Elawyers Elawyers
Washington| Change

DEPARTMENT OF FINANCIAL SERVICES, DIVISION OF WORKERS' COMPENSATION vs WMW ENTERPRISES, D/B/A FAMILY FLOORING, 05-002651 (2005)

Court: Division of Administrative Hearings, Florida Number: 05-002651 Visitors: 9
Petitioner: DEPARTMENT OF FINANCIAL SERVICES, DIVISION OF WORKERS' COMPENSATION
Respondent: WMW ENTERPRISES, D/B/A FAMILY FLOORING
Judges: ERROL H. POWELL
Agency: Department of Financial Services
Locations: West Palm Beach, Florida
Filed: Jul. 26, 2005
Status: Closed
Recommended Order on Monday, February 6, 2006.

Latest Update: Mar. 30, 2006
Summary: The issue for determination is whether Respondent failed to secure workers’ compensation coverage for his subcontractors, thereby, failing to abide by the coverage requirements of the Workers’ Compensation Law, Chapter 440, Florida Statutes, and, if so, what penalty should be assessed.Respondent failed to secure payment of Workers` Compensation coverage for its subcontractors who were its employees. Recommend that the Stop-Work Order and the Amended Penalty Assessment were appropriate.
05-2651.PDF

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS


DEPARTMENT OF FINANCIAL ) SERVICES, DIVISION OF WORKERS’ ) COMPENSATION, )

)

Petitioner, ) Case No. 05-2651

)

vs. )

) WMW ENTERPRISES, d/b/a FAMILY ) FLOORING, )

)

Respondent. )

)


RECOMMENDED ORDER


Pursuant to notice, a formal hearing was held in this case by video teleconference on October 7, 2005, with connecting sites in West Palm Beach and Tallahassee, Florida, before Errol H. Powell, a designated Administrative Law Judge of the Division of

Administrative Hearings.


APPEARANCES


For Petitioner: Colin M. Roopnarine, Esquire

Department of Financial Services Division of Legal Services Workers’ Compensation Section

200 East Gaines Street Tallahassee, Florida 32399-4229


For Respondent: Michael Martino, pro se

WMW Enterprises, Inc, d/b/a Family Flooring

1450 10th Street

Lake Park, Florida 33403

STATEMENT OF THE ISSUE


The issue for determination is whether Respondent failed to secure workers’ compensation coverage for his subcontractors, thereby, failing to abide by the coverage requirements of the Workers’ Compensation Law, Chapter 440, Florida Statutes, and, if so, what penalty should be assessed.

PRELIMINARY STATEMENT


On or about December 28, 2004, the Department of Financial Services, Division of Workers’ Compensation (Department) issued a Stop-Work Order (SWO) and an Order of Penalty Assessment (OPA) against WMW Enterprises, d/b/a Family Flooring (Family Flooring). The SWO and OPA were contained in a one-page document. By the SWO, the Department charged Family Flooring with violating Section 440.107(2), Florida Statutes, by failing to obtain workers' compensation coverage that meets the requirements of the Chapter 440, Florida Statutes, and the Insurance Code. The SWO identified Family Flooring as a construction employer. By the OPA, the Department assessed a penalty against Family Flooring, but no dollar amount was provided, only the calculation method or process being used by the Department. The SWO and OPA were hand- delivered to Family Flooring. By an Amended OPA, dated

December 28, 2004, and personally served January 4, 2005, to which was attached a penalty worksheet, the Department assessed

an amended penalty against Family Flooring in the amount of


$42,613.47.


By Payment Agreement Schedule for Periodic Payment of Penalty, dated January 4, 2005, Family Flooring entered into an agreement with the Department for a payment schedule of the amended penalty assessed against it. By Order of Conditional Release From Stop-Work Order (Conditional Release from SWO), dated January 4, 2005, the Department released Family Flooring from the SWO based upon certain conditions enumerated in the Conditional Release from SWO.

Subsequently, Family Flooring challenged the Department’s action and requested a hearing. This matter was referred to the Division of Administrative Hearings on July 26, 2005.

At the hearing, the Department presented the testimony of one witness and entered 12 exhibits (Petitioner's Exhibits numbered 1-12) into evidence. Family Flooring presented the testimony of one witness (its president) and entered two exhibits (Respondent’s Exhibits numbered 1 and 2) into evidence.

Additionally, official recognition was taken of Chapter 440, Florida Statutes (2002) and (2004), and Florida Administrative Code Rule 69L-6.

A transcript of the hearing was ordered. At the request of the parties, the time for filing post-hearing submissions was set for more than ten days following the filing of the transcript.

The Transcript, consisting of one volume, was filed on


October 31, 2005. The undersigned notified the parties regarding the date that the Transcript was filed. The Department timely filed its post-hearing submission. Family Flooring filed its post-hearing submission but it was untimely, and Family Flooring failed to provide the Department a copy. By Notice of Ex-Parte Communication, the undersigned provided the Department a copy of Family Flooring’s post-hearing submission. Furthermore, subsequently, Family Flooring provided the Department a copy of its post-hearing submission and provided notice thereof to the undersigned. The Department did not object to the untimely filing of Family Flooring’s post-hearing submission. The post- hearing submission filed by Family Flooring is accepted. Both post-hearing submissions have been considered in the preparation of this Recommended Order.

FINDINGS OF FACT


  1. At all times material hereto, Family Flooring was located at 1450 10th Street, Lake Park, Florida.

  2. At all times material hereto, Michael Martino was the president of Family Flooring.

  3. After having conducted a workers’ compensation coverage check of businesses along 10th Street in Lake Park, Florida, the Department’s investigator, John Turner (Investigator Turner), visited Family Flooring.

  4. Family Flooring engages in the retail sales of various flooring and performs some installation of the floorings sold when requested by its clients. When installation is requested, the client pays Mr. Martino for the flooring and installation. Mr. Martino hires and pays the subcontractors to perform the installation. Mr. Martino informed Investigator Turner and testified at hearing that Family Flooring had not secured payment of workers’ compensation coverage for its subcontractors.

  5. The Department’s Coverage and Compliance Automated Systems (CCAS), a database of workers’ compensation coverage information for the State of Florida, and its exemption website (exemption database) confirmed that Family Flooring failed to have workers’ compensation coverage for the subcontractors.

  6. Investigator Turner requested certain business records from Family Flooring, including payroll records and exemptions, for the time period covering October 16, 2004 through

    December 16, 2004. Mr. Martino complied with the request.


  7. The business records submitted indicated that Family Flooring hired eight subcontractors.

  8. Individuals may make application to the Department to be exempt from workers’ compensation benefits. If granted, only the individual named on the application is exempt.

  9. The business records indicated that some, not all, of the subcontractors had exemptions.

  10. A review of both the business records and the Department’s databases for the eight subcontractors failed to verify workers’ compensation coverage or current, valid workers’ compensation exemptions for the following subcontractors: Scott Lunardoni -- exemption expired on December 31, 2003; Mauricio Perez -- exemption expired on December 31, 1999; Richard Robinson

    -- no exemptions; and Robert Waddicor -- exemption expired on December 31, 2003.

  11. No dispute exists that Family Flooring hired and paid the above-named subcontractors for installation of flooring.

  12. At the time of hiring the above-named subcontractors, Mr. Martino did not inquire as to whether they had secured the payment of workers’ compensation coverage or possessed current, valid workers’ compensation exemptions.

  13. Mr. Martino maintained that the above-named subcontractors were independent contractors, not employees of Family Flooring. As a result, he maintained that Family Flooring was not required to secure the payment of workers' compensation coverage.

  14. At hearing, Mr. Martino entered into evidence two notarized letters from two of the subcontractors, Mauricio Perez and Scott Lunardoni. The letter from Mauricio Perez was notarized on April 21, 2005, and the letter from Scott Lunardoni was notarized on April 20, 2005. Both letters provided that each

    considered himself an “independent contractor,” not an employee of Family Flooring; that Family Flooring supplied the flooring, which was purchased by the customer, usually a homeowner; that each set his own time and schedule, provided his own transportation and tools for the installation, and was compensated at his own rate schedule; that each understood his responsibilities as to the required insurance and licenses; and that each was free to offer his services to other businesses, which they did.

  15. Investigator Turner testified that the Department’s interpretation of Chapter 440, Florida Statutes, pertaining to Family Flooring’s circumstances was that the above-named subcontractors became employees of Family Flooring when the subcontractors failed to secure workers’ compensation coverage and failed to have a current, valid workers’ compensation exemption.

  16. Having identified subcontractors who had no workers’ compensation coverage or exemptions, Investigator Turner sought approval from his supervisor for the issuance of a SWO and OPA. The approval was given, and a SWO and OPA were issued and served on Family Flooring on December 28, 2004. The SWO provided, among other things, that Family Flooring was an employer in the construction industry and that the basis for its issuance was Family Flooring’s “failure to secure the payment of workers’

    compensation in violation of § 440.107(2) Fla. Stat., by: failing to obtain coverage that meets the requirements of Ch. 440, Fla.

    Stat., and the Insurance Code.” The OPA provided, among other things, that the penalty assessed would be “in an amount equal to

    1.5 times the amount the employer would have paid in premium when applying approved manual rates to the employer’s payroll during the periods for which it failed to secure the payment of workers’ compensation required by this chapter [Chapter 440, Fla. Stat.] within the preceding 3-year period, or $1,000, whichever is greater. § 440.107(7)(d), Fla. Stat.”

  17. To determine the assessment for the penalty, on December 28, 2004, Investigator Turner served a subpoena upon Family Flooring for the production of its business records covering a three-year period from December 28, 2001 through December 28, 2004.

  18. Family Flooring responded to the subpoena and provided a copy of its check ledger and a computer generated payroll ledger.

  19. The Department utilizes the Scopes Manual to assign a class code or number to a specific job or task. The Scopes Manual is produced by the National Council on Compensation Insurance (NCCI) and is a reference for all jobs and jobs descriptions to which NCCI assigns class codes/numbers. The Scopes Manual is used throughout the insurance industry and

    throughout the State of Florida for uniformity; as a result, the same specific job or task in different geographic locations in Florida would have the same class code or number.

  20. Using the Scopes Manual, the Department assigned a class code to the type of work performed by each aforementioned subcontractor, who was now determined to be an employee of Family Flooring. The Department then multiplied the assigned class code’s approved manual rate times the gross wages paid to the employee, per one hundred dollars, to obtain the premium what Family Flooring should have paid during the period of non- compliance; and then multiplied the premium obtained by 1.5 to obtain the penalty to be assessed for each employee.

  21. During the period of non-compliance, Mr. Martino had a current, valid workers’ compensation exemption. Also, the Department’s database indicated, among other things, that the “Exemption Type” was “Construction.” Due to Mr. Martino's exemption, payments to him by Family Flooring were not included in the assessment of the penalty.

  22. A total penalty in the amount of $42,613.47 was calculated by the Department.

  23. An Amended OPA, together with the Department’s penalty worksheet, was served on Family Flooring on January 4, 2005, providing, among other things, that the amended assessed penalty was $42,613.47.

  24. Subsequently, Family Flooring entered into an agreement, Payment Agreement Schedule for Periodic Payment of Penalty (Agreement), with the Department regarding payment of the penalty. The Agreement provided, among other things, for a down payment by Family Flooring of ten percent of the assessed penalty, for the remaining balance of the penalty to be paid by Family Flooring in 24 equal monthly installments, and for proof of compliance with Chapter 440, Florida Statutes, by Family Flooring.

  25. As proof of compliance with Chapter 440, Florida Statutes, Family Flooring, through Mr. Martino, provided the Department a notarized letter, dated and notarized December 28, 2004, which provided that Family Flooring would only hire subcontractors who were in compliance with the regulations of the Department.

  26. As a result of the Agreement, on January 4, 2005, the Department issued an Order of Conditional Release from Stop-Work Order (Order of Conditional Release). No evidence was presented at hearing that Family Flooring had violated the Order of Conditional Release.

    CONCLUSIONS OF LAW


  27. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and the

    parties thereto pursuant to Sections 120.569 and 120.57(1), Florida Statutes (2005).

  28. The Department is charged with implementing and enforcing the Workers' Compensation Law, Chapter 440, Florida Statutes.

  29. The ultimate burden of proof is on the Department to establish by a preponderance of the evidence that Family Flooring violated Chapter 440, Florida Statutes, as alleged in the SWO and that the penalty assessed is correct as alleged in the Amended OPA. § 120.57(1)(j), Fla. Stat. Family Flooring does not have a license or property interest at stake so as to raise the standard of proof to clear and convincing. See Department of Labor and Employment Security, Division of Workers' Compensation vs. Patrick Jackey d/b/a Bert's World of Color, DOAH Case No. 98-2496 (Recommended Order, December 4, 1998; Final Order, March 2, 1999).

  30. Strict compliance with the Workers' Compensation Law is required and is, therefore, required by the employer. See C & L

    Trucking v. Corbitt, 546 So. 2d 1185, 1187 (Fla. 5th DCA 1989).


  31. An employer is defined in pertinent part as "every person carrying on any employment." § 440.02(15), Fla. Stat. (2001); and § 440.02(16), Fla. Stat. (2002), (2003 effective January 1, 2004) and (2004). Section 440.02(16), Florida Statutes (2003) and (2004), further provides in pertinent part:

    (b) A homeowner shall not be considered the employer of persons hired by the homeowner to carry out construction on the homeowner's own premises if those premises are not intended for immediate lease, sale, or resale.


  32. Family Flooring is an employer as defined by Chapter 440, Florida Statutes, during the time period in the case at hand, December 28, 2001 through December 28, 2004.

  33. Employment is defined in pertinent part as "any service performed by an employee for the person employing him or her" and includes "with respect to the construction industry, all private employment in which one or more employees are employed by the same employer." § 440.02(16)(a) and (b)2., Fla. Stat. (2001); and § 440.02(17)(a) and (b)2., Fla. Stat. (2002), (2003), and (2004).

  34. Section 440.10(1), Florida Statutes (2001) and (2002), provides in pertinent part:

    1. Every employer coming within the provisions of this chapter . . . shall be liable for, and shall secure, the payment to his or her employees . . . of the compensation payable under ss. 440.13, 440.15, and 440.16. Any contractor or subcontractor who engages in any public or private construction in the state shall secure and maintain compensation for his or her employees under this chapter as provided in s. 440.38.


    2. In case a contractor sublets any part or parts of his or her contract work to a subcontractor or subcontractors, all of the employees of such contractor and subcontractor or subcontractors engaged on

      such contract work shall be deemed to be employed in one and the same business or establishment; and the contractor shall be liable for, and shall secure, the payment of compensation to all such employees, except to employees of a subcontractor who has secured such payment.


    3. A contractor may require a subcontractor to provide evidence of workers' compensation insurance or a copy of his or her certificate of election. A subcontractor electing to be exempt as a sole proprietor, partner, or officer of a corporation shall provide a copy of his or her certificate of election to the contractor.


      (Emphasis added)


  35. The Florida Legislature amended subsections (a) and (c) in 2003. Section 440.10(1), Florida Statutes (2003, effective January 1, 2004) and (2004), provides in pertinent part:

    1. Every employer coming within the provisions of this chapter shall be liable for, and shall secure, the payment to his or her employees . . . of the compensation payable under ss. 440.13, 440.15, and 440.16. Any contractor or subcontractor who engages in any public or private construction in the state shall secure and maintain compensation for his or her employees under this chapter as provided in s. 440.38.


      * * *


      (c) A contractor shall require a subcontractor to provide evidence of workers' compensation insurance. A subcontractor who is a corporation and has an officer who elects to be exempt as permitted under this chapter shall provide a copy of his or her certificate of exemption to the contractor.


      (Emphasis added)

  36. The evidence demonstrates that, when Mr. Martino hired the four subcontractors (Scott Lunardoni, Mauricio Perez, Richard Robinson, and Robert Waddicor), he did not inquire or determine whether the four subcontractors had secured the payment of workers' compensation coverage or possessed current, valid workers' compensation exemptions. The evidence further demonstrates that two of the four subcontractors, Mauricio Perez and Richard Robinson, did not have current, valid exemptions for the time period covered, December 28, 2001 through December 28, 2004; but that the other two subcontractors, Scott Lunardoni and Robert Waddicor, had current, valid exemptions which expired on December 31, 2003, and, therefore, had no current, valid exemptions for the year 2004.

  37. Employee is defined in Section 440.02, Florida Statutes. Section 440.02(14), Florida Statutes (2001), provides in pertinent part:

    1. 'Employee' means any person engaged in any employment under any appointment or contract of hire or apprenticeship, express or implied, oral or written, whether lawfully or unlawfully employed . . .


    2. 'Employee' includes any person who is an officer of a corporation and who performs services for remuneration for such corporation within this state, whether or not such services are continuous.


      1. Any officer . . . may elect to be exempt from this chapter by filing written notice of the election with the division . . .

      * * *


      3. An officer . . . who elects to be exempt from this chapter by filing a written notice of the election with the division . . . is not an employee.


      (Emphasis added)


      The same pertinent language is found at Section 440.02(15), Florida Statutes (2002).

  38. The pertinent language was changed by the Florida Legislature in 2003. Section 440.02(15), Florida Statutes (2003, effective January 1, 2004) and (2004), provides in pertinent part:

    1. 'Employee' means any person who receives remuneration from an employer for the performance of any work or service while engaged in any employment under any appointment or contract for hire or apprenticeship, express or implied, oral or written, whether lawfully or unlawfully employed . . .


    2. 'Employee' includes any person who is an officer of a corporation and who performs services for remuneration for such corporation within this state, whether or not such services are continuous.

      1. Any officer . . . may elect to be exempt from this chapter by filing written notice of the election with the department . . .


      * * *


      3. An officer . . . who elects to be exempt from this chapter by filing a written notice of the election with the department . . . is not an employee.


      (Emphasis added)

  39. No dispute exists that, at all times material hereto, Mr. Martino elected the exemption, was exempt, and was, therefore, not an employee, as defined. Consequently, his remuneration was correctly not included in the calculation of the Amended OPA by the Department.

  40. Family Flooring contends that the four subcontractors that it hired were not employees, but independent contractors; and, therefore, Family Flooring was not required to secure workers' compensation coverage for the subcontractors. Family Flooring's claim is in the nature of an affirmative defense. As to an affirmative defense, the burden of proof is on the party asserting the defense. See Captain's Table, Inc. v. Khouri, 208 So. 2d 677 (Fla. 4th DCA 1968). By asserting the affirmative, as to the status of the four contractors, Family Flooring has the burden to show that they were independent contractors.

  41. Chapter 440, Florida Statutes, addresses the status of independent contractors as employees.

  42. Section 440.10(1), Florida Statutes (2001), provides in pertinent part:

    (g) For the purposes of this section, a person is conclusively presumed to be an independent contractor if:


    1. The independent contractor provides the general contractor with an affidavit stating that he or she meets all the requirements of s. 440.02(14)(d); and

    2. The independent contractor provides the general contractor with a valid certificate of workers' compensation insurance or a valid certificate of exemption by the division.


    [A]n independent contractor who provides the general contractor with both an affidavit stating that he or she meets the requirements of s. 440.02(14)(d) and a certificate of exemption is not an employee under s.

    440.02(14)(c) . . . .


    (Emphasis added)


    Section 440.10(1), Florida Statutes (2002), provides in pertinent part:

    (g) For the purposes of this section, a person is conclusively presumed to be an independent contractor if:

    1. The independent contractor provides the general contractor with an affidavit stating that he or she meets all the requirements of

      s. 440.02; and

    2. The independent contractor provides the general contractor with a valid certificate of workers' compensation insurance or a valid certificate of exemption by the department.


    [A]n independent contractor who provides the general contractor with both an affidavit stating that he or she meets the requirements of s. 440.02 and a certificate of exemption is not an employee under s. 440.02 . . . .


    (Emphasis added)


    Section 440.10(1)(g), Florida Statutes, was not retained by the Florida Legislature in 2003 and 2004.

  43. Section 440.02(14), Florida Statutes (2001), provides in pertinent part:

    1. 'Employee' includes a sole proprietor or a partner who devotes full time to the proprietorship or partnership and, except as provided in this paragraph, elects to be included in the definition of employee by filing notice thereof . . . Partners or proprietors actively engaged in the construction industry are considered employees unless they elect to be excluded from the definition of employee by filing written notice of the election with the division . . . For purposes of this chapter, an independent contractor is an employee unless he or she meets all of the conditions set forth in subparagraph (d)1.


    2. 'Employee' does not include:

    1. An independent contractor, if:

    1. The independent contractor maintains a separate business with his or her own work facility, truck, equipment, materials, or similar accommodations;

    2. The independent contractor holds or has applied for a federal employer identification number, unless the independent contractor is a sole proprietor who is not required to obtain a federal employer identification number under state or federal requirements;

    3. The independent contractor performs or agrees to perform specific services or work for specific amounts of money and controls the means of performing the services or work;

    4. The independent contractor incurs the principal expenses related to the service or work that he or she performs or agrees to perform;

    5. The independent contractor is responsible for the satisfactory completion of work or services that he or she performs or agrees to perform and is or could be held liable for a failure to complete the work or services;


    6. The independent contractor receives compensation for work or services performed for a commission or on a per-job or competitive-bid basis and not on any other basis;

    7. The independent contractor may realize a profit or suffer a loss in connection with performing work or services;

    8. The independent contractor has continuing or recurring business liabilities or obligations; and

    9. The success or failure of the independent contractor's business depends on the relationship of business receipts to expenditures.


    (Emphasis added)


    Section 440.02(15), Florida Statutes (2002), provides in pertinent part:

    1. 1. 'Employee' includes a sole proprietor or a partner who devotes full time to the proprietorship or partnership and, except as provided in this paragraph, elects to be included in the definition of employee by filing notice thereof . . . Partners or sole proprietors actively engaged in the construction industry are considered employees unless they elect to be excluded from the definition of employee by filing written notice of the election with the department . . . For purposes of this chapter, an independent contractor is an employee unless he or she meets all of the conditions set forth in subparagraph (d)1.


    2. 'Employee' does not include:

    1. An independent contractor, if:

    1. The independent contractor maintains a separate business with his or her own work facility, truck, equipment, materials, or similar accommodations;

    2. The independent contractor holds or has applied for a federal employer identification number, unless the independent contractor is a sole proprietor who is not required to obtain a federal employer identification number under state or federal requirements;

    3. The independent contractor performs or agrees to perform specific services or work

      for specific amounts of money and controls the means of performing the services or work;

    4. The independent contractor incurs the principal expenses related to the service or work that he or she performs or agrees to perform;

    5. The independent contractor is responsible for the satisfactory completion of work or services that he or she performs or agrees to perform and is or could be held liable for a failure to complete the work or services;

    6. The independent contractor receives compensation for work or services performed for a commission or on a per-job or competitive-bid basis and not on any other basis;

    7. The independent contractor may realize a profit or suffer a loss in connection with performing work or services;

    8. The independent contractor has continuing or recurring business liabilities or obligations; and

    9. The success or failure of the independent contractor's business depends on the relationship of business receipts to expenditures.


    (Emphasis added)


  44. The evidence demonstrates that, when Mr. Martino hired the four subcontractors (Scott Lunardoni, Mauricio Perez, Richard Robinson, and Robert Waddicor), he failed to obtain the affidavit and the certificate of insurance or exemption from them, pursuant to Section 440.10(1)(g), Florida Statutes (2001) and (2002). Consequently, the subcontractors are not "conclusively presumed" independent contractors, so as not to be employees of Family Flooring.

  45. None of the four subcontractors testified at hearing.


    Two affidavits, dated after the issuance of the SWO, OPA, and Amended OPA, from two of the four subcontractors were presented into evidence. The affidavits failed to certify that the two subcontractors met the requirements for an independent contractor. Furthermore, the evidence presented is insufficient to demonstrate that the four subcontractors satisfied all of the conditions of an independent contractor, as set forth at Section 440.02(14), Florida Statutes (2001) and Section 440.02(15), Florida Statutes (2002). Failing to satisfy all of the conditions, the four subcontractors became employees of Family Flooring.

  46. Additionally, the evidence demonstrates that the four subcontractors were engaged in employment with Family Flooring under contracts, some oral and some written, for the installation of flooring whenever a customer of Family Flooring's requested the installation of the flooring that the customer had purchased from Family Flooring.

  47. Section 440.02(15), Florida Statutes (2003, effective January 1, 2004) and (2004), provides in pertinent part:

    1. 'Employee' includes:


      * * *

      1. All persons who are being paid by a construction contractor as a subcontractor, unless the subcontractor has validly elected an exemption as permitted by this chapter, or

        has otherwise secured the payment of compensation coverage as a subcontractor

        . . . for work performed by or as a subcontractor.

      2. An independent contractor working or performing services in the construction industry.


      * * *


    2. 'Employee' does not include:

    1. An independent contractor who is not engaged in the construction industry.

      1. In order to meet the definition of independent contractor, at least four of the following criteria must be met:

        1. The independent contractor maintains a separate business with his or her own work facility, truck, equipment, materials, or similar accommodations;

        2. The independent contractor holds or has applied for a federal employer identification number, unless the independent contractor is a sole proprietor who is not required to obtain a federal employer identification number under state or federal regulations; (III)The independent contractor receives compensation for services rendered or work performed and such compensation is paid to a business rather than to an individual;

        1. The independent contractor holds one or more bank accounts in the name of the business entity for purposes of paying business expenses or other expenses related to services rendered or work performed for compensation:

        2. The independent contractor performs work or is able to perform work for an entity in addition to or besides the employer at his or her own election without the necessity of completing an employment application or process; or


        3. The independent contractor receives compensation for work or services rendered on a competitive-bid basis or completion of a task or a set of tasks as defined by a

        contractual agreement, unless such contractual agreement expressly states that an employment relationship exists.


      2. If four of the criteria listed in sub- subparagraph a. do not exist, an individual may still be presumed to be an independent contractor and not an employee based on full consideration of the nature of the individual situation with regard to satisfying any of the following conditions:

        1. The independent contractor performs or agrees to perform specific services or work for a specific amount of money and controls the means of performing the services or work.

        2. The independent contractor incurs the principal expenses related to the service or work that he or she performs or agrees to perform.

        3. The independent contractor is responsible for the satisfactory completion of the work or services that he or she performs or agrees to perform.

        4. The independent contractor receives compensation for work or services performed for a commission or on a per-job basis and not on any other basis.

        5. The independent contractor may realize a profit or suffer a loss in connection with performing work or services.

        6. The independent contractor has continuing or recurring business liabilities or obligations.

        7. The success or failure of the independent contractor's business depends on the relationship of business receipts to expenditures.


      3. Notwithstanding anything to the contrary in this subparagraph, an individual claiming to be an independent contractor has the burden of proving that he or she is an independent contractor for purposes of this chapter.


    (Emphasis added)

  48. Further, the evidence presented is insufficient to demonstrate that the four subcontractors meet at least four of the criteria for an independent contractor, set forth at Section 440.02(15)(d)1.a., Florida Statutes (2003) and (2004).

  49. The evidence presented is also insufficient to demonstrate that two subcontractors, Richard Robinson and Robert Waddicor, could be "presumed" independent contractors.

    § 440.02(15)(d)1.b., Fla. Stat. (2003) and (2004). However, the evidence presented is sufficient to demonstrate that the other two subcontractors, Scott Lunardoni and Mauricio Perez, satisfied one of the conditions to be "presumed" independent contractors, as set forth at Section 440.02(15)(d)1.b.(I), Florida Statutes (2003) and (2004).

  50. Section 440.02(15)(c), Florida Statutes (2003) and (2004), specifically included in the definition of employees independent contractors who were working or performing services in the construction industry and specifically excluded from the definition of employees independent contractors who were not engaged in the construction industry.

  51. Family Flooring contends that neither it nor the four subcontractors were engaged in the construction industry.

  52. Construction industry is defined by Section 440.02, Florida Statutes. Section 440.02(7), Florida Statutes (2001) and (2002), provides in pertinent part:

    1. 'Construction industry' means for-profit activities involving the carrying out of any building, clearing, filling, excavation, or substantial improvement in the size or use of any structure or the appearance of any land. When appropriate to the context, 'construction' refers to the act of construction or the result of construction. However, 'construction' shall not mean a landowner's act of construction or the result of a construction upon his or her own premises, provided such premises are not intended to be sold or resold.


      (Emphasis added)


      Section 440.02(8), Florida Statutes (2003, effective


      January 1, 2004) and (2004), provides in pertinent part:


    2. 'Construction industry' means for-profit activities involving the carrying out of any building, clearing, filling, excavation, or substantial improvement in the size or use of any structure or the appearance of any land. However, 'construction' does not mean a homeowner's act of construction or the result of a construction upon his or her own premises, provided such premises are not intended to be sold, resold or leased by the owner within 1 year after the commencement of construction. The division may, by rule, establish standard industrial classification codes and definitions thereof which meet the criteria of the term 'construction industry' as set forth in this section.


    (Emphasis added)


  53. Section 440.02(16), Florida Statutes (2003, effective January 1, 2004) and (2004), provides in pertinent part:

    (b) A homeowner shall not be considered the employer of persons hired by the homeowner to carry out construction on the homeowner's own

    premises if those premises are not intended for immediate lease, sale, or resale.


  54. Florida Administrative Code Rule 69L-6.021, Construction Industry Classification Codes, Descriptions, and Operations, provides in pertinent part:

    1. The Division adopts the classification codes and descriptions that are specified in the Florida Contracting Classification Premium Adjustment Program, and published in the Florida exception pages of the National Council on Compensation Insurance, Inc. (NCCI), Basic Manual (1996 ed., issued January 21, 2003). For convenience, the Division lists here the classification codes and descriptions that are published in the Florida exception pages of the Basic Manual and adopted in this rule.


      * * *


      (z) 5348 Stone, Mosaic or Terrazzo or Ceramic Tile Work - Inside


      This Rule was first promulgated on October 21, 2002 and was subsequently amended on July 4, 2004; consequently, it is not applicable prior to October 21, 2002.

  55. Examining Sections 440.02(7), Florida Statutes (2002), and 440.02(8), Florida Statutes (2003) and (2004), together with Florida Administrative Code Rule 69L-6.021(z), persuades the undersigned that the definition of construction industry includes the work performed by Family Flooring and the four subcontractors.

  56. Further, examining Section 440.02(7), Florida Statutes (2001) and (2002), together with Section 440.02(16)(b), Florida Statutes (2003) and (2004), without examining Florida Administrative Code Rule 69L-6.021(z), persuades the undersigned that the definition of construction industry includes the work performed by Family Flooring and the four subcontractors during the time period prior to the Rule being promulgated. The evidence is insufficient to demonstrate that the work performed was "a landowner's act of construction or the result of a construction upon his or her own premises, provided such premises are not intended to be sold or resold."

  57. Section 440.107, Florida Statutes (2003), provides in pertinent part:

    1. For the purposes of this section, "securing the payment of workers' compensation" means obtaining coverage that meets the requirements of this chapter and the Florida Insurance Code.


  58. The evidence demonstrates that the four contractors were employees of Family Flooring. For the time-period covered in the instant case, Sections 440.38 and 440.107(2), Florida Statutes, requires every employer to secure the payment of compensation for its employees under the Workers' Compensation Law. The evidence demonstrates that Family Flooring failed to secure payment of workers' compensation for its employees, i.e.,

    the four subcontractors. Hence, Family Flooring violated Sections 440.10, 440.38, and 440.107, Florida Statutes, by failing to secure the payment of workers' compensation coverage for the four subcontractors.

  59. As to the amended assessment of penalty, Section 440.107(7), Florida Statutes (2004), provides in pertinent part:

    1. Whenever the department determines that an employer who is required to secure the payment to his or her employees of the compensation provided for by this chapter has failed to secure the payment of workers' compensation required by this chapter . . . such failure shall be deemed an immediate serious danger to public health, safety, or welfare sufficient to justify service by the department of a stop-work order on the employer, requiring the cessation of all business operations . . . The department may issue an order of conditional release from a stop-work order to an employer upon a finding that the employer has complied with coverage requirements of this chapter and has agreed to remit periodic payments of the penalty pursuant to a payment agreement schedule with the department. . . .


      * * *


      (d)1. In addition to any penalty, stop-work order, or injunction, the department may assess against any employer who has failed to secure the payment of compensation as required by this chapter a penalty equal to

      1.5 times the amount the employer would have paid in premium when applying approved manual rates to the employer's payroll during periods for which it failed to secure payment of workers' compensation required by this chapter within the preceding 3-year period or

      $1,000, whichever is greater.

  60. The evidence demonstrates that the issuance of a SWO and OPA by the Department were warranted and that the Department correctly assessed the penalty in the Amended OPA.

RECOMMENDATION


Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation enter a final order:

  1. Finding that WMW Enterprises, d/b/a Family Flooring violated Sections 440.10 and 440.38, Florida Statutes, by failing to secure the payment of workers' compensation coverage for its employees, Scott Lunardoni, Mauricio Perez, Richard Robinson, and Robert Waddicor.

  2. Affirming and upholding the Stop-Work Order and Order of Penalty Assessment and the Amended Order of Penalty Assessment in the amount of $42,613.47.

DONE AND ENTERED this 6th day of February, 2006, in Tallahassee, Leon County, Florida.

S

ERROL H. POWELL

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us


Filed with the Clerk of the Division of Administrative Hearings this 6th day of February, 2006.


COPIES FURNISHED:


Colin M. Roopnarine, Esquire Department of Financial Services Division of Legal Services

Workers’ Compensation Section

200 East Gaines Street Tallahassee, Florida 32399-4229


Michael Martino

WMW Enterprises, Inc. d/b/a Family Flooring

1450 10th Street

Lake Park, Florida 33403


Carlos G. Muñiz, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300


Tom Gallagher, Chief Financial Officer Department of Financial Services

The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS


All parties have the right to submit written exceptions within 15 days from the date of this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.


Docket for Case No: 05-002651
Issue Date Proceedings
Mar. 30, 2006 Final Order filed.
Mar. 02, 2006 Document referral letter to the Agency from Ann Cole.
Feb. 06, 2006 Recommended Order cover letter identifying the hearing record referred to the Agency.
Feb. 06, 2006 Recommended Order (hearing held October 7, 2005). CASE CLOSED.
Dec. 05, 2005 Letter to Judge Powell from M. Martino regarding copy of Summation Brief forwarded to C. Roopnarine filed.
Dec. 05, 2005 Notice of Ex-parte Communication.
Nov. 22, 2005 Summation Brief for the Honorable Errol H. Powell, Administrative Law Judge filed.
Nov. 18, 2005 Department of Financial Services, Division of Workers` Compensation Proposed Recommended Order filed.
Nov. 04, 2005 Notice of Filing Transcript.
Oct. 31, 2005 Transcript of Proceedings filed.
Oct. 13, 2005 Letter to Judge Powell from M. Martino enclosing Exhibits to add to the October 7, 2005 Hearing filed.
Oct. 12, 2005 Exhibits in Response to an Official Recognition filed.
Oct. 07, 2005 CASE STATUS: Hearing Held.
Sep. 29, 2005 Petitioner`s Pre-hearing Statement filed.
Aug. 17, 2005 Order of Pre-hearing Instructions.
Aug. 17, 2005 Notice of Hearing by Video Teleconference (video hearing set for October 7, 2005; 10:00 a.m.; West Palm Beach and Tallahassee, FL).
Aug. 04, 2005 Joint Response to Initial Order filed.
Jul. 26, 2005 Initial Order.
Jul. 26, 2005 Down-Payment Installment Invoice filed.
Jul. 26, 2005 Order of Conditional Release from Stop Work Order filed.
Jul. 26, 2005 Payment Agreement Schedule for Periodic Payment Penalty filed.
Jul. 26, 2005 Amended Order of Penalty Assessment filed.
Jul. 26, 2005 Stop Work Order filed.
Jul. 26, 2005 Letter to C. Roopnarine from M. Martina asking that the Petition for Hearing dated 02/19/05 be held in abeyance filed.
Jul. 26, 2005 Request for Administrative Hearing filed.
Jul. 26, 2005 Agency referral filed.

Orders for Case No: 05-002651
Issue Date Document Summary
Mar. 28, 2006 Agency Final Order
Feb. 06, 2006 Recommended Order Respondent failed to secure payment of Workers` Compensation coverage for its subcontractors who were its employees. Recommend that the Stop-Work Order and the Amended Penalty Assessment were appropriate.
Source:  Florida - Division of Administrative Hearings

Can't find what you're looking for?

Post a free question on our public forum.
Ask a Question
Search for lawyers by practice areas.
Find a Lawyer