LEONARD D. JACKSON, )
vs. ) Case No. 04-3629
Respondent. )
Upon due notice, a disputed-fact hearing was held in this case on December 15, 2004, in Gainesville, Florida, before Ella Jane P. Davis, a duly-assigned Administrative Law Judge of the Division of Administrative Hearings.
For Petitioner: Leonard D. Jackson, pro se
For Respondent: Thomas E. Wright, Esquire
Whether Petitioner is entitled to service credit in the Florida Retirement System (FRS) from June 1, 1995, through August 2001.
Petitioner requested a review and determination by Respondent Division of Retirement (Division) of whether he is entitled to service credit in the FRS from June 1, 1995, through August 2001, while he was a psychologist performing special needs testing for the School Board of Alachua County (SBAC).
After reviewing materials provided by Petitioner and SBAC, the Division issued its proposed final agency action in a May 7, 2004, letter, denying Petitioner's request. Petitioner timely requested a disputed-fact hearing, and on or about October 5, 2004, the cause was referred to the Division of Administrative Hearings for that purpose.
At hearing, Petitioner testified on his own behalf and had two exhibits admitted in evidence. Respondent presented the oral testimony of Joyce Morgan, Benefits Administrator, Division of Retirement, and Kathleen Black, Student Services Director of SBAC, and had 13 exhibits admitted in evidence. Official recognition was taken of Chapter 121, Florida Statutes, and Chapter 60S, Florida Administrative Code.
No transcript was provided. Both parties have timely-filed their post-hearing proposals. Petitioner also filed "exceptions" to Respondent's Proposed Recommended Order. All three items have been considered.
At all times material, Petitioner has been a school psychologist, certified by the Florida Department of Education.
From June 1995 through August 2001, Petitioner performed duties as a psychologist under "purchase of services agreements" with SBAC to perform special needs assessments for gifted children. These formal contracts were executed between Petitioner and SBAC in and for each successive school year during that period. Although there was the expectation that a new contract would be negotiated/signed each year, there was no guarantee to that effect.
The annual contracts for June 1995 through August 2001, between SBAC and Petitioner provided that Petitioner was to assume all risks, and that he was a "consultant." They further provided that he was to be paid at a rate of $150.00 for each assessment he completed. Either party to the contract could terminate it on 30 days' notice.
In pertinent part, the annual contracts described Petitioner as an independent consultant and not an employee in the following terms:
* * *
The CONSULTANT is an Independent Consultant and will perform all services at the Consultant's risk, assuming full responsibility for completion of the services stipulated below:
Psychoeducational evaluations of students referred for determination of eligibility to the Gifted Program as shall be requested by the Board through its Director of Exceptional Student Education or Lead School Psychologist. All psychoeducational evaluations shall be completed within 30 days of having been received by the CONSULTANT.
All reports and billing for services rendered by the CONSULTANT shall be submitted in a timely manner. All reports are to be submitted in triplicate.
* * * CONSULTANT also acknowledges that in
rendering the services provided herein, the CONSULTANT will be acting as an Independent Consultant, and not as an employee of the School Board of Alachua County. (Emphasis added.)
The contracts contained no specific provision for reimbursement of Petitioner's expenses. However, a calculated amount for travel expenses was built into the fee of $150.00 per child.
SBAC did not consider Petitioner an "employee" during the period of his annual contracts, because he was not filling a regularly established position. Accordingly, SBAC did not report to FRS any retirement information/contributions on the amounts it paid Petitioner during this period.
Likewise, during the specified period, Petitioner received no paid leave or other employee benefits from SBAC.
Also, SBAC did not provide unemployment compensation coverage or workers' compensation coverage for Petitioner during the specified period.
While under contract as an independent consultant, Petitioner did not report his time to SBAC via a timesheet or otherwise. Rather, he was paid for each completed assessment under the terms of his respective contracts. He was only required to file his test results within five business days of the date he assessed a student.
Between 1995 and 2001, SBAC reported Petitioner's pay for federal income tax purposes by Form 1099, rather than by Form W-2. A 1099 form is traditionally used for occasional employees and for independent contractors. W-2 forms are used for regular employees. Petitioner reported his income from SBAC as "other income," i.e. self-employment income.
In a similar vein, SBAC withheld no taxes, Social Security, or Medicare deductions for Petitioner during this period. SBAC made no matching contributions for Social Security or Medicare.
During the specified period, Petitioner was hired solely for special needs assessments. The time frame for testing by SBAC was established by law. Other than special
needs assessments, Petitioner had no duties for SBAC, but he was assigned cases by SBAC as necessary to meet its caseload and time frame. Petitioner was only called upon when SBAC's school psychologists, who filled regularly established positions, were not available or could not timely meet the demand for assessments in a school year of 10 months' duration.
Petitioner was required to hold a professional license as a psychologist to perform his SBAC contracts, and he was expected to perform his services for SBAC within the standards of his profession. His contracts provided for him to render personal services, and he could not hire an assistant or subcontract out his duties to another psychologist.
SBAC could not instruct Petitioner how to do his job as a professional psychologist or what decision or recommendation to reach on any child. However, SBAC told him which text to use, and he was initially trained by another school psychologist on the testing instrument required by SBAC.
Petitioner also received initial training from SBAC on how to report his assessments, and SBAC provided him with test kits and word processing assistance for each child assessment. SBAC set the format for his reports and provided him with a template therefor.
Petitioner was not regularly provided office space by SBAC. However, he was allotted a room on each school's premises
for each test, as he traveled from school to school within the county, and he had to do his testing on a day the specified child was in school and that school was open. Each test had to be completed within 30 days of its assignment, per his contracts. Petitioner was free to schedule one or more of his assessments on the dates most efficient for him, provided he met his deadlines.
Petitioner's efforts for SBAC during this period might be described as "frequently recurring, but not regular."
Petitioner never worked for SBAC more than four consecutive months during the entire time period at issue.
During that period, he was on his own for defending his test results.
Petitioner was required to carry his own professional liability insurance during the time in question, whereas then and now, SBAC "covered" their employees' liability insurance.
Between 1995 and 2001, Petitioner was free to offer his professional services to other clients besides SBAC, but he chose not to do so.
There was no profit or loss involved for SBAC or Petitioner in Petitioner's 1995-2001 service. Petitioner had to invest none of his personal funds to do his assessments.
In September 2001, Petitioner was hired by SBAC in a half-time, regularly established position with all benefits,
including sick leave, personal leave, and FRS membership. Upon that event, his duties were altered to include rendering any psychological assistance required by any SBAC school in which he was working. He is now reimbursed for travel by submitting request forms. He has continued to meet that job description and has filled that regularly established position to date.
SBAC requested, and in 2002, received a letter-opinion from the Internal Revenue Service (IRS) interpreting various federal statutes and regulations. That IRS letter-opinion concluded that during the period in question, the Petitioner was an "employee" of SBAC; that various federal forms might require filing or amending by SBAC; and that SBAC and Petitioner might need to pay yet-to-be determined amounts. That IRS opinion is based on facts submitted by SBAC and not necessarily in evidence; is based on federal laws which are not determinative of the Florida retirement issue before this forum, and was not necessarily final. Accordingly, it is not binding in the instant case.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this cause, pursuant to Sections 120.569 and 120.57(1), Florida Statutes.
Petitioner had the duty to go forward and to prove his entitlement to the claimed FRS benefits by a preponderance of the evidence. See § 120.57(1)(j) and (k), Fla. Stat. (2004); Florida Department of Transportation v. J.W.C. Co., 396 So. 2d 778 (Fla. 1st DCA 1981); Balino v. Department of Health and Rehabilitative Services, 348 So. 2d 349 (Fla. 1st DCA 1977); and Young v. Department of Community Affairs, 625 So. 2d 831 (Fla. 1993).
FRS is codified in Chapter 121, Florida Statutes.
Section 121.051, Florida Statutes (2004), provides for compulsory participation in the FRS for all employees hired after December 1, 1970. Section 121.021(11), Florida Statutes (2004), defines "employee" as any person receiving salary payments for work performed in a regularly established position and, if employed by a city or special district, employed in a covered group.
Florida Administrative Code Rule 60S-6.001(33), as in effect at all times material provided, and still provides:
INDEPENDENT CONTRACTOR -- Means an
individual who is not subject to the control and direction of the employer for whom work is being performed, with respect not only to what shall be done but to how it shall be done. If the employer has the right to exert such control, an employee--employer relationship exists and the person is an employee and not an independent contractor. The Division has adopted the following factors as guidelines to aid in determining
whether an individual is an employee or an independent contractor. The weight given each factor is not always the same and varies depending on the particular situation.
INSTRUCTIONS: An employee must comply with instructions from his employer about when, where, and how to work. The instructions may be oral or may be in the form of manuals or written procedures which show has the desired result is to be accomplished. Even if no actual instructions are given, the control factor is present if the employer has the right to give instructions.
TRAINING: An employee is trained to perform services in a particular manner. This is relevant when the skills and experience which would be used as an independent contractor were gained as a result of previous employment. Independent contractors ordinarily use their own methods and receive no training from the purchasers of their services.
INTEGRATION: An employee's services are integrated into the business operations because the services are critical and essential to the success or contribution of an agency's progress/operation. This shows that the employee is subject to direction and control.
SERVICES RENDERED PERSONALLY: An employee renders services personally. This shows that the employer is interested in the methods as well as the results. Lack of employer control may be indicated when a person has the right to hire a substitute without the employer's knowledge or approval.
HIRING ASSISTANTS: An employee works for an employer who hires, supervises, and pays assistants. An independent contractor
hires, supervises, and pays assistants under a contract that requires him or her to provide materials and labor and to be responsible only for the result.
CONTINUING RELATIONSHIP: An employee has a continuing relationship with an employer. A continuing relationship may exist where work is performed at frequently recurring, although irregular intervals.
SET HOURS OF WORK: An employee usually has set hours of work established by an employer. An independent contractor is the master of his or her own time and works on his own schedule.
FULL-TIME OR PART-TIME WORK: An employee may work either full-time or part- time for an employer. Full-time does not necessarily mean an 8-hour day or a 5 or 6- day week. Its meaning may vary with the intent of the parties, the nature of the occupation and customs in the locality. These conditions should be considered in defining "full-time." An independent contractor can work when and for whom he or she chooses.
WORK DONE ON PREMISES: An employee works on the premises of an employer, or works on a route or at a location designated by an employer. The performance of work on the employer's premises is not controlling in itself; however, it does imply that the employer has control over the employee. Work performed off the employer's premises does indicate some freedom from control; however, it does not in itself mean the worker is not an employee.
ORDER OR SEQUENCE OF SERVICES: An employee generally performs services in the order or sequence set by an employer. This shows that the employee is subject to direction and control of the employer.
REPORTS: An employee submits oral or written reports to an employer. This shows that the employee must account to the employer for his or her actions.
PAYMENTS: An employee is usually paid by the hour, week, or month. An independent contractor is paid periodically (usually a percent of the total payment) by the job or on a straight commission.
EXPENSES: An employee's business and/or travel expenses are paid by an employer. This shows that the employer is in position to control expenses and therefore the employee is subject to regulations and control.
TOOLS AND MATERIALS: An employee is furnished significant tools, materials, and other equipment by an employer. An independent contractor usually provides his own tools, materials, etc.
INVESTMENT: An employee is usually furnished the necessary facilities. An independent contractor has a significant investment in the facilities he or she uses in performing services for someone else.
PROFIT OR LOSS: An employee performs the services for an agreed upon wage and is not in a position to realize a profit or suffer a loss as result of his services. An independent contractor can make a profit or suffer loss. Profit or loss implies the use of capital by the individual in an independent business of his own.
WORKS FOR MORE THAN ONE PERSON OR FIRM: An employee usually works for an organization. However, a person may work for a number of people or organizations and still be an employee of one or all of them. An independent contractor provides his or her services to two or more unrelated persons or firms at the same time.
OFFERS SERVICES TO GENERAL PUBLIC: An independent contractor makes his or her services available to the general public. This can be done in a number of ways: having his/her own office and assistants, hanging out a "shingle", hold business licenses, having listings in business directories and telephone directories, and advertising in newspapers, trade journals, etc.
RIGHT TO TERMINATE EMPLOYMENT: An employee can be fired by an employer. An independent contractor cannot be fired so long as he or she produces a result that meets the specifications of the contract. An independent contractor can be terminated but usually he will be entitled to damages for expenses incurred, lost profit, etc.
RIGHT TO QUIT: An employee can quit his or her job at any time without incurring liability. An independent contractor usually agrees to complete a specific job and is responsible for its satisfactory completion, or is legally obligated to make good for failure to complete it.
Section 121.021(17)(b)4., Florida Statutes (2004), provides that ". . . one month of service credit shall be awarded for each month salary is paid for service performed."
Section 121.021(22)(b)1., Florida Statutes (2004), provides that "under no circumstances shall compensation include fees paid to professional persons for special or particular services. . . ." See also Henry v. Department of Administration, Division of Retirement, 431 So. 2d 677 (Fla. 1st DCA 1983,) (DOAH Case No. 81-2032).
There has been some evolution of the language and numbering system employed in Chapter 121, Florida Statutes, during the period of time at issue and subsequent thereto, up to the present, but there is no material difference, and of itself, Section 121.021(22)(b)(1), Florida Statutes, would seem to preclude Petitioner's claim.
However, the determination of "employee" versus "independent contractor" is always a balancing test and no single criterion is controlling. Where one holds himself out as making professionally trained judgments and sequentially executes contracts which evidence equal status between the parties and which intentionally specify "not . . . an employee," but independent contractor status, those elements are significant. Under such circumstances, Petitioner cannot have had a reasonable expectation of FRS retirement or other employee benefits, and during the period in question, neither party treated the amounts paid under the contracts as "wages" or "salary" of an "employee." Only if a contract clearly evidences subterfuge to avoid employee status should it be considered void. Likewise, the differences between Petitioner's liability exposure, benefits, and the detail of the directions imposed upon him by SBAC since he has filled a regularly established position, compared with these elements during the time period at
issue, clearly point to his independent contractor status from June 1, 1995 through August 2001.
On this same note, Petitioner, as well as SBAC, treated his income under the contracts as if it were not employment income. Petitioner's work was piecemeal or "by the assessment." SBAC simultaneously employed psychologists filling regularly established positions who operated as if they were employees. These psychologists were supervised and were paid wages and benefits very differently than was Petitioner.
Further, while SBAC could direct the format of Petitioner's reports, SBAC administrators relied upon Petitioner's expertise as a professional psychologist. Petitioner determined the methods by which SBAC's instructions were carried out. He was not provided office space, although he was provided testing space on SBAC's premises and word processing assistance by SBAC employees. He was free to make his services available to the general public, but chose to work only as needed by SBAC for no more than four consecutive months per year. SBAC reported what it paid Petitioner by Form 1099, and only for each assessment he completed. Other than reporting to SBAC within five days of testing, Petitioner had no set hours of work for SBAC. SBAC provided only initial training; made no contributions for Social Security or Medicare; provided no workers' compensation or unemployment compensation coverage for
him, and provided none of the other benefits normally offered to full or part-time employees.
If there were any evidence that the contract for personal services herein was used as a subterfuge it would be a different matter, but here the parties agreed to certain terms and governed their actions by those terms over the entire period of the annual contracts. Therefore, the terms of their contracts should not be altered in hindsight. See Board of Trustees of the Northwest Florida Community Hospital v. Department of Management Services, Division of Retirement, 651 So. 2d 170 (Fla. 1st DCA 1995).
The evidence as a whole supports the conclusion that Petitioner was an independent contractor from June 1, 1995, through August 2001, so as to be ineligible as an FRS-covered "employee" during that period.
RECOMMENDED that the Department of Management Services, Division of Retirement, enter a final order denying Petitioner's request for membership and service credit in the FRS from
June 1, 1995, through August 2001.
DONE AND ENTERED this 10th day of February, 2005, in Tallahassee, Leon County, Florida.
ELLA JANE P. DAVIS
Filed with the Clerk of the Division of Administrative Hearings this 10th day of February, 2005.
Thomas E. Wright, Esquire Department of Management Services Division of Retirement
Leonard D. Jackson
Alberto Dominguez, Esquire Department of Management Services Division of Retirement
Department of Management Services Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399-1560
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.
