STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STRICKLAND ELECTRIC COMPANY ) OF TALLAHASSEE, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 86-2963

) DEPARTMENT OF GENERAL SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a hearing was held before William R. Cave, a Hearing Officer of the Division of Administrative Hearings, on November 18, 1986, in Tallahassee, Florida. The issue for determination is whether the minority person had control of the management and daily affairs of the business and whether the Petitioner employs twenty-five (25) or less "permanent full-time" employees.

APPEARANCES

For Petitioner: E. Thomas Brushwood, Esquire

NOHRR, NOHRR, BRUSHWOOD, ELLIS & ELLIS, P.A.

Post Office Box 10117 Tallahassee, Florida 32302

For Respondent: Claire D. Dryfuss, Esquire

Office of General Counsel Department of General Services Room 452, Larson Building Tallahassee, Florida 32399

On May 5, 1986, Jean Strickland filed a request for Petitioner to be certified as a Minority Business Enterprise with the Respondent. On June 24, 1986, Respondent notified Jean Strickland that the request had been denied for failure to establish eligibility under Chapter 288, Florida Statutes, and Rule 18-8, Florida Administrative Code. On July 11, 1986, Petitioner requested an extension of time for filing a Petition For Formal Hearing and on July 14, was granted an extension of time until August 13, 1986, to file its Petition For Formal Hearing. On August 7, 1986, Petitioner timely filed its Petition For Formal Hearing with Respondent and on August 11, 1986, the Division of Administrative Hearings received the request from Respondent to assign a Hearing Officer to hold the formal hearing.

At the time set for hearing, argument of counsel was heard on Respondent's Motion To Strike and the motion was denied.

Petitioner presented the testimony of Jean Strickland, Bobby T. Strickland, William Childers, Thad Chason, Jon Winchester, Doug Walsh, David Merrill, Alban Stewart, and Benjamin Campbell. Petitioner's Exhibits Nos. 1 and Composite 2 were received into evidence. Respondent presented the testimony of Patricia Freeman. Respondent's Exhibits Nos. 1 through 6 were received into evidence.

The parties submitted posthearing Proposed Findings of Fact and Conclusions of Law. A ruling on each Proposed Finding of Fact has been made as reflected in the Appendix to this Recommended Order.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:

1. Jean Strickland is a minority person as defined in Section 288.703(3)(f), Florida Statutes, who owns fifty-one (51) percent of the stock in Petitioner, Strickland Electric Company of Tallahassee, Inc. (Strickland) and is the President and sole Director.

   
   

2. Bobby T. Strickland, husband of Jean Strickland, owns forty-nine (49) percent of the stock in Strickland and is Vice-President.

   
   

3. Jean Strickland was issued ten (10) shares of stock in Strickland on April 15, 1972, and forty-one (41) shares of stock in Strickland on August 22, 1955, giving Jean Strickland fifty-one (5l) percent ownership of Strickland.

   
   

4. From March 10, 1972, until October 31, 1986, Jean Strickland was Secretary/Treasurer of Strickland and one (1) of its two (2) Directors. On October 31, 1986, Jean Strickland was voted President of Strickland in a special meeting of the Board of Directors of Strickland. At a special meeting of the Board of Directors of Strickland on November 17, 1986, Bobby T. Strickland resigned as Director of Strickland and the By-Laws of Strickland were amended to allow only one (1) Director, thereby leaving Jean Strickland as the sole Director of Strickland.

   
   

5. From March 10, 1972, until October 31, 1986, when Jean Strickland was elected President, Bobby T. Strickland was President and one (1) of the two (2) Directors of Strickland. On October 31, 1986, Bobby T. Strickland was elected Vice-President of Strickland and resigned his directorship on November 17, 1986.

   
   

6. Strickland has a net worth of less than one million ($1,000,000.00); is domiciled in Florida; and is organized to engage in commercial transactions.

   
   

7. Jean Strickland is not a licensed electrical contractor.

   
   

8. Bobby T. Strickland holds a master electrician's license and is a licensed electrical contractor.

   
   

9. As the only Director and President, Jean Strickland has general supervision and control of all the business and affairs of Strickland.

   
   

10. Because of Bobby T. Strickland's expertise in the electrical contracting business, Jean Strickland delegates the majority of the hiring, firing and supervision of the field personnel, including job site foremen, to Bobby T. Strickland. At times Jean Strickland shares this responsibility with

    Bobby T. Strickland. The field employees represent a large percentage of the total employees of Strickland.

    
    

11. Jean Strickland shares the responsibility of hiring, firing and supervising the service personnel. The service work represents approximately ten percent (10 percent) of Strickland's business.

    
    

12. Jean Strickland shares the responsibility of hiring, firing and supervising the purchasing agent and the employee who works on preparing the bid proposals.

    
    

13. Jean Strickland is responsible for hiring, firing and supervising the warehouseman and other office personnel such as secretaries.

    
    

14. Jean Strickland shares the responsibility of purchasing goods and equipment needed by Strickland with Bobby T. Strickland, but because of his expertise in the electrical contracting business, Bobby T. Strickland has the responsibility of purchasing the majority of the larger equipment needed by Strickland which represents thirty to forty percent (30 percent to 40 percent) of the equipment purchased after consulting with Jean Strickland. Jean Strickland has the responsibility of purchasing the small equipment and supplies needed by Strickland.

    
    

15. Jean Strickland shares the responsibility of purchasing business insurance with Bobby T. Strickland; with Jean Strickland having the major responsibility for group health insurance and Bobby T. Strickland having the major responsibility for bond insurance because of his expertise.

    
    

16. Being the owner of forty-nine percent (49 percent) of Strickland, Bobby T. Strickland shares in the financial responsibility and control over financial affairs with Jean Strickland. Both Jean Strickland and Bobby T. Strickland are personally liable for all financial obligations of Strickland. Both Jean Strickland and Bobby T. Strickland are signatories on the two (2) bank accounts of Strickland which require only one (1) signature.

    
    

17. Jean Strickland shares the responsibility of preparing bids and deciding which jobs Strickland will bid with Bobby T. Strickland.

    
    

18. Because of his expertise in the electrical contracting business, Bobby

    T. Strickland is basically responsible for the technical side of the business and, therefore, handles the field work which employs the larger portion of Strickland's employees. However, under the corporate structure of Strickland, Bobby T. Strickland is directly responsible to Jean Strickland.

    
    

19. Jean Strickland trains and is directly responsible for the office personnel.

    
    

20. Both Jean Strickland and Bobby T. Strickland share the responsibility of handling change orders but, because of his expertise in electrical contracting, Bobby T. Strickland handles technical change orders which constitutes the majority of the change orders.

    
    

21. Bobby T. Strickland receives an annual salary of thirty thousand dollars ($30,000.00). There was no evidence that Bobby T. Strickland's annual salary was excessive when considering his technical expertise and the fact that he is a master electrician.

22. Although Jean Strickland testified that her annual salary was thirteen thousand five hundred dollars ($13,500.00), Strickland's payroll records, Respondent's Exhibit No. 3, indicates that her annual salary is fifteen thousand six hundred dollars ($15,600.00) and in addition, when company profits will allow, she receives a bonus.

    
    

23. Jean and Bobby T. Strickland jointly own the property upon which the business is located.

    
    

24. Because steady employment with Strickland, as with other contracting businesses, depends upon successfully bidding jobs to provide that employment, employees are hired at an hourly wage for a particular job with the understanding that unless other work becomes available they will be terminated upon completion of that particular job. Therefore, permanent employment with Strickland is the exception and not the rule.

    
    

25. Strickland employs approximately forty-two (42) employees and, with the exception of Jean and Bobby T. Strickland, all are paid an hourly wage.

    
    

26. With proper authorization from the employee, Strickland will deduct the premium for an accident insurance policy which is negotiated by the employee and Colonial Insurance Company.

    
    

27. After being employed one (1) month, employees may sign up for group health insurance and life insurance which premiums the employees are responsible for paying.

    
    

28. After six (6) months employment, employees are participating members in Strickland's profit and pension plan, but they are not vested in the plan until the end of three (3) years, and then only thirty percent (30 percent) vested. There was no evidence as to how long it took to become one hundred percent (100 percent) vested.

    
    

29. After five (5) years of employment, employees are entitled to a paid vacation and medical insurance paid by the company.

    
    

30. Hourly employees, whether full-time or part-time, do not get paid for holidays or for time taken off because of sickness.

    
    

31. All hourly employees, other than part-time employees, are generally expected to work forty (40) hours per week and are considered full-time employees. At times relevant to this proceeding, Strickland employed approximately thirty (30) full-time employees.

    
    

32. Presently Strickland employs nine (9) employees, excluding Jean Strickland, who have been with Strickland over five (5) years and four (4) employees who have been with Strickland over three (3) years.

    
    

    CONCLUSIONS OF LAW

    
    

33. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, this proceeding. Section 120.57(1), Florida Statutes.

    
    

34. The burden of proof is on the party asserting the affirmative of an issue before an administrative tribunal. Florida Department of Transportation

    v. J. W. C. Company, Inc., 396 So.2d 778 (1 DCA Fla. 1981). Strickland must

    prove its entitlement to certification as a Minority Business Enterprise by a preponderance of the evidence. Florida Department of Health and Rehabilitative Services v. Career Service Commission, 289 So.2d 412 (4 DCA Fla. 1974).

    Strickland has met its burden to prove entitlement to certification as a Minority Business Enterprise.

    
    

35. Section 288.703(2), Florida Statutes, defines a Minority Business Enterprise as "any small business concern which is defined in subsection (1) which is organized to engage in commercial transactions, which is domiciled in Florida, and which is at least 51 percent owned by minority persons and whose management and daily operations are controlled by such persons." (Emphasis supplied.)

    
    

36. Respondent, in attempting to set forth factors to be considered when establishing whether the minority person has control over the management and daily operations of the business, adopted Rule 13-8.05(3), Florida Administrative Code, which provides as follows:

    
    

    1. An applicant must establish that the minority owners possess control over the management and daily operations of the business. The Department will consider the following factors:

       1. Whether the minority owners have control over the purchase of goods, equipment,

          business inventory and services needed in the day-to-day operations of the business.

       2. Whether the minority owners have the authority to hire and fire employees.

       3. Whether the minority owners have a knowledge of the financial structure of the business and control over all financial affairs.

       4. Whether the minority owners control business accounts - checking, savings, and other financial affairs.

       5. Whether the minority owners have the capability, knowledge, and experience required to make decisions regarding that particular type work.

       6. Whether the minority owners have displayed independence and initiative in seeking and negotiating contracts, accepting and rejecting bids and in conducting all major aspects of the business.

          
          

37. Applying the above rule to the evidence established in this case, it is clear that Jean Strickland, the minority person, controls the management and daily operations of the business notwithstanding that she delegates or shares responsibility of the technical side of the business with Bobby T. Strickland.

    
    

38. Section 288.703(1), Florida Statutes, defines a small business as "an independently owned and operated business concern which employs 25 or fewer permanent full-time employees, and which has a net worth of not more than one million dollars." (Emphasis supplied.)

39. The above definition requires that for employees to be included in this count, they must be both permanent and full-time employees. The terms permanent, full-time or permanent full-time are not defined by statute or by administrative rule. However, the Court in Russell & Axon v. Handshoe, 176 So.2d 909 (1 DCA Fla. 1965), cert. den., 188 So.2d 317 (Fla. 1966), cited the general rule that permanent employment means steady employment, a steady job, a position of some permanence, as contrasted with a temporary employment or a temporary job, and in further discussion of the terms "temporary" and "permanent" characterized a permanent employee as one entitled to all the prerequisites granted by the employer to those whose employment is deemed permanent in nature, such as the various types of fringe benefits which are normally denied to those whose employment is temporary, i.e. paid vacation time and paid medical insurance.

    
    

40. Although the evidence is clear that Strickland employs more than twenty-five (25) full-time employees, it is equally clear that less than twenty- five (25) of these full time employees are permanent full-time employees and, therefore, Strickland meets the required count of Section 288.703(1), Florida Statutes, and comes within the definition of a "small business."

RECOMMENDATION

Based on the Findings of Fact and Conclusions of Law recited herein, it is RECOMMENDED that a Final Order be entered GRANTING Petitioner's request for certification as a Minority Business Enterprise.

Respectfully submitted and entered this 30th day of December, 1986, in Tallahassee, Leon County, Florida.

WILLIAM R. CAVE

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 30th day of December, 1986.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-2963

The following constitutes my specific rulings pursuant to Section 120.59(1), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this cause.

Rulings on Proposed Findings of Fact Submitted by Petitioner Petitioner has submitted its Proposed Findings of Fact in two (2)

unnumbered paragraphs, but for purposes of this Appendix, I will refer to them

as paragraphs one (1) and two (2).

1. The first and second sentence adopted in Finding of Fact Nos. 1 and 4. The balance of the paragraph is adopted in Findings of Fact 10 through 20 and 23, but modified to show that although Jean Strickland has the authority and responsibility for the management and daily operations of the business, she does delegate or share these responsibilities with Bobby T. Strickland while maintaining the final authority and responsibility.

2. Adopted in Findings of Fact 26 through 32, but clarified, however, that portion of the sixth sentence that indicates that the employee has to be employed five (5) years before being eligible to participate in the profit and pension plan is rejected as not supported by substantial competent evidence in the record.

Rulings on Proposed Findings of Fact Submitted by Respondent

Respondent has submitted its Proposed Findings of Fact in nine (9) unnumbered paragraphs, but for purposes of this Appendix, I will refer to them as paragraphs one (1) through nine (9).

1. Adopted in Findings of Fact 1 through 5 and 10 through 13 with the exception of sentences 7 and 8 which are rejected as irrelevant and immaterial.

2. Adopted in Findings of Fact 14 and 15.

3. Adopted in Findings of Fact 7, 8, 16 and 18.

4. Adopted in Findings of Fact 17 and 18.

5. Adopted in Findings of Fact 18 and 19.

6. Adopted in Findings of Fact 18 and 20.

7. Adopted in Findings of Fact 21 and 22 as clarified.

8. Adopted in Findings of Fact 25 through 27 and 29 as clarified with the exception of the second sentence which is rejected because the substantial competent evidence in the record does not support that all forty-two (42) employees are offered a steady, established job.

9. Adopted in Findings of Fact 31 and 32 as clarified.

COPIES FURNISHED:

E. Thomas Brushwood, Esquire

NOHRR, NOHRR, BRUSHWOOD, ELLIS & ELLIS, P.A.

Post Office Box 10117 Tallahassee, Florida 32302

Claire D. Dryfuss, Esquire Office of General Counsel Department of General Services Room 452, Larson Building Tallahassee, Florida 32399

Ronald W. Thomas, Executive Director Department of General Services

Room 133, Larson Building Tallahassee, Florida 32399

Susan Kirkland, Esquire General Counsel

Department of General Services Room 457, Larson Building Tallahassee, Florida 32399

Docket for Case No: 86-002963

Orders for Case No: 86-002963