vs.
Respondent.
Case No. 15-1825
Pursuant to notice, a final hearing was held in this case on June 17, 2015, by video teleconference at sites in Tallahassee, Florida, and Daytona Beach, Florida, before
E. Gary Early, a designated Administrative Law Judge of the Division of Administrative Hearings.
For Petitioner: Mary K. Surles, Esquire
Department of Financial Services Division of Legal Services Workers’ Compensation Section
Whether Respondent failed to obtain workers' compensation insurance that meets the requirements of chapter 440, Florida Statutes, and, if so, the appropriate penalty.
On January 12, 2015, Petitioner, Department of Financial Services, Division of Workers’ Compensation (“Petitioner” or “Division”), issued a Stop-Work Order and Order of Penalty Assessment, alleging that Respondent, CBC Roofing Company Mike Hawryluk, LLC (“Respondent”), was not in compliance with the workers’ compensation coverage requirements of chapter 440, Florida Statutes. The Stop-Work Order was hand-delivered to Respondent, and ordered Respondent to cease all business operations for all worksites in the state. The Order of Penalty Assessment established a general penalty of two times the amount that the employer would have paid in premiums had workers’ compensation insurance been procured for the preceding two-year period.
On February 16, 2015, Petitioner issued an Amended Order of Penalty Assessment (hereinafter "Amended Order") which was served by hand-delivery on Respondent. The Amended Order calculated a specific monetary penalty of $105,790.64. The Amended Order included a notice to Respondent of its right to
challenge the agency’s proposed action by filing a petition pursuant to sections 120.569 and 120.57, Florida Statutes.
On March 9, 2012, Respondent filed a Request for Administrative Hearing Involving Disputed Issues of Material Fact, by which it requested a formal administrative hearing.
On April 3, 2015, the Request for Administrative Hearing Involving Disputed Issues of Material Fact, Stop-Work Order and Order of Penalty Assessment, and Amended Order were transmitted to the Division of Administrative Hearings for a formal administrative hearing. The case was set for hearing to convene on June 17, 2015.
On June 12, 2015, Petitioner filed a Motion for Leave to Amend the Penalty and 2nd Amended Order of Penalty Assessment, by which it reduced the assessed penalty from $105,790.64 to
$92,324.70. On June 15, 2015, the case was transferred to the undersigned. The Motion for Leave to Amend the Penalty was thereafter granted. Thus, the 2nd Amended Order of Penalty Assessment forms the basis for this proceeding.
At the final hearing, Petitioner presented the testimony of Robert Etheredge, a Compliance Investigator with the Division of Workers’ Compensation Bureau of Compliance; Lyna Ty, a Penalty Calculator for the Division of Workers’ Compensation; and Mike Hawryluk, Respondent’s sole managing member. Petitioner introduced Petitioner’s Exhibits 1-7, 10, and 12-15, each of
which was admitted into evidence. Respondent, with Mr. Hawryluk having testified during Petitioner’s case-in-chief, introduced Respondent’s Exhibits 1 and 2, each of which was admitted into evidence. Petitioner requested 30 days to file its post-hearing submittal, which request was granted as to both parties.
The one-volume Transcript was filed on July 30, 2015. The parties each timely filed a proposed recommended order, which have been considered in the preparation of this Recommended Order.
This proceeding is governed by the law in effect at the time of the commission of the acts alleged to warrant imposition of a penalty. See McCloskey v. Dep’t of Fin. Servs., 115 So. 3d
441 (Fla. 5th DCA 2013). Thus, references to statutes are to Florida Statutes (2014), unless otherwise noted.
Petitioner is the state agency responsible for enforcing the Florida Workers' Compensation Law, chapter 440, Florida Statutes, including those provisions that require employers to secure and maintain payment of workers’ compensation insurance for their employees who may suffer work- related injuries.
Respondent is a Florida limited-liability company, having been organized on May 2, 2007. Mike Hawryluk has been
the sole manager of the company. The company is engaged in roofing in the construction industry.
When Respondent was established, a checking account was opened in the company name.
Respondent maintained workers’ compensation insurance from June 1, 2007, until June 1, 2009.
Mr. Hawryluk filed a notice of election to be exempt from the provisions of chapter 440. That exemption became effective on November 2, 2007.
Mr. Hawryluk held three construction licenses: a general contractor license, #CGC1517558; a building contractor license, #CBC1254280; and a roofing contractor license, #CCC1328252.
A general contractor is “a contractor whose services are unlimited as to the type of work which he or she may do, who may contract for any activity requiring licensure under this part, and who may perform any work requiring licensure under this part.” § 489.105(3)(a), Fla. Stat.
A building contractor is “a contractor whose services are limited to construction of commercial buildings and single- dwelling or multiple-dwelling residential buildings, which do not exceed three stories in height, and accessory use structures in connection therewith or a contractor whose services are limited to remodeling, repair, or improvement of any size
building if the services do not affect the structural members of the building.” § 489.105(3)(e), Fla. Stat.
A roofing contractor is “a contractor whose services are unlimited in the roofing trade.” § 489.105(3)(e), Fla. Stat.
Due to declines in the economy, Respondent became insolvent in 2010, and the company went inactive. Respondent did not take formal steps to end its existence, but stopped filing annual reports. On September 23, 2011, Respondent was administratively dissolved by the Department of State, Division of Corporations for failing to file an annual report. No business was conducted by Respondent after the date of dissolution, until its reinstatement as discussed herein.
In conjunction with the dissolution of the company, Mr. Hawryluk allowed his workers’ compensation owner’s exemption to expire on November 1, 2011.
Mr. Hawryluk continued to use the CBC Roofing Company bank account as a personal bank account. That decision was made as a matter of personal convenience, and does not demonstrate that Respondent continued to either conduct business or engage its defunct corporate existence in any way.
As the economy improved, and as his alternative job of selling internet domain names failed to pan out, Mr. Hawryluk decided to re-enter the construction business.
The Division produced a series of building permits issued by Volusia County to Mr. Hawryluk under any of his three construction licenses, or to other companies under his control. The permits were obtained by Mr. Etheredge on June 10, 2015, in preparation for the final hearing. The permits were as follows:
Applicant Parcel Address Permit Type Last Activity
Mike Hawryluk 21 Julie Dr., Ormond Beach Residential 03/29/2010
Mike | Hawryluk | 54 Palm Dr., Ormond Beach | Re-roof | repair | 04/08/2010 |
Mike | Hawryluk | 1712 Derbyshire Rd., Holly Hill | Re-roof | replace | 05/15/2012 |
Mike Hawryluk 3 John Bulow Cir., Ormond Beach Re-roof 05/06/2014 CBC Roofing Co. Mike Hawryluk
Mike Hawryluk 36 Seabreeze Dr., Ormond Beach Roof/combination 05/29/2014 Mike Hawryluk 80 Carol Rd., Ormond Beach Re-roof replace 05/29/2014
Mike | Hawryluk | 3070 | Whisper | Blvd., DeLand | Re-roof | repair | 06/13/2014 |
Mike | Hawryluk | 3070 | Whisper | Blvd., DeLand | Re-roof | replace | 06/20/2014 |
Mike | Hawryluk | 1313 | Fairway | Ave., Ormond Beach | Re-roof | replace | 07/11/2014 |
Mike Hawryluk 225 Seminole Dr., Ormond Beach Re-roof replace 09/09/2014
Bruce A. Fizell 10 Dunes Cir., Ormond Beach Roofing 02/20/2015 Mike Hawryluk Subcontractor
Mike Hawryluk 2577 John Anderson Dr., Ormond Beach Re-roof replace 03/12/2015
Mike Hawryluk 3296 Relay Rd., Ormond Beach Re-roof 03/18/2015 CBC Roofing Co. Mike Hawryluk
Mike Hawryluk 309 Navajo Dr., Ormond Beach Re-roof replace 04/17/2015
There were no permits issued for the period from January 13, 2013 to November 8, 2013, the period during which Respondent was legally dissolved, and during which Respondent was not engaged in construction contracting.1/ The evidence in this case, including the permit record, provides clear and convincing evidence that Respondent was not conducting business,
and was thus not an “employer” during the period from January 13, 2013 to November 8, 2013.
Respondent was reinstated on November 8, 2013, and has remained active since. On November 13, 2013, Mr. Hawryluk reinstated his workers’ compensation owner’s exemption.
On January 12, 2015, Petitioner's investigator, Robert Etheredge, conducted an inspection at a residential construction site at 225 Seminole Drive, Ormond Beach, Florida. He observed three people removing siding from the residence, identified as William Evans, Thomas Vance, and Marcos Proveda. There were two trucks parked at the site, one of which had a CBC Roofing sign affixed. Mr. Hawryluk was also at the site.
Mr. Hawryluk stated that the three employees had been there for approximately one hour, and were being paid at a rate of $8.00 per hour.
Mr. Etheredge asked Mr. Hawryluk for evidence that Respondent’s employees were covered by workers’ compensation insurance. There was none.
Mr. Etheredge reviewed the Compliance and Coverage Automated System (CCAS), which is the statewide database for workers’ compensation information, to confirm Respondent’s status in the workers’ compensation system. Using the CCAS, Mr. Etheredge confirmed that Respondent had no workers’ compensation coverage on file for any employee of the company.
He further noted that Mr. Hawryluk held an exemption from workers’ compensation for the period from November 13, 2013 to November 13, 2015.
Mr. Etheredge also accessed the Florida Division of Corporations website to ascertain Respondent’s corporate status. He noted that Respondent had previously been dissolved, and then reinstated on November 8, 2013.
After having gathered the information necessary to determine Respondent’s status, Mr. Etheredge contacted his supervisor and received authorization to issue a Stop-Work Order and Order of Penalty Assessment. The Stop-Work Order required Respondent to cease all business operations statewide. The Order of Penalty Assessment assessed a penalty, pursuant to section 440.107(7)(d), “[e]qual to 2 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 has failed to secure the payment of compensation within the preceding 2-year period.” The consolidated order was hand- delivered to Mr. Hawryluk, on behalf of Respondent, at
11:45 a.m. on January 12, 2015.
The Stop-Work Order and the Order of Penalty Assessment, as amended, named CBC Roofing Company Mike Hawryluk, LLC, as the employer. The Stop-Work Order and the Order of Penalty Assessment, as amended, did not name Mr. Hawryluk as
having violated the workers’ compensation law, either individually or “doing-business-as” CBC Roofing Company Mike Hawryluk, LLC.
The Stop-Work Order was accompanied by a Request for Production of Business Records for Penalty Assessment Calculation, which required Respondent to “produce business records for examination and copying, for the period of 01/13/2013 through 01/12/2015.”
On January 14, 2015, Respondent advised the Division, by letter, that it had terminated the three employees observed at the construction site, with the three having been paid a total of $25.50.
In response to the Request for Production of Business Records, Respondent produced all records that it had for the period during which it was conducting business prior to
January 1, 2015, consisting of bank records for the period of November 13, 2013 through December 31, 2014.
Respondent did not produce records for the period from January 1, 2015 through January 12, 2015.
The records provided for the period of November 13, 2013 through December 31, 2014, were sufficient to allow the Division to determine that there was no violation of workers’ compensation for that period. Thus, the Second Amended Order of
Penalty Assessment did not calculate or assess penalties for that period.
There were no business records produced for the period from January 13, 2013 to November 13, 2013, because Respondent was defunct, and business records did not and could not exist.
Although section 440.107(7)(e) requires salaries of employees to be imputed for a period of the previous two years, Mr. Etheredge testified that Petitioner’s construction of the law has resulted in the situation in which:
Sometimes I come across companies that only started six months ago. We do not go back further, that wouldn't make any sense. We only go to the inception of the company or two years, whichever happens to be greater.
THE COURT: All right. And had the company started on November of 2013, would these records have been sufficient, the records provided to you been sufficient to calculate a penalty without the information?
THE WITNESS: If there was also an accompanying record to indicate that the company actually started November 2013, then that would have been adequate, correct.
Petitioner’s application of the law applies with equal force in this case, in which the evidence demonstrates conclusively that, for all practical purposes, Respondent “started” on November 8, 2013, after a period of dissolution and inactivity. In that regard, it makes no more sense to impute wages for non-existent employees while a company is defunct and demonstrably inactive
than it does to impute wages for non-existent employees before a company is in existence.2/
The records were reviewed by Petitioner’s penalty auditor, Lyna Ty. Mr. Ty determined that the records were insufficient to establish the compensation paid to Respondent’s employees for the periods from January 13, 2013 to November 13, 2013, and from January 1, 2015 to January 12, 2015. Therefore, pursuant to section 440.107(7)(e), salaries were imputed for each of the three employees, and for Mr. Hawryluk for the period before the reactivation of his owner’s exemption, based on the statewide average weekly wage for the period for which “inadequate” records were provided.
Mr. Ty used the “Scopes Manual” published by the National Council on Compensation Insurance to ascertain the classification of Respondent’s business, based upon the nature of the goods and services it provided. Mr. Ty originally determined that Respondent’s construction business fell within Class Code 5551 - Roofing.
During the course of this proceeding, the Division determined that the more accurate Scopes Manual classification code for Respondent’s business was Class Code 5645, Carpentry - Construction of Residential Dwellings Not Exceeding Three Stories in Height. The calculations described herein are those that applied the correct class code, and which resulted in the
2nd Amended Order of Penalty Assessment that forms the basis for this proceeding.
The salaries of Respondent’s three employees, as employees of a class code 5645 business, were imputed as though they worked full-time for Respondent from January 13, 2013 to November 13, 2013, and from January 1, 2015 to January 12, 2015, the periods for which “inadequate” records were provided. In addition, salary was imputed to Mr. Hawryluk for the period from January 13, 2013 to November 13, 2013, since his exemption had expired, and had not yet been reinstated. Since the records provided for the period of November 13, 2013 through
December 31, 2014, were sufficient to demonstrate that Respondent did not fail to secure the payment of compensation, salaries were not imputed by the Division for that period.
The imputed wages were then multiplied by two, pursuant to section 440.107(7)(e), resulting in a total imputed gross payroll of $292,385.44.
The penalty for Respondent’s failure to maintain workers’ compensation insurance for its employees is calculated as “2 times the amount Respondent would have paid in premium when applying approved manual rates to the employer’s payroll during periods for which it failed to secure the payment of workers’ compensation required by this chapter within the preceding 2-year period or $1,000, whichever is greater.”
The National Council on Compensation Insurance periodically issues a schedule of workers’ compensation rates per $100 in salary, which varies based on the Scopes Manual classification of the business.
The workers’ compensation insurance premium was calculated by multiplying one percent of the $292,385.44 imputed gross payroll ($2,923.85) by the approved manual rate (which varied from $15.71 to $15.91, depending on the quarter), which resulted in a calculated premium of $46,162.35.
The penalty was determined by multiplying the calculated premium by two, resulting in the final penalty of
$92,324.70. On June 10, 2015, the Division prepared its 2nd Amended Order of Penalty Assessment assessing a monetary penalty in that amount against Respondent.
The overwhelming weight of the evidence in this case demonstrates that Respondent ceased operation as a business engaged in construction contracting no later than September 23, 2011, and took no further action to conduct business until it filed for reinstatement on November 8, 2013.
The Division failed to establish that Respondent was an “employer” for workers’ compensation purposes from
January 13, 2013 to November 8, 2013. Respondent was not, during that period, “carrying on any employment” and, during the period of dissolution, had no employees.
The Division established that Respondent was an "employer" for workers' compensation purposes beginning on November 8, 2013, because it was engaged in the construction industry and had one or more employees working for the company.
Applying imputed wages in accordance with the formula described above, the penalty for the period from November 8, 2013 through November 12, 2013, is calculated by first applying the average weekly wage of $841.57 for each of the four employees, including Mr. Hawryluk, for a period of one week (though there is absolutely no evidence that the three employees observed on January 12, 2015, were employees from November 8, 2013 to November 12, 2013), which comes to $3,366.28.3/ Multiplying $3,366.28 by two, pursuant to section 440.107(7)(e), equals a gross payroll for the period of $6,732.56. One percent of the gross payroll ($67.33) times the approved manual rate for that quarter ($15.71) produces a premium amount of $1,057.75. That amount times two, pursuant to section 440.107(7)(d)1., results in a penalty of $2,115.50.
The penalty correctly established in the 2nd Amended Order of Penalty Assessment Penalty Calculation Worksheet for the period from January 1, 2015 to January 12, 2015, is
$2,754.36.
The appropriate penalty for the full lawful period of imputation is $4,869.86.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and parties pursuant to sections 120.569 and 120.57(1), Florida Statutes (2015).
Petitioner is the agency of the State of Florida charged, pursuant to section 440.107(3), with the duty to:
enforce workers' compensation coverage requirements, including the requirement that the employer secure the payment of workers' compensation . . . . In addition to any other powers under this chapter, the department shall have the power to:
Conduct investigations for the purpose of ensuring employer compliance.
Enter and inspect any place of business at any reasonable time for the purpose of investigating employer compliance.
Examine and copy business records.
* * *
Issue stop-work orders, penalty assessment orders, and any other orders necessary for the administration of this section.
Enforce the terms of a stop-work order.
Levy and pursue actions to recover penalties.
Petitioner has the burden of proof in this case, and must show by clear and convincing evidence, that Respondent violated chapter 440 and the rules promulgated thereunder during the relevant period, and that the penalty assessments are
correct. § 120.57(1)(j), Fla. Stat.; Dep’t of Banking & Fin.,
Div. of Sec. & Inv. Prot. v. Osborne Stern & Co., 670 So. 2d 932 (Fla. 1996); Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987);
Pou v. Dep’t of Ins., 707 So. 2d 941 (Fla. 3d DCA 1998). Clear and convincing evidence “requires more proof than a ‘preponderance of the evidence’ but less than ‘beyond and to the exclusion of a reasonable doubt.’” In re Graziano, 696 So. 2d
744, 753 (Fla. 1997).
The workers’ compensation law is a creation of statute and was unknown to the common law. Summit Claims Mgmt. v.
Lawyers Express Trucking, Inc., 913 So. 2d 1182, 1184 (Fla. 4th DCA 2005); Shaw v. Cambridge Integrated Servs. Group, Inc.,
888 So. 2d 58, 62 (Fla. 4th DCA 2004). As a statute in derogation of the common law, the workers’ compensation statute requires strict compliance with its provisions by the person seeking its benefits. See Florida Steel Corp. v. Adaptable
Dev., Inc., 503 So. 2d 1232 (Fla. 1986); Anderson Columbia, Inc.
v. Brewer, 994 So. 2d 419, 421 (Fla. 1st DCA 2008); Edwards v. C.A. Motors, Ltd., 985 So. 2d 1147 (Fla. 1st DCA 2008).
Section 440.10(1)(a) provides in relevant part:
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.
Section 440.02(8) defines “construction industry,” in pertinent part, as “for-profit activities involving any building, clearing, filling, excavation, or substantial improvement in the size or use of any structure or the appearance of any land.” See Allied Trucking of Fla. v. Lanza,
826 So. 2d 1052, 1052-1053 (Fla. 1st DCA 2002). Respondent’s activities on January 12, 2015, at the residential worksite constituted construction.
Section 440.02(16)(a), in pertinent part, defines an “employer” to be “every person carrying on any employment.”
Section 440.02(17)(b)2., defines “employment” to mean “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.”
Section 440.02(15)(a) broadly defines “employee” to mean:
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, and includes, but is not limited to, aliens and minors.
The three persons at the residential worksite on January 12, 2015, Mr. Evans, Mr. Vance, and Mr. Proveda, were Respondent’s employees.
Section 440.107(7)(a) provides, in pertinent part,
that:
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 . . . 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 . . . .
Petitioner proved that Respondent did not secure worker’s compensation for the three employees at the residential worksite on January 12, 2015. As a result of the foregoing, Petitioner’s Stop-Work Order was authorized and appropriate.
Section 440.107(7)(d)1. provides, in pertinent part,
that:
In addition to any penalty, stop-work order, or injunction, the department shall assess against any employer who has failed to secure the payment of compensation as required by this chapter a penalty equal to
2 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 the payment of workers' compensation required by this chapter within the preceding 2-year period or $1,000.00, whichever is greater.
Section 440.107(7)(d)1. provides that:
(e) When an employer fails to provide business records sufficient to enable the department to determine the employer’s payroll for the period requested for the calculation of the penalty provided in paragraph (d), for penalty calculation purposes, the imputed weekly payroll for each employee, corporate officer, sole proprietor, or partner shall be the statewide average weekly wage as defined in
s. 440.12(2) multiplied by 2.
In accordance with section 440.107(5), the Division has adopted rules that specify the business records, including those related to its employees, that employers must maintain and produce. In implementing that authority, Florida Administrative Code Rule 69L-6.015, provides as follows:
(1) Employers must at all times maintain the records required by this rule and must produce the records when requested by the division pursuant to Section 440.107, F.S.
* * *
Employment records. Every employer shall maintain employment records pertaining to every person to whom the employer paid or owes remuneration for the performance of any work or service in connection with any employment under any appointment or contract for hire or apprenticeship.
The employment records required by this subsection shall indicate with regard to every such person:
Name of the person.
Social Security Number, Federal Employer Identification Number, or IRS Tax Identification Number of the person.
Each day, month, and year or pay period when the employer engaged the person in employment.
Amount of remuneration paid or owed by the employer for work or service performed by the person. Where remuneration is paid or owed on an hourly basis, the record shall indicate the day, month, and year of work or service and the number of hours worked by the person during each pay period. Where remuneration is paid or owed on any basis other than hourly, the record shall specify the basis, such as competitive bid, piece rate, or task, and indicate the day, month, and year, when remuneration was earned.
In addition, every employer shall maintain the following records for each such person:
All checks or other records provided to the person for salary, wage, or earned income.
All Form 1099 Miscellaneous Income and Form W-2 Wage and Tax Statements issued to the person.
All written contracts or agreements between the employer and the person that describe the terms of employment.
All employment and unemployment reports filed pursuant to Florida law.
The evidence demonstrated that, for the period from January 12, 2013 through November 7, 2013, Respondent, CBC Roofing Company Mike Hawryluk, LLC, was not in active existence;
was not an “employer,” in that it was not carrying on any employment; and had no employees who received remuneration from Respondent 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. Thus, for that period, Respondent was not required to maintain records pursuant to rule 69L-6.015.
Petitioner established by clear and convincing evidence that, from November 8, 2013 to the present, Respondent was an employer for workers' compensation purposes because it was conducting business and engaged one or more employees to perform services on its behalf, and was thus required to secure and maintain compensation for its employees pursuant to section 440.10.
Petitioner established by clear and convincing evidence that, from November 8, 2013 through November 12, 2013, Respondent did not maintain employment records sufficient to meet the requirements of rule 69L-6.015.
Petitioner admitted that, from November 13, 2013 through December 31, 2014, Respondent maintained employment records sufficient to meet the requirements of the workers’ compensation law.
Petitioner established by clear and convincing evidence that, from January 1, 2015 to January 12, 2015, Respondent did not maintain employment records sufficient to meet the requirements of rule 69L-6.015.
If an employer fails to maintain and produce required business records, imputation of wages for any known employees for the period of imputation is required. Twin City Roofing
Constr. Specialists, Inc. v. Dep't of Fin. Servs., 969 So. 2d
563, 566 (Fla. 1st DCA 2007) (When, as here, an employer refuses to provide business records, the Division is required to impute the missing payroll for the period requested in order to assess the penalty.). Thus, as to the three employees observed on the worksite on January 13, 2015, it was appropriate for the Division to impute wages for the period from November 8, 2013 through November 12, 2013, and for the period from January 1, 2015 to January 12, 2015. In addition, it was appropriate for the Division to impute wages as to Mr. Hawryluk for the period prior to the reinstatement of his owner’s exemption from November 8, 2013 through November 12, 2013.
As set forth in the Findings of Fact, the appropriate penalty for the period from November 8, 2013 through
November 12, 2013 is $2,115.50.
The 2nd Amended Order of Penalty Assessment Penalty Calculation Worksheet correctly established a penalty for the period from January 1, 2015 to January 12, 2015, of $2,754.36.
Based on the foregoing, the appropriate penalty for Respondent’s failure to secure and maintain compensation for its employees is a total of $4,869.86.
RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, enter a final order assessing a penalty of $4,869.86 against Respondent, CBC Roofing Company Mike Hawryluk, LLC, for its failure to secure and maintain required workers’ compensation insurance for its employees for the periods of time set forth herein.
DONE AND ENTERED this 11th day of September, 2015, in Tallahassee, Leon County, Florida.
E. GARY EARLY Administrative Law Judge
Filed with the Clerk of the Division of Administrative Hearings this 11th day of September, 2015.
1/ There was a permit for a roof replacement with a “last activity” date of May 15, 2012, prior to any alleged violation or period of imputation of wages against Respondent. Although the permit applicant was Mr. Hawryluk, there was no evidence that the permit was issued to or involved Respondent. Even if the 2012 permit was relevant to any issue in this proceeding, which it is not, the Division failed to meet its burden of showing that the permit can be attributed to Respondent.
2/ The undersigned is cognizant that, under Florida law, an administratively-dissolved corporation “continues its corporate existence but may not carry on any business except that necessary to wind up and liquidate its business and affairs.”
§ 607.1421(3), Fla. Stat. The undersigned further recognizes that an administratively-dissolved corporation may be reinstated by filing the appropriate forms, and in that case, the reinstatement “relates back to and takes effect as of the effective date of the administrative dissolution and the corporation resumes carrying on its business as if the administrative dissolution had never occurred.” § 607.1422(3), Fla. Stat. Despite the legal fiction of continuous existence upon reinstatement, the evidence demonstrates that Respondent was factually not carrying on any employment and was not an employer for that period of presumptive existence. As such, the period from January 12, 2013 through November 7, 2013 was not a “period[] for which [Respondent] failed to secure the payment of workers' compensation required by [chapter 440] within the preceding 2-year period.”
3/ The undersigned recognizes that the imputation of wages for employees who were demonstrably not employed during all or part of the period of imputation is a harsh remedy that, to some, might seem unreasonable. However:
Department precedent establishes that where the records are deficient, it is improper to attempt to pick partial information out of the deficient records in an attempt to patch together employee rosters. Instead, when an employer fails to produce all of the records
required by rule 69L-6.015 to show the actual duration of each individual's employment, imputation of the employment duration is required. To do otherwise would “undoubtedly encourage unscrupulous employers to manipulate the Division by producing only those records that would illegally minimize the penalty prescribed by the governing statutes.” [Dep't of Fin.
Servs. v. Jesus Sosa, d/b/a Jesus Sosa Corp., Case No. 08-3078 (Fla. DOAH Dec. 10, 2008; DFS Feb. 23, 2009, at 3); aff'd per
curiam, 29 So. 3d 295 (Fla. 1st DCA 2009).] As noted in the Sosa Final Order, this result was required even if the employer was merely negligent in failing to maintain all of the required records: “While imputation may work a hardship on an employer who is merely negligent and not ill-motivated, that employer can avoid that hardship by not indulging in that negligence.” Id. at 3.
The Department emphasized the public policy considerations that dictate “strict enforcement of legislation specifically designed to substantially punish non- compliant employers so as to increase employer compliance and ensure workers' compensation coverage for their employees.” Id.
Dep't of Fin. Servs. v. Mex Group Maintenance and Repair, Inc., Case No. 14-2618 (Fla. DOAH Feb. 13, 2015; DFS May 12, 2015).
Christopher Ivey Miller, Esquire Department of Financial Services Division of Legal Services Workers’ Compensation Section
Julie Jones, CP, FRP, Agency Clerk Department of Financial Services Division of Legal Services
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.
