STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEES, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 87-0515
) DEPARTMENT OF GENERAL SERVICES, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to written notice, a formal hearing was held in this case before Larry J. Sartin, a duly designated Hearing Officer of the Division of Administrative Hearings, on July 7, 1987, in Jacksonville, Florida.
APPEARANCES
For Petitioner: John B. MacDonald, Esquire
Brant, Moore, Sapp, MacDonald, & Wells, P.A.
121 West Forsyth Street, Suite 900 Post Office Box 4548
Jacksonville, Florida 32202
For Respondent: Claire D. Dryfuss, Esquire
Office of General Counsel Department of General Services Room 452, Larson Building Tallahassee, Florida 32399-0955
PROCEDURAL STATEMENT
In November, 1986, Gale Dees Paschal, on behalf of the Petitioner, Dees, Inc., filed a request for certification as a minority business enterprise with the Respondent, the Department of General Services. By letter dated January 16, 1987, the Respondent denied the request for certification. The Petitioner filed a petition for formal hearing challenging the denial.
At the final hearing, the Petitioner presented the testimony of Gale Dees Paschal, Robert Hazard, Joye Glenna, Edith Dees, Michael Dees and L. Wayne Long. The Petitioner offered 41 exhibits, which were marked as "Dees" exhibits.
Exhibits 1-35 and 38-41 were accepted into evidence. Exhibits 36 and 37 were rejected.
The Respondent did not call any witnesses. The Respondent offered 2 exhibits. Those exhibits were marked as "DGS" exhibits and were accepted into evidence.
The parties have timely filed proposed recommended orders containing proposed findings of fact. A ruling on each proposed finding of fact has been made either directly or indirectly in this Recommended Order or the proposed finding of fact has been accepted or rejected in the Appendix which is attached hereto.
ISSUE
Whether the Petitioner qualifies as a minority business enterprise?
FINDINGS OF FACT
J. F. Dees is the husband of Edith Dees and the father of Gale Dees Paschal and Michael Dees. Edith Dees is the mother of Ms. Paschal and Michael Dees.
In 1959, J. F. Dees and Edith Dees began operating a painting business. The business was eventually incorporated as J. F. Dees, Inc.
J. F. Dees, Inc., employed union employees.
In June of 1974, Ms. Dees formed the Petitioner. The Petitioner was formed so that nonunion labor could be used and to provide for the future of Ms. Paschal and Michael Dees.
Ms. Dees owned 100 percent of the stock of the Petitioner from its formation in 1974 until 1976. In 1976, Ms. Dees sold 50 percent of the stock of the Petitioner to Ms. Paschal and 50 percent to Michael Dees.
The purchase price for 50 percent of the stock of the Petitioner in 1976 was $25,000.00, half the appraised value of the Petitioner at that time. The money used by Ms. Paschal and Michael Dees to purchase the stock was given to them by Ms. Dees.
After selling the stock of the Petitioner, Ms. Dees and J. F. Dees retired.
From 1976 until June, 1986, Ms. Paschal and Michael Dees were 50-50 owners and the only directors of the Petitioner.
On June 19, 1986, Ms. Paschal and Michael Dees each gave 100 shares of their stock in the Petitioner to Ms. Dees. Ms. Dees was given an interest in the Petitioner and returned to work because J. F. Dees had suffered a serious illness. As a result of this illness, Ms. Dees had suffered financial difficulties which necessitated her return to work.
The Petitioner is a Florida corporation. It was formed on June 6, 1974.
The Petitioner is engaged in the business of commercial and industrial painting and related services.
The Petitioner has no affiliation or relationship with J. F. Dees, Inc., or any other business.
As of March 31, 1986, the net worth of the Petitioner was $652,128.29. No financial statements as of March 31, 1987, or any other date after March 31, 1986, have been prepared.
In 1986 the Petitioner had gross sales of over $2,000,000.00. The net profit on the Petitioner's gross sales was $164,870.23.
The net worth of the Petitioner as of the date of the final hearing of this case was less than $1,000,000.00.
The Petitioner is performing a useful business function.
Ms. Paschal and Ms. Dees are not employees of a non-minority business with any ownership interest in the Petitioner.
The Petitioner has one outstanding class of stock. The outstanding stock of the Petitioner is currently owned as follows:
Ms. Paschal 400 Shares -- 40 percent Michael Dees 400 Shares -- 40 percent Ms. Dees 200 Shares -- 20 percent
Ms. Paschal, Ms. Dees and Michael Dees are the only directors of the Petitioner at this time.
The By-Laws of the Petitioner provide that the management and control of the business of the Petitioner is vested in the Board of Directors. Any combination of two directors can control the business of the Petitioner.
The Petitioner's officers are as follows: President: Ms. Paschal
Vice-President: Michael Dees
Vice-President: Ms. Dees Secretary/Treasurer: Joye M. Glenna
The By-Laws of the Petitioner provide the following with regard to the duties of the officers:
The duties of the officers shall be such as are usually imposed upon such officials of corporations and as are required by law, and such as may be assigned to them, respectively, by the Board of Directors from time to time.
Ms. Paschal, Ms. Dees and Michael Dees are all paid a salary for the work they perform for the Petitioner.
The Board of Directors approves Christmas bonuses. In 1985 no bonuses were given to Ms. Paschal, Ms. Dees or Michael Dees. In 1986, Michael Dees was awarded a bonus. The bonus was awarded to Michael Dees because of his work as one of 5 estimators of the Petitioner. His bonus was computed in the same manner that bonuses for the other 4 estimators were calculated. Bonuses were awarded based upon an employee's contribution to the Petitioner's business. Ms. Paschal and Ms. Dees did not receive a bonus in 1986 because they did not work as estimators.
Michael Dees has received a loan from the Petitioner.
The Petitioner is a subchapter S corporation for Federal income tax purposes. The profits and losses of the Petitioner are allocated to Ms. Paschal, Ms. Dees and Michael Dees in the same proportions as their stock ownership.
The five estimators of the Petitioner, including Michael Dees, have the same authority and duties. Michael Dees' primary job function with the Petitioner is in his capacity as an estimator.
Michael Dees does not supervise the work of the other 4 estimators. In his capacity as an estimator, Michael Dees prepares bids on jobs, supervises projects he is responsible for, orders materials needed for his projects and signs some correspondence. Correspondence signed by Michael Dees is prepared for his signature by Ms. Paschal. The duties Michael Dees performs as an estimator are also performed by the other 4 estimators. Estimators, including Michael Dees, hire painters and laborers for their projects. Foremen are also hired at the suggestion of the estimators by the Directors.
The Petitioner has a weekly staff meeting attended by the estimators, Ms. Paschal and Ms. Dees. Ms. Dees attends as few of the meetings as possible because she does not like getting up as early as the time the meetings are held.
The general operation of the Petitioner is discussed at the staff meetings. The estimators report on the status of their projects and recommend who should be hired as a foreman when one is needed. The ultimate decision on who is to be hired by the Petitioner is made by the Directors.
The Board of Directors has authorized Ms. Paschal, Ms. Dees, Michael Dees and Joye Glenna, the Secretary/Treasurer, to sign checks on the Petitioner's bank accounts. They are all authorized to sign checks for convenience purposes. All checks are authorized by Ms. Paschal or Ms. Dees. Ms. Glenna prepares the checks and Ms. Paschal or Ms. Glenna sign them. Ms. Paschal reviews all checks except routine ones.
Ms. Paschal is a guarantor on outstanding loans of the Petitioner. The Petitioner has not borrowed any funds since Ms. Dees acquired her stock in the Petitioner. If required by a lending institution, Ms. Dees would personally guarantee loans to the Petitioner.
Ms. Paschal, Ms. Dees and Michael Dees are all liable on the Petitioner's indemnity bond.
Ms. Paschal, Ms. Dees and Michael Dees have the authority to hire and fire employees. If an employee is to be hired or fired, they consult with each other. The last estimator position filled by the Petitioner was filled by the promotion of L. Wayne Long. Mr. Long was promoted in March, 1987. Ms. Dees participated in the decision to promote Mr. Long. Ms. Dees has participated in the decisions to hire foremen since June, 1986.
The Petitioner has 18 non-painter permanent positions: 5 estimators,
2 clerical, 8 foremen, 1 warehouse employee and Ms. Paschal and Ms. Dees.
During 1985, 1986 and the first quarter of 1987, the Petitioner reported the following number of employees on Form 941, Employer's Quarterly Federal Tax Return:
1985 | 1986 | 1987 | |
January | 64 | 58 | 52 |
February | 54 | 54 | 49 |
March | 61 | 61 | 40 |
April | 74 | 73 | |
May | 61 | 69 | |
June | 60 | 91 | |
July | 57 | 104 | |
August | 78 | 86 | |
September | 58 | 65 | |
October | 74 | 80 | |
November | 79 | 72 | |
December | 69 | 70 |
The Petitioner had 212 projects in 1986. The projects had an average duration of 8 weeks. Therefore, the Petitioner had an average of 32 projects at any given time during 1986. The Petitioner currently has approximately 34 projects.
The Petitioner has 60 to 75 persons on its payroll as of the date of the formal hearing of this case.
The Petitioner paid a bonus to 18 employees at the end of 1986. Not all permanent employees received a bonus, i.e., Ms. Paschal and Ms. Dees.
Painting contractor companies generally experience a high turnover of employees. In 1985 the Petitioner employed 337 people during the year. In 1986 the Petitioner employed a total of 374 persons.
The Petitioner has 8 foremen who are permanent full-time employees. In order for them to function they must have painters to supervise. If each foreman has only 1 painter, there would be at least 8 additional employees on a permanent full-time basis. More than 8 painters would be needed to work on the 32-34 projects the Petitioner has had at any given time in 1986 and 1987.
During 1985 and 1986 the Petitioner employed at least 23 employees who worked for at least 12 months.
Ms. Paschal is an American woman.
From 1964 until 1974, Ms. Paschal worked full-time with J. F. Dees and
J. F. Dees, Inc. Her responsibilities included accounting, payroll and payables. She learned estimating and how to prepare bids and participated in such activities.
Since 1974, Ms. Paschal has been employed full-time with the Petitioner.
From 1974 until 1976 Ms. Paschal served as a Vice-President of the Petitioner.
From 1974 until the present Ms. Paschal has served as a Director of the Petitioner.
From 1976 until the present Ms. Paschal has served as the President of the Petitioner.
Ms. Paschal graduated from high school. She also has attended Florida Junior College and the University of North Florida. She has taken courses in business and construction, including accounting, management, tax law, blueprint reading, hiring/firing, safety and loss control, Worker's Compensation, insurance and bonding and contract law.
Ms. Paschal has also attended seminars relating to product specifications and applications and computers.
Ms. Paschal is the secretary/treasurer and founding member of the First Coast Chapter of Painting and Decorating Contractors of America.
Ms. Paschal's duties as President of the Petitioner include the following:
Overseeing the day to day operations of personnel. She performs this function in part through the estimators and other management personnel who report directly to her;
Supervision and control of estimating and final bid estimates;
Reviewing specifications on all large and complex projects;
The preparation and signing of the vast majority of correspondence on behalf of the Petitioner;
Overseeing accounts receivable billings and collections. Estimators, including Michael Dees, also handle the collection of receivables. Difficult collections are often turned over to Ms. Dees to collect;
Overseeing and coordinating the use of field personnel;
Approval of payroll;
Evaluation of personnel and setting of pay;
Preparing and overseeing employee management duties, establishing company policies and compliance with personnel laws;
Responsibility for financial aspects of the Petitioner;
Procurement of insurance;
Signing contracts and change orders. Michael Dees and Ms. Dees can also sign contracts and change orders after Ms. Paschal's review and approval;
Handling legal matters, including decisions as to whether to institute legal proceedings on behalf of the Petitioner; and
Acting as spokesperson on policies of the Petitioner.
Ms. Paschal signs the vast majority of contracts entered into by the Petitioner. Michael Dees has signed contracts.
Ms. Paschal reviews and approves all bids submitted by the Petitioner. Most bids are initially prepared by the five estimators, including Michael Dees.
Ms. Paschal has prepared safety policies for the Petitioner.
Ms. Paschal has prepared employee "right to know" compliance manuals for the Petitioner's employees.
Ms. Paschal handles the Petitioner's finances, including, among other things, banking relations, loans, payroll, cash flow, review of accounts receivable and budgeting. Ms. Dees assists Ms. Paschal with cash flow and budgeting and other financial aspects of the Petitioner.
Ms. Paschal participates in the preparation of large and complex bids.
Ms. Paschal and Ms. Dees coordinate and consult on all large purchases.
Ms. Paschal keeps her direct contacts with owners, general contractors and project superintendents to a minimum. She has delegated authority to the estimators and allows them to coordinate their projects directly. She is available, however, to handle any problems which the estimators cannot handle.
When estimators have a problem they discuss the problem with other estimators, including, but not limited to, Michael Dees. If the estimators cannot resolve the problem they bring the problem to Ms. Paschal for resolution.
Ms. Dees is an American woman.
Ms. Dees has been involved in the painting business since her early childhood. Her father and her husband were involved in the contract painting business. She has been involved in virtually every function of the contract painting business, including, among other things, estimating, signing contracts, payroll, bookkeeping and inventory control. She is qualified to handle estimating work for the Petitioner.
Ms. Dees graduated from high school. Although she has not taken courses in business and construction, her extensive experience in the painting business more than compensates for her lack of formal education.
Ms. Dees has served as a Vice-President and comptroller of the Petitioner since 1986. Her duties include collection of difficult overdue accounts, overseeing accounts payable, overseeing purchasing and inventory control and job cost and overhead analysis. A shop man handles the inventory and ordering of supplies but Ms. Dees has the overall responsibility for purchasing and inventory. Ms. Dees reviews estimates prepared by the estimators and can perform estimating work.
Ms. Dees designed the purchase order system used by the Petitioner.
From 1976 until the present Michael Dees has served as a Vice- President of the Petitioner.
Michael Dees graduated from high school and attended Florida Junior College. He has taken building and construction courses and attended seminars, including blueprint reading, estimating and application of new coating products, management, hiring and firing, spray painting and contract law.
Michael Dees does not participate in the general, everyday financial affairs of the Petitioner. He is also not actively responsible for accounting, purchasing, payroll, legal matters, insurance or employee and safety regulation compliance. Michael Dees' primary activity with the Petitioner is as an estimator. Although he also serves as 1 of 3 Directors of the Petitioner, Michael Dees does not engage in the overall, daily management of the Petitioner.
Michael Dees lacks the experience and knowledge concerning the management of the Petitioner of Ms. Paschal and Ms. Dees. Although he is attempting to learn more about the operation and management of the Petitioner, he relies upon Ms. Paschal and Ms. Dees currently because of their superior experience and knowledge. At present, Michael is more interested in working and being treated in the same manner as the other estimators of the Petitioner.
Ms. Paschal has 23 years experience in the painting business, including 11 years with the Petitioner. Ms. Dees has 19 years experience in the painting business, including 3 with the Petitioner. Michael Dees has 18 years experience in the painting business, including 11 years with the Petitioner.
Ms. Paschal and Ms. Dees have knowledge of the financial structure of the Petitioner and possess the capability, knowledge and experience necessary to make decisions concerning commercial and industrial painting.
In November of 1986, a request for certification as a minority business enterprise was filed by Ms. Paschal on behalf of the Petitioner.
The Petitioner has not entered into any agreement which could result in Ms. Paschal and Ms. Dees owning less than 51 percent of the Petitioner's stock.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties to, and the subject matter of, this proceeding. Section 120.57(1), Florida Statutes (1986 Supp.).
The Petitioner is seeking approval of certification as a minority business enterprise. The burden of proving such entitlement is on the Petitioner. Rule 28-6.008, Florida Administrative Code; Florida Department of Transportation v. J.W.C. Company, Inc., 396 So.2d 778 (Fla. 1st DCA 1981); and Florida Department of Health and Rehabilitative Services v. Career Service Commission, 289 So.2d 412 (Fla. 4th DCA 1974).
A "Minority business enterprise" is defined by Section 288.703(2), Florida Statutes (1985), as:
any small business concern as 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 added].
There is no question that the Petitioner is engaged in commercial transactions, that it is domiciled in Florida and that at least 51 percent of the Petitioner is owned by minority persons (Ms. Paschal and Ms. Dees), as defined in Section 288.703(3)(f), Florida Statutes (1985). At issue are the questions of whether the Petitioner is a small business concern and whether the minority persons control the management and daily operations of the Petitioner.
Management and Control of Daily Operations
The Respondent has promulgated Rule 13-8.05(3), Florida Administrative Code, which sets out certain factors to be considered in determining whether the minority persons control the management and daily operations of the Petitioner:
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:
Whether the minority owners have control over the purchase of goods, equipment,
business inventory and services needed in the day-to-day operation of the business.
Whether the minority owners have the authority to hire and fire employees.
Whether the minority owners have a knowledge of the financial structure of the business and control over all financial affairs.
Whether the minority owners control business accounts, checking, savings and other financial affairs.
Whether the minority owners have the capability, knowledge, and experience required to make decisions regarding that particular type of work.
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.
The term "control" has been defined as "to exercise authority over; direct; command." "Authority" has been defined as "the power or a right to command, act, enforce obedience, or make final decisions; jurisdiction." Webster's New Twentieth Century Dictionary, Unabridged 1980. Based upon these definitions and the Respondent's rules, the Petitioner must first prove that Ms. Paschal and Ms. Dees exercise authority over and direct: (1) the purchase of goods, equipment, business inventory and services; and (2) all financial affairs and business accounts of the Petitioner; and they must have the power to hire and fire.
The evidence presented by the Petitioner proved that Ms. Paschal and Ms. Dees make decisions on behalf of the Petitioner with regard to the purchase of equipment, business inventory and services, all financial affairs of the Petitioner, the use of business accounts of the Petitioner and that they have the power to hire and fire. Although the evidence proved that some of these functions are also carried out by other employees of the Petitioner, including Michael Dees, all the employees, including Michael Dees, do so at the direction and under the supervision of Ms. Paschal and/or Ms. Dees.
Not all of the functions of the Petitioner concerning purchase and financial affairs and accounts are controlled by Ms. Paschal and Ms. Dees. The Respondent's rules do not, however, contemplate that all of these functions must be handled by all of the minority owners of a business. Instead, the Respondent's rules provide that the "minority owners" must possess the requisite control. In this case, the minority owners, Ms. Paschal and Ms. Dees, together possess the requisite control. Together they either carry out the functions listed in Rule 13-8.05(3), Florida Administrative Code, directly themselves or they have delegated those functions to others who are supervised by, and under the control of, Ms. Paschal and Ms. Dees.
In their capacities as President and Vice-President, Ms. Paschal and Ms. Dees control directly or indirectly all purchases on behalf of the Petitioner. Although other employees, including Michael Dees, in his capacity as an estimator, the other estimators, and the warehouse man, purchase supplies for the Petitioner, they do so under the authority delegated to them by Ms. Paschal or Ms. Dees. Michael Dees has not been delegated authority to purchase on behalf of the Petitioner in his capacity as Vice-President of the Petitioner.
The minority owners also have control over the Petitioner's business accounts. Although Michael Dees and Joye Glenna have been authorized to sign- checks on behalf of the Petitioner at the business institutions at which the Petitioner maintains accounts, they do so only at the direction of the President, the Board of Directors or at the direction of Ms. Dees pursuant to the authority delegated to her by the President as comptroller of the Petitioner. Michael Dees and Joye Glenna have the authority to sign checks only as a convenience.
The evidence also proved that Ms. Paschal and Ms. Dees have the authority and power to make decisions concerning purchasing, finances and hiring and firing. The Petitioner is a corporation, governed by the provisions of Chapter 607, Florida Statutes (1985). Chapter 607, Florida Statutes (1985), provides, among other things, the manner in which a corporation may be controlled. In particular, Section 607.111, Florida Statutes (1985), provides:
Board of directors; exercise of corporate powers.
All corporate powers shall be exercised by or under the authority of, and the business and affairs of a corporation shall be managed under the direction of, a board of directors, except as may be otherwise provided in this chapter or in the articles of incorporation. If any such provision is made in the articles of incorporation, the powers and duties conferred or imposed upon the board of directors by this chapter shall be exercised
or performed to such extent and by such person or persons as shall be provided in the articles of incorporation.
Section 607.121, Florida Statutes (1985), provides:
Director quorum and voting. A majority of the number of directors fixed by, or in the manner provided in, the bylaws or, in the absence of a bylaw fixing or providing for the number of directors, then of the number stated in the articles of incorporation shall constitute a quorum for the transaction of business, unless a greater number is required by the articles of incorporation or the bylaws. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors, unless the act of a greater number is required by the articles of incorporation or the bylaws.
The Petitioner's Articles of Incorporation and By-Laws are consistent with these provisions of Chapter 607. Ms. Paschal, Ms. Dees and Michael Dees serve as the Directors of the Petitioner. The minority owners, Ms. Paschal and Ms. Dees, constitute the majority of the Directors. Therefore, the minority owners have the authority or power to manage and control the Petitioner as contemplated in the Respondent's rules. Although neither Ms. Paschal or Ms. Dees, acting alone, can control the Petitioner, the statutes and the Respondent's rules do not require that each minority owner, acting alone, have the authority to operate the business. All that is required is that the minority owners together have the requisite control. As the majority of the Board of Directors of the Petitioner, the minority owners in this case possess this control.
The minority owners also possess authority in their capacities as officers of the Petitioner. Section 607.151, Florida Statutes (1985), authorizes the selection of officers of a corporation, including "a president, a secretary, and a treasurer ..." and "[s]uch other officers and assistant officers and agents as may be deemed necessary ..." Section 607.151(2), Florida Statutes (1985), provides the following with regard to the authority of officers:
All officers and agents, as between themselves and the corporation, shall have such authority and perform such duties in the management of the corporation as may be provided in the bylaws or as may be determined by resolution of the board of directors not inconsistent with the bylaws.
The Directors of the Petitioner have elected Ms. Paschal President of the Petitioner and Ms. Dees and Michael Dees as Vice-Presidents of the
Petitioner. The By-Laws of the Petitioner provide the following with regard to the duties of officers of the Petitioner:
The duties of the officers shall be such as are usually imposed upon such officials of corporations and as are required by law.
Thus, Ms. Paschal, as President of the Petitioner, is the chief operating officer of the Petitioner with authority to manage and control all of the daily operations of the Petitioner. As Vice-Presidents, Ms. Dees and Michael Dees act in the absence of Ms. Paschal and carry out the duties assigned to them by Ms.
Paschal, as President.
The evidence also proved that the minority persons possess knowledge of the financial structure of the business and the capability, knowledge and experience required to make decisions regarding the particular work of the Petitioner's business, commercial painting. Their knowledge, capabilities and experience with regard to all the functions of the Petitioner's business is greater than that possessed by Michael Dees.
Finally, the minority persons have displayed independence and initiative in seeking and negotiating contracts, accepting and rejecting bids and in conducting all major aspects of the Petitioner's business. Although authority to seek and negotiate contracts has been delegated by Ms. Paschal to the estimators, they exercise their authority under her supervision.
Based upon the foregoing, it is concluded that the minority owners of the Petitioner control the management and daily operations of the Petitioner. Although Michael Dees, as a Director, stockholder and officer of the Petitioner, participates in a few of the management decisions involving the Petitioner, his participation is limited. Additionally, Michael's activities with the Petitioner are primarily the same as those of four other persons who are employed as estimators. Finally, Michael does not possess the authority to override the decisions of the minority owners -- he owns less than a majority interest in the Petitioner, he is only 1 of 3 Directors and he must answer to the President of the Petitioner, Ms. Paschal, as a Vice-President.
Other Requirements
Pursuant to Rule 13-8.05(2), Florida Administrative Code, the Petitioner must prove that the minority owners are entitled to receive profits from the business and share in any other benefits accruing to the owners, that the minority owners substantially share in the risks of the business and that the business cannot at any time enter into any agreement which if exercised would result in less than 51 percent minority ownership of the business. The evidence supports a conclusion that these requirements of the Respondent's rules have been met.
The minority owners share profits based upon their percentage of stock owned. As the majority of the Board of Directors, the minority owners control any other benefits accruing to the owners of the Petitioner, including loans. The bonus laid to Michael Dees was not paid to him in his capacity as an owner of the Petitioner. He did not, therefore, receive a benefit not received by the minority owners which accrued to him as an owner as contemplated by the Respondent's rules.
The minority owners also substantially share in the risks of the Petitioner. Since Ms. Dees became a shareholder of the Petitioner, the Petitioner has not borrowed any funds. If funds were borrowed and the shareholders were required to personally guarantee the loan, all of the owners would do so, including Ms. Dees. In fact, the only loans for which a owner is personally liable are personally guaranteed by only Ms. Paschal. These loans were incurred before Ms. Dees became an owner in 1986.
Finally, the Petitioner has not entered into any agreement which can result in the minority owners owning less than 51 percent of the stock of the Petitioner.
The Petitioned has also complied with the requirements of Rule 13- 8.05(4)-(7), Florida Administrative Code.
Small Business Concern
Section 288.703(1), Florida Statutes (1985), defines a "small business", in pertinent part, as follows:
"Small business" means 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 $1 million...
The evidence in this proceeding proved that the Petitioner is an independently owned and operated business concern with a net worth of not more than $1 million. The evidence failed to prove, however, that the Petitioner employs 25 or fewer permanent full-time employees.
The terms "permanent", "full-time" or "permanent full-time" are not defined by statute or by rule. In Russell & Axon v. Handshoe, 176 So.2d 909 (Fla. 1st DCA 1965), cert. den., 188 So.2d 317 (1966), the court state that generally permanent employment means steady employment, a steady job, a position of some permanence, as contrasted with a temporary employment or a temporary job. A permanent employee, according to the court, is 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.
In this proceeding, the evidence proved that the Petitioner has 18 non-painter positions which are clearly occupied by permanent full-time employees: 5 estimators, 2 clerical employees, 8 foremen, 1 warehouse employee, Ms. Paschal and Ms. Dees.
The Petitioner also employs a significant number of painters in full- time positions. The Petitioner does not consider the employees they hire as painters to be permanent employees. The evidence failed to support this conclusion. The evidence presented by the Petitioner failed to prove that its painters are treated any differently than those persons whom the Petitioner considers to be permanent employees. The only difference, other than the amount of salary paid to the Petitioner's employees and their duties, in the manner in which employees are treated by the Petitioner concerns the payment of bonuses. Bonuses were not, however, paid to employees because they were considered permanent. Instead, bonuses were paid based upon an employee's perceived contribution to the Petitioner's business. In 1985, no bonus was paid to
Michael Dees or Ms. Paschal. In 1986, no bonus was paid to Ms. Paschal or Ms. Dees. In addition to being stockholders of the Petitioner, they are also permanent full-time employees of the Petitioner. Despite their status as permanent employees, they did not receive a bonus. Therefore, the payment of a bonus does not determine whether an employee is a permanent employee.
Based upon the weight of the evidence, it is concluded that the Petitioner employs in excess of 25 full-time employees and has done so at least since 1985. The Petitioner has argued that the persons it employs as painters are not permanent employees because of the high turnover in painter positions they have experienced. Although the Petitioner does experience a high turnover of employees, this does not prove that the Petitioner does not employ any permanent painters. Based upon the quantity of work performed by the Petitioner through 1986 and into 1987 and the number of permanent full-time foremen the Petitioner employs (8), the Petitioner must maintain some number of permanent positions for painters in order to carry out its business. At a minimum, the Petitioner must have at least 8 painters on a permanent basis -- one for each foreman to supervise. Adding these positions to the 18 other permanent positions, the Petitioner has at least 26 permanent full-time employees. Additionally, the Petitioner needs more than 8 painters to perform the 32-34 projects it is working on at any given time and the Petitioner has had at least
23 employees in addition to the 18 other permanent employees who have worked for the Petitioner for at least 12 months.
Based upon the foregoing, it is concluded that the Petitioner is not a small business as defined in Section 288.703(1), Florida Statutes (1985). Therefore, the Petitioner cannot qualify for certification as a minority business enterprise as defined in Section 288.703(2), Florida Statutes (1985).
Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Petitioner's request for certification as a minority
business enterprise be denied.
DONE and ENTERED this 5th day of August, 1987, in Tallahassee, Florida.
LARRY J. SARTIN
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 5th day of August, 1987.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-0515
The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the
paragraph number(s) in the Recommended Order where they have been accepted. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted.
Petitioner's Proposed Findings of Fact
Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection
1 | 10. | ||
2 | 11. | ||
3-6 | 18. | ||
7 | 43 and | 62. | |
8 | 21 and | 48. | |
9 | 21 and | 65. | |
10 | 21. | ||
11 | 19. | ||
12-13 | 44. | ||
14 | 45. | ||
15 | 46-47. | ||
16 | 49. | ||
17 | 50. | ||
18-19 | 5. | ||
20 | 9. | ||
21 | 12. | ||
22 | 26. | ||
23 | 22. | ||
24 | 52. | ||
25 | 27 and | 69-70. | |
26-27 | 27. | ||
28 | 52-53. | ||
29 | 54. | ||
30 | 52. | ||
31 | 52 and | 65. | |
32 | 52. | ||
33 | 57. | ||
34 | 69. | ||
35 | 59. | ||
36 | 31. | ||
37 | 15. | ||
38 | 32. | ||
39 | 33. | ||
40 | 55. | ||
41 | 56. | ||
42 | 51. | ||
43 | 23. | ||
44 | 40. | ||
45-47 | These proposed findings of fact are not | ||
supported by the weight | of the evidence. | ||
48 | 16. | ||
49-50 | 63. | ||
51 | 2 and 4. | ||
52 | 63. | ||
53 | 65. | ||
54 | 66. | ||
55 | 65. | ||
56 | 34. | ||
57 | 28. |
58 | 52. |
59 | 69. |
60 | 70. |
61 | 17. |
62 | 12. |
Respondent's Proposed Findings of Fact
1 4 and 10.
2 11.
3 18.
4 1.
5 49, 64, 68.
6-8 71.
9 8 and 19. The evidence failed to prove that Ms. Paschal and Michael Dees "jointly managed the business" prior to June, 1986.
10 21 and 48.
11 21 and 67.
12 5, 9, 18, 21 and 65.
13 22.
14 The first two sentences are rejected. The resolution and the ratification of the lawful actions of the officers of a corporation are routine practices of a corporation's Board of Directors. Duties had already been assigned to the officers through the By-Laws of the Petitioner. No further action was required by the Board in order for the officers to carry out their duties. The last sentence is accepted in paragraph 31.
15 This proposed finding of fact is irrelevant. The last sentence is not supported by the weight of the evidence. The authority of the officers was already provided by the By-Laws.
16 73.
17-21 Hereby accepted to the extent they are relevant findings of fact.
22 52 and 65. Michael Dees handles collecting accounts receivables relating to his projects and in his capacity as an estimator.
23 52 and 57.
30. The last sentence is not supported by the weight of the evidence.
34. The last sentence is not supported by the weight of the evidence.
26 29.
27 30.
28 65.
29 Hereby accepted.
30 57.
31 59 and 65.
32 24.
33 31.
34-35 65.
36-39 52.
40 52 and 53.
41 60.
42-44 Not supported by the weight of the evidence.
Hereby accepted.
Not supported by the weight of the evidence.
47 53.
48-51 28.
Hereby accepted.
The first 3 sentences are irrelevant or not supported by the weight of the evidence. The last 4 sentences are irrelevant or not supported by the weight of the evidence. The rest of
the proposed finding of fact is accepted in 19-20 and 22.
54-55 72.
Not supported by the weight of the evidence.
25. The last sentence is irrelevant.
58 24.
59 The first sentence is irrelevant. 32.
60 33.
61 38.
The first 2 sentences are not supported
by the weight of the evidence. 24 and 39.
Hereby accepted.
14 and 37. The next to the last sentence is not supported by the weight of the evidence.
COPIES FURNISHED:
Ronald W. Thomas John B. MacDonald, Esquire
Executive Director Brant, Moore, Sapp, Department of General Services MacDonald & Wells, P.A. Room 133, Larson Building 121 West Forsyth Street Tallahassee, Florida 32399-0950 Suite 900
Post Office Box 4548
Claire D. Dryfuss, Esquire Jacksonville, Florida 32202 Office of General Counsel
Department of General Services Room 452, Larson Building Tallahassee, Florida 32399-0955
| Issue Date | Proceedings |
|---|---|
| Aug. 05, 1987 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Oct. 08, 1987 | Agency Final Order | |
| Aug. 05, 1987 | Recommended Order | Petitioner failed to prove entitlement to certification as minority business enterprise. Female applicant. |
