---|
| Jan. 26, 2021 | Agency Final Order | |
| Sep. 13, 2019 | Recommended Order | The Department proved, by clear and convincing evidence, that Respondent failed to secure required workers' compensation coverage for its "employees" during the period of non-compliance. The Department property calculated the penalty, with two exceptions. |
