STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
HARRY A. BLAIR, )
)
Petitioner, )
)
vs. ) CASE NO. 83-0746
) DEPARTMENT OF ADMINISTRATION, ) DIVISION OF RETIREMENT, )
)
Respondent. )
)
RECOMMENDED ORDER
For Petitioner: John M. Potter, Esquire
Clewiston, Florida
For Respondent: Augustus D. Aikens, Jr., Esquire
Tallahassee, Florida
A final hearing was held in this case in Fort Myers on February 7, 1984. The issue is whether petitioner, Harry A. Blair ("Blair"), is entitled to be a member of the Florida Retirement ("FRS") from July 1, 1979, forward.
Specifically, the issue is whether Blair, an attorney for the Lee County School Board ("School Board"), is a "regular employee" entitled to membership in the FRS or an independent professional contractor.
FINDINGS OF FACT
Blair's Representation of the School Board.
Prior to January 6, 1971, Blair practiced law as a partner with Emmet Anderson, then School Board attorney, and handled some of Anderson's School Board representation. Anderson represented the School Board for a $75 per month retainer and charged fees for additional services not covered by the retainer. Following its established policy, the School Board intended to provide Anderson with retirement benefits (under the predecessor to the FRS) and, as of at least February 20, 1969, intended retirement contributions be made for the additional services, in addition to the retainer services, but excluding services for bond validation and other litigation.
On January 6, 1971, Blair replaced Anderson as the School Board's attorney. At the time, approximately 14,000 students were enrolled in the school district. (Now there are approximately 31,000.) Blair filled out and submitted an enrollment card for membership in the FRS, describing himself only as holding the title or position of "attorney." His compensation and retirement arrangements with the School Board were the same as for Anderson.
Starting January 6, 1971, Blair's retirement investment planning was based, in part, on his presumed membership in the FRS (or its predecessor). The School Board also presumed Blair was a member and, with him, made the
necessary arrangements for enrolling him and making his retirement contributions.
Beginning approximately July 1, 1972, Blair was paid a $1,000 per month retainer for "regular legal work" and additional fees, paid on an hourly rate of
$30, for "special extraordinary assignments," such as litigation and real estate transactions. Retirement contributions were made based on the retainer compensation only, paid half by the School Board and half by Blair as required by law. On January 1, 1975, the School Board began paying all of the retirement contribution as then required by law.
On December 2, 1980, Blair's retainer compensation was increased to
$1,500 per month, and his hourly rate was increased to $65. On that date, Blair's representation of the School Board also was put in writing for the first time in response to audit criticism.
Blair's School Board representation now is governed generally by the December 2, 1980, contract. The representation involved basically is of two types: "regular legal work" and litigation.
The "regular legal work" consists of: attendance at School Board meetings; advice on matters that arise at those meetings; legal opinions on questions presented by either the School Board or the Superintendent; and all other legal work which the School Board might request him to do, other than litigation. Blair is on 24-hour call and must respond to the requests of the Superintendent as well as any one of the five members of the School Board. He cannot refuse an assignment given by any a of majority of the School Hoard or, on Blair's advice, the School Board makes the rare decision that it is wiser to retain different counsel or co-counsel with more expertise in a particular area of law)
Disregarding reimbursement of costs and fringe benefits for the moment, Blair's compensation for "regular legal work" is a $1,500 per month retainer paid out of the School Board's salary account. Taxes are withheld and W-2 forms submitted.
Blair's second type of School Board representation is litigation. His litigation assignments are given to him by the School Board, sometimes through the Superintendent, and sometimes after it receives advice from Blair as part of his "regular legal work." Regardless of Blair's advice or personal preference, he must handle all litigation assignments unless, on Blair's advice, the School Board determines that it is appropriate to retain different counsel or co- counsel either with more expertise in a particular area of law or with offices closer to where the litigation, or part of it, is taking place.
Again disregarding reimbursement of costs and fringe benefits, Blair receives $65 per hour for litigation, also paid out of the School Board's salary account. Taxes have been withheld, retirement contributions made, and W-2 forms submitted on this compensation only since December 1980. No other School Board personnel considered by it to be eligible for membership in the FRS are paid in this manner, only ineligible consultants.
Blair's travel expenses are reimbursed under the same procedure used for all other School Board employees, i.e., in accordance with Section 112.061, Florida Statutes. Some of his other direct costs of representing the School Board, including at least some long distance telephone charges and postage for extraordinary mailings, are reimbursed. Stationery, envelopes, and note pads
are supplied by the School Board, and Blair has a School Board extension telephone in his law office. Other direct and indirect costs, including postage for regular mail and copying, are absorbed by Blair.
As for fringe benefits, Blair receives the life, health, and workmen's compensation insurance benefits received by all other School Board employees. But Blair and the School Board do not deem vacation, annual, or sick leave to be appropriate, since he does the School Board work as necessary and, to a large extent, on his own schedule. Therefore, he does not receive those benefits.
In addition, Blair has complied with the School Board's request that he participate in several education law associations (including National Council of School Board Attorneys, Florida School Board Attorneys' Association, and the National Organization for Legal Problems in Education) and has lectured at some of the conventions. The School Board reimburses his travel expenses, as previously mentioned, and pays the membership dues for him. While these arrangements could perhaps be viewed as fringe benefits, Blair's participation seems to be a condition of continued employment, if not even a part of his "regular work."
The contract is actually between the school Board and Harry A. Blair, P.A., the professional association through which Blair conducts his private law practice. Blair's School Board representation makes up about 30-50 percent of his civil trial law practice. Blair has his School Board work performed by himself and the staff of his private law practice (an associate, two secretaries, and a receptionist) under his direction and supervision.
Blair's associate performs School Board work which Blair, for some reason, cannot do himself. Blair charges at least some of his associate's time spent on litigation matters at $50 per hour; no extra charge is made when the associate does Blair's "regular legal work."
Between July 1, 1979, and November 1980, only Blair's retainer went into his personal account, while the litigation fees went into his law practice professional association account; from December 1980 on, all of Blair's compensation for School Board work has gone into his personal account.
Blair has no budgeted office at the School Board. The School Board's staff and typewriters are available for Blair's typing and other needs, but he has no authority over any School Board staff. Blair generally uses his private law office staff and word processor for School Board work. The law office is not a budgeted School Board office.
The School Board buys and updates several legal publications for Blair to maintain and use in his private law office, including: United States Code; Florida Administrative Code; two education law reporters; and several other education law periodicals. The School Board bought and updates a labor law reporter for Blair's use, but this publication is maintained at School Board offices.
Finally, Blair's relationship with the School Board is unique in that, while the School Board can terminate the relationship at will on 30 days' notice, Blair cannot terminate the relationship until he secures an appropriate replacement.
The Division's Actions.
Starting January 6, 1971, respondent, the Department of Administration, Division of Retirement ("Division"), accepted Blair's enrollment and retirement contributions. But in 1979, the Division duly promulgated new rules effective July 1, 1979, which, if read, would have placed Blair and the School Board on notice that Blair's eligibility for membership in the FHRS was at least questionable according to the rules. Then, on September 15, 1979, the Division directed a general request to the School Board, among all other FRS reporting agencies, to check their reporting of persons eligible for membership in the FRS for compliance with new retirement rules adopted July 1, 1979. The School Board paid no particular attention to the request, at least as far as Blair was concerned, and did not bring it to Blair's attention.
On December 12, 1980, the Division again wrote the School Board, in care of its Superintendent, this time concerning the eligibility of Blair in particular. The Division requested the completion of a questionnaire designed to assist it in determining Blair's eligibility for retirement. It is reasonable to infer that the School Board did bring this communication to Blair's attention, but it made no immediate response. On March 25, 1901, the Division again requested the same information.
By letter dated February 8, 1983, the Division made a preliminary determination that Blair is ineligible for membership in the FRS. The letter, signed by the Chief of the Bureau of Enrollment and Contributions, stated (1) that Blair was eligible prior to July 1, 1979, because he was being paid from a salary account and therefore was considered to be filling a regularly established position, but (2) that by rule effective July 1, 1979, the Division defined "regularly established position" and, under Rule 22s-6.01(12) in particular, Blair was ineligible. The Division's witness, who drafted the letter, also understood that to be the effect of the new rules.
Blair interpreted the February 8, 1983, letter as his Section 120.57(1) point of entry and requested formal administrative proceedings. During the pendency of these proceedings, the Division has withdrawn Blair from the FRS, subject to the final order in this case. 1/
CONCLUSIONS OF LAW
Burden of Proof and Persuasion.
At the outset of the final hearing, Blair sought a ruling that the Division has the burden of proof and persuasion. I ordered that Blair should proceed with his evidence, but reserved ruling which party has the ultimate burden of persuasion.
The evidence was that Blair's enrollment and contributions were accepted by the Division and that the key Division personnel believed Blair was eligible before the new Division rules went into effect on July 1, 1979. Then, when the Division initiated action to remove Blair from the FRS, it chose to remove him as of July 1, 1979. Although no previous formal determination of eligibility was made, the Division's actions suggest that it considered Blair eligible under the rules as they existed before July 1, 1979.
Before the new rules, Rule 22B-1.04, Florida Administrative Code, simply provided that participation in the FRS was compulsory for all employees of a district school board. Section 121.021(11), Florida Statutes, defined "office or employee and "any person receiving salary payments for work performed
in a regularly established position." And Section 121.021(22) included the following exemption from the term "compensation": "Under no circumstances shall compensation include fees paid professional persons for special or particular services." Under the law as it existed before July 1, 1979, it was reasonable for the Division to have concluded that Blair was eligible for membership in the FRS. Since Blair's actual job functions remained exactly the same, he had no obligation under Section 121.021(12) or (38), to prove continuing eligibility.
Based on the evidence relevant to the issue, I conclude that the Division has the ultimate burden of persuading the finder of fact that Blair is now ineligible for membership in the FRS. Applying the basic principles established in Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977), the Division viewed its July 1, 1979, rules as a statewide reclassification of people like Blair. As a result of this reclassification, the Division asserts Blair's current ineligibility while conceding his eligibility prior to the July 1, 1979, rules. Therefore, it is asserting the affirmative of the issue. That Blair is a highly sophisticated litigant, unlike the private litigants in Balino, does not alter the application of these basic principles established by the decision.
The Division recently reached the opposite conclusion in its Final Order, Potter v. Division of Retirement, DOAH Case No. 83-1747, entered March 2, 1984. But that decision is not consistent with Balino, which has greater dignity and which is the precedent which binds this proceeding.
Evidentiary Rulings.
Blair objected to introduction of all Respondent's Exhibits except 8 on the ground that they were not identified in a pretrial stipulation. That objection is overruled.
Neither party complied with the order requiring a pretrial stipulation. From the record, Blair had no reason to believe that the Division would not introduce any evidence in support of its case other than Joint Exhibit
1 and the Questionnaire (which neither party introduced, as it turned out). The Division only represented that it relied on the grounds set forth in those two documents. Blair knew for over six months before final hearing that the Division had not reciprocated his disclosure of witnesses and exhibits--ample time to either move to compel the Division or seek the information through discovery. Finally, Respondent's Exhibits were obtained from School Board records to which Blair had ready access. Therefore, while the parties opened themselves to fair criticism for not properly following through on prehearing procedures, this is not an adequate ground to exclude the exhibits from evidence.
Blair also objected to Respondent's Exhibits 1, 2, 6, 7, 9, and 10, alleging that they are irrelevant. A review of the exhibits in light of all the evidence indicates that some of the exhibits cannot be given very much weight. But it cannot be said that they are entirely irrelevant. Blair's objection is therefore overruled.
Blair Has No Vested Interest in FRS Membership After July 1, 1979.
Blair seeks to cut this case short by contending that he has a vested interest in FRS membership after July 1, 1979. Three Division determinations of prospective ineligibility, of which one withstood appeal, belie Blair's contention. Id., Bryan W. Henry v. Department of Administration, Division of
Retirement, 4 FALR 1295A (DOA, DOR 1982), revised in part, affirmed in part, Henry. Department of Administration, Division of Retirement, 431 So.2d 677 (Fla. 1st DCA 1983); Final Order, Ben L. Bryan, Jr. v. Department of Administration, Division of Retirement, DOAH Case No. 82-3460, June 7, 1983. As those cases state or imply, rights under the FRS do not vest during the first ten years of membership. See also Florida Sheriffs Association v. Department of Administration, 408 So.2d 1033 (F1a. 1982). Therefore, Blair has no vested right to retirement benefits.
The Division Is Not Estopped from Denying Blair's FRS Membership After July 1, 1979.
There are not present in this case the elements of an estoppel to prevent the Division from denying Blair's FRS membership after July 1, 1979. See Henry, 431 So.2d at 681; Final Order, Potter v. Division of Retirement, supra.
The decisions cited by Blair on this point are not controlling. As already stated, unlike in State ex rel. Melton v. Board of Public Instruction for Dade County, 191 So.27 (Fla. 1939), and in In Re The Florida Bar, 281 So.2d
21 (Fla. 1973), Blair has no vested rights to retirement benefits. And In Re Florida Board of Bar Examiners, 268 So.2d 371 (Fla. 1972), contains only dicta on the subject which is contrary to the holding in Henry, supra.
Whether the Division would be estopped to deny Blair's membership before July 1, 1979, need not be addressed. The Division eliminated that issue by not proposing to make a retrospective determination of ineligibility.
Blair Does Not Meet the Requirements for Eligibility for FRS Membership After July 1, 1979.
Prior to July 1, 1979, there were no rules-to clarify the question whether a person such as Harry A. Blair is eligible for membership in the FRS. At all times pertinent to this case, Section 121.021(22), Florida Statutes (1983), defined the term "compensation" and stated: "Under no circumstances shall compensation include fees paid professional persons for special or particular services." Section 121.021(22) might require the conclusion that such a person is ineligible for FRS membership if all his compensation is attributable to fees for special or particular services It would require the conclusion that, even if such a person could be eligible for membership, the portion of his compensation attributable to fees for special or particular services cannot be included as part of his "compensation," as that term is defined by 121.021(22). But, it does not require the conclusion that professionals who charge fees for special or particular services are ipso facto ineligible for FRS membership. See Frank A. Howard, Jr. v. Department of Administration, Division of Retirement, 4 FALR 542A (DOA, DOR 1981).
Section 121.051(1)(a), Florida Statutes (1983), provides that membership in the FRS is "compulsory as to all officers and employees . . ." Section 121.021(11), Florida Statutes (1983), states: "`Officer or employee' means any person receiving salary payments for work performed in a regularly established position . . ."
Blair's hourly rate fees clearly are "fees," as defined by 121.021(22), and therefore not includable in "compensation" for retirement purposes. But the more difficult question is whether Blair's $1,500 per month retainer payments constitute "salary payments for work performed in a regularly
established position." Labels given by the various witnesses to the retainer as either fee or salary are not dispositive. The answer must come from an analysis of the pertinent statutes and rules.
Effective July 1, 1979, the Division promulgated rules purporting to clarify the answers to these questions. Rule 22B-1.04 Florida Administrative Code, provides in pertinent part:
Membership in the Florida Retirement System shall be compulsory if the employee
is filling a full-time or part-time regularly established position. An employee filling a regularly established position shall be enrolled on the first day of employment, even if the employee is serving a probationary period, or working part-time. A position meeting the definition below shall be considered a regularly established position....
A regularly established position in a local agency (district school board, county agency, community college, city and special district) is an employment position which will be in existence beyond four consecutive months. A local agency when creating or establishing an employment position, except for positions identified in 22B-1.04(5) (c)6.a. or 2251.04(6)(e), should determine if the position will exist beyond four consecutive calendar months. If it will, then it is for retirement purposes, a regularly established position. If it will not, then it is a temporary position for retirement purposes . . A regularly established position shall be compensated from the employer's regular salaries and wages account as required by: 6A-1.01,
F.A.C. for district school board . .
* * *
An employee who is filling a temporary position shall not be eligible for membership in the Florida Retirement System.
An employer employing a person in a temporary position shall advise the employee at the time of his employment that -he is filling a temporary position and cannot participate in the Florida Retirement System or claim this temporary employment later for retirement purposes. The employee shall also be advised that his wages are not covered for social security purposes unless that employer has
an absolute coverage (no exclusions) agreement with the Social Security Administration and the State of Florida.
A position shall not be considered temporary due to the uncertainty of the employee's intention to continue employment. A position
meeting the definition below shall be a temporary position.
* * *
An employment position which will not exist beyond four (4) consecutive calendar months; or
An employment position which is listed below in (e) regardless of whether it will exist beyond four consecutive months.
When an employment position in a local agency is extended beyond four consecutive calendar months, with the exception of those listed in (e) below, it shall become a regularly established position for retirement purposes and the employer shall enroll the current employee filling the position into the retirement system and shall begin the first day of the fifth calendar month to make the necessary contributions.
A temporary position shall be compensated as follows: . district school boards from the other personal services (OPS) account as required by 6A-1.01, F.A.C.
The following types of positions in a local agency are considered temporary positions for retirement purposes. This is not a complete list of temporary positions and should be used only as a guide, along with the definitions above, in determining if an individual is filling a temporary position.
6. Consultants and Other Professional Persons on contract (as defined in 22B-6.01(12).
Rule 225-6.01(12), Florida Administrative Code, provides:
(12) CONSULTANT OR OTHER PROFESSIONAL PERSON - Means an individual who: agrees to provide certain services; works according to his own methods; is not subject to the control of his employer, except as to the results of his work; and does not enjoy the fringe benefits offered by the employer. A consultant or other professional person usually: is compensated from another salaries and wages account; does not earn annual or sick leave; and may frequently do a majority of his
work In his own office rather than on the employer's premises. (See 225-1.04 (6)(e)6.
Rule 225-6.01, Florida Administrative Code, also provides, in pertinent part:
(33) OFFICER OR EMPLOYEE Means any person receiving salary payments for work performed in a regularly established position with any agency, branch, department, institution,
university, institution of higher education, or board of the state, or any county agency, branch department, board, district school board, or any city or special district of the state which participates in the Florida Retirement System. (See definition of "regularly established position" and "salary payments.")
(47) TEMPORARY POSITION . . . A temporary position in a local agency is an employment position which will exist for less than 4 consecutive months, or an employment position which is listed in 22B-1. 04(6)(e) regardless of whether it will exist for 4 consecutive months or more.
It is evident from the foregoing rules that the question whether Blair's $1,500 per month retainer payments are "salary payments for work performed in a regularly established sultant or other professional person on contract" as Rules 22B-1.04(6)(e)6 and 22B-6.01(12), Florida Administrative Code, define that phrase. Althoiigh located among rules which define eligibility in terms of the permanency of the position, it is evident that Rule 22B-1.04(6)(e)6 does not actually concern itself with whether a "professional or consultant on contract" is filling a "temporary position." Rather, it concerns itself with whether the "contract" is an "employment contract" or an "independent contract," as those terms are used in the common law.
The criteria of Rule 22B-6.01(12) must be examined with this in mind:
2/
For his retainer, Blair has agreed to provide all legal services
the School Board needs except litigation, for which he charges extra fees. 3/ In this respect, there is not much difference between Blair's retainer arrangement with the School Board and the job description of many other regular employees.
The School Board has no more or less control over Blair than any public agency has over its employed lawyers.
Blair enjoys all fringe benefits of life insurance, health insurance, and workmen's compensation insurance.
Blair is compensated from the School Board's salary account.
Blair does not get sick leave, annual leave, or vacation leave.
Blair has almost all of his School Board work done in his own law
office.
In one sense, Blair works according to his own methods the same as
any publicly employed lawyer works according to his own methods, especially when he is the senior or only lawyer representing the agency. Blair, like any lawyer, decides how to best accomplish the work at hand unless the client instructs him otherwise. But in another, very important sense, the manner in which Blair has his School Board work done according to his own methods differs markedly from how other publicly employed lawyers have theirs done. The School
Board's contract with Blair actually is a contract with the professional association through which Blair conducts his law practice. Blair has the School Board's work performed by the staff of his private law practice. And, while there are other "badges" of an independent contract (some, but not all, of which are present in this case), the classic independent contract is one in which the independent contractor agrees, in return for payment, to have certain work performed by means of his independent business. In such a case, the independent contractor is selling more than just his labor; he also is selling the labor of his employees and sometimes ,also his equipment, supplies, and materials.
The crucial factors identified in Paragraphs (6) ,and (7) above make Blair an independent contractor with, and not an employee of, the School Board. (They also distinguish him from Frank A. Howard, Jr., whose case was cited above.) Therefore, Blair's retainer payments are not "salary payments for work performed in a regularly established position," and he is not eligible for membership in the FRS regardless how long he has been or will continue to be on retainer with the School Board. This conclusion is required by the Division's rules and furthers the Division's reasonable policy that an independent contractor should not be permitted to receive FRS retirement benefits for work performed by his employees, employees who do not receive FRS retirement benefits.
Based on the foregoing findings of fact and conclusions of law, it is recommended that the Division: (1) enter a final order declaring Harry A. Blair ineligible for membership in the Florida Retirement System after July 1, 1979; and (2) make an appropriate refund to the School Board of Lee County for contributions it has made to the account of Harry A. Blair since July 1, 1979.
RECOMMENDED this 5th day of April, 1984, in Tallahassee, Florida.
J. LAWRENCE JOHNSTON Hearing Officer
Division of Administrative Hearings 2009 Apalachee Parkway
Tallahassee, Florida 32301
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 5th day of April, 1984.
ENDNOTES
1/ All proposed findings of fact have been considered and, except to the extent consistent with the foregoing Findings of Fact, rejected as either being not supported by competent substantial evidence, being contrary to the greater weight of the evidence or being irrelevant.
2/ Blair erroneously cites Noles v. Gotti, 433 So.2d 1380 (F1a.2d DCA 1983), for the proposition that the controlling factor is whether the parties believe they are creating an employment contract or an independent contract. First, there was no persuasive evidence in this case that the parties believed they
were creating an employment contract (as opposed to an independent contract), only that they intended to provide Blair with FRS retirement benefits. Second, the only question before the court in Moles v. Gotti was whether the trial court should have received evidence of the parties' belief in this regard. The answer was "yes" because the parties' belief is a factor. Hut it is not the only or the controlling factor.
3/ The Division did not establish that Blair must decline School Board work which creates a conflict with his other private clients; Blair's other private clients could have agreed with him that Blair would represent the School Board in such circumstances.
COPIES FURNISHED:
John M. Potter, Eso.
Post Office Box 96
Clewiston, Florida 33440
Augustus D. Aikens, Jr., Esquire Division of Retirement Department of Administration 2639 North Monroe Street
Suite 207, Building C Tallahassee, Florida 32303
Mr. Nevin G. Smith Secretary
Department of Administration
435 Carlton Building Tallahassee, Florida 32301
Harry A. Blair, Esquire Post Office Box 1467
Fort Myers, Florida 33902
| Issue Date | Proceedings |
|---|---|
| Jun. 01, 1990 | Final Order filed. |
| Apr. 05, 1984 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| May 04, 1984 | Agency Final Order | |
| Apr. 05, 1984 | Recommended Order | School Board attorney paid flat retainer plus fees at hourly rate, not salary payments. Petitioner was not employee entitled to retirement fund membership. |
ST. LUCIE COUNTY SCHOOL BOARD vs LURANA HILLARD, 83-000746 (1983)
GASPARE B. TAMBURELLO vs DIVISION OF RETIREMENT, 83-000746 (1983)
MELCENE L. CARTER vs. DIVISION OF RETIREMENT, 83-000746 (1983)
FRED D. GREENE vs. HAMILTON COUNTY SCHOOL BOARD, 83-000746 (1983)
GEORGE TAMALAVICH vs DEPARTMENT OF MANAGEMENT SERVICES, DIVISION OF RETIREMENT, 83-000746 (1983)
