The Issue Whether Petitioner has been the subject of an unlawful employment practice.
Findings Of Fact Petitioner, Howard B. Steele, a black male, has been employed with the City of Lynn Haven since October, 1981. At the time he sought employment, Petitioner applied for the position of meter reader "or any available position." A meter reader position was not available, so Petitioner accepted a position in the sanitation department, picking up garbage. Three months after his employment, Mr. Steele was transferred to the street department to work on the trash truck. The trash truck crew picks up yard trash. During the summer of 1984, Mr. Steele was selected to assist with the maintenance and upkeep of the parks during baseball season. Parks and recreation was a part of the street department, and at all relevant times, was a two-man unit. When baseball season was over, Mr. Steele and his coworker would work in the sanitation department. In 1986, Mr. Steele and another coworker were assigned to handle the parks and recreation responsibilities exclusively during the entire year. Mr. Steele was no longer required to work in the sanitation department. The City of Lynn Haven is a municipality chartered pursuant to Laws of Florida, 1951, Ch. 27685, Sec. 5. At all relevant times, Lynn Haven employed approximately 98 persons. Of the 98 employees, fifteen are black and constitute approximately fifteen percent of the City's work force. The general population of non-whites in Lynn Haven and Bay County is approximately 13.8 percent and 14.3 percent, respectively. The general population of blacks in Lynn Haven is 10.1 percent. However, the City's qualified applicant pool is significantly less than ten percent. 1/ When the City's percentage of blacks in the work force is compared to the qualified applicant pool or even to the general population figures, it is apparent the City has no hiring practices or policies that disproportionately impact on blacks. In 1979, Lynn Haven adopted a Position Classification and Pay Plan (the Plan). The Plan has been slightly modified over the past ten years. The Plan includes eight general job classifications, as follows: Administrative, Clerical, Labor, Public Safety, Equipment Operation, Refuse, Utilities, and Supervision. Each job classification has a corresponding pay range that can be adjusted in exceptional circumstances. Salary increases are obtained primarily by two methods: cost-of-living raises and merit raises. 2/ Currently, both raises are given annually to all employees. However, prior to June 1989, merit raises were given biannually. A merit increase is not automatic but is given in conjunction with an annual evaluation on the employee's anniversary date of employment. Merit raises generally range from zero to five percent within the job's pay range. Consequently, while an employee is always eligible for a cost-of-living increase, it is possible for an individual to reach the maximum salary level for his or her position and no longer be eligible for a merit increase. Additionally, under the Plan, if an employee is demoted for just cause, the demotion may be in the form of a reduction in pay or to a lesser job classification. If, however, the demotion is due to an employee's inability to perform his or her work because of health or other reasons, there is no change in the employee's pay unless recommended by the department head. Therefore, it is possible for a person to be demoted into a lower job classification and make more money than a person with more seniority already in the lower job classification. The demotion policy is facially neutral and works to the advantage or disadvantage of blacks and whites equally. In 1981, when Mr. Steele was hired, he was paid $3.35 per hour. At that time, the salary range for unskilled laborers was $2.67 to $3.74 per hour. Currently, Mr. Steele is essentially an unskilled laborer with seniority in the parks and recreation unit. He is primarily responsible for maintaining the cleanliness of the city parks. This includes mowing the grass, cutting the shrubbery, and making minor repairs. Mr. Steele also lines the playing fields before ball games. While Mr. Steele does delegate assignments and duties to his crew member, Tommy Flanders, and is sometimes required to supervise community service workers, he does not function as a department head or have the responsibilities of a foreman such as Mr. Gray or Mr. Marlowe who hold foreman positions. During his employment, Mr. Steele has received a written reprimand for falsifying a time card and has also had a well-documented problem with absenteeism spanning several years. Since his employment in 1981, Mr. Steele has been given a cost-of- living increase each year he has been employed with the City. Mr. Steele has also received the appropriate number of merit raises. None of these raises were inequitable or discriminatory. Mr. Steele received his first merit increase in July, 1982, and his second merit increase in April, 1983. Under the policy existing at the time, merit increases were given every two years. Mr. Steele, however, received an extra merit raise because of his job performance. In 1985, Mr. Steele, along with approximately 20 other white and black employees, were eligible for a merit increase. However, the City inadvertently failed to give these employees their raises. The missed raises were due exclusively to an oversight by the City and were corrected in 1986 when they were discovered. In 1986, Mr. Steele was given a 15% salary increase which included his annual cost-of-living raise and a two-step merit increase. In 1987, Mr. Steele was given a cost-of-living raise but not a merit increase. As noted above, merit increases were given biannually, and because Mr. Steele had received a two-step merit increase in 1986, he was not entitled to a merit increase in 1987. On November 3, 1988, Mr. Steele received a merit increase which raised his salary to $6.91 per hour. The following June (1989) the compensation policy was amended to permit merit raises annually. Under the new policy, Mr. Steele was eligible for a merit increase in October, 1989. Once again, the City inadvertently failed to give Mr. Steele his merit increase in 1989 but corrected the oversight retroactively. 3/ On March 10, 1990, when Mr. Steele filed his Charge of Discrimination, he was being paid $7.44 per hour. On October 29, 1990, Mr. Steele received a merit raise which brought his salary to $7.55 per hour, and on December 28, 1990, Mr. Steele received a cost-of-living raise which brought his rate of pay to $7.78 per hour. 4/ Mr. Steele has received other raises since 1990 and is currently making $8.82 per hour. It is undisputed that Tommy Flanders, Mr. Steele's white co-worker with less seniority in the parks and recreation unit, was at one time paid a higher hourly rate than Mr. Steele. Mr. Flanders was hired in April, 1981, in the fire department as a paid fireman. Mr. Flanders had been a volunteer fireman with the City since 1968. Mr. Flanders was unable to get state certification because of a vision problem, and upon denial of a fireman's certification, he was demoted to the sanitation department. He worked in this job approximately two months and then moved to Pensacola after a work-related injury. Mr. Flanders returned to Lynn Haven in August, 1985, and was hired by the City as a truck driver in the street department at a rate of $4.21 per hour. Mr. Flanders' pay was consistent with the City's pay classification system. He was promoted to Step 1 foreman in February, 1986, at a rate of $5.96 per hour. Mr. Flanders remained in the sanitation department until he was injured in another job-related accident in August, 1988. When he returned from workers' compensation leave to light duty in November, 1988, Mr. Flanders was assigned to the parks and recreation unit as a crew member with Mr. Steele. Although this was essentially a demotion, the City's demotion policy permitted Mr. Flanders to maintain the same hourly rate of pay he received as a foreman with the sanitation department. This created an unfortunate situation for Mr. Steele, who had been in the recreation unit longer and had more experience in the parks and recreation unit than Mr. Flanders. However, the pay disparity was consistent with the then-current pay and classification plan and is one reason the City began to move toward adoption of a new compensation and job classification plan. Mr. Flanders' current hourly rate is $8.45 per hour. John Barnes, a black male, is presently employed with the City as a meter reader at the rate of $9.55 per hour. Mr. Barnes was hired as a sanitation worker in 1980 at the rate of $3.35 per hour. Mr. Barnes was promoted to truck driver and then to backhoe operator. In 1987, he was encouraged by the City to apply for a firefighter's position. Mr. Barnes was hired as a firefighter. When Mr. Barnes was unable to successfully complete the state certification requirements for firefighters, he was transferred to the street department. 5/ Although this was a demotion, Mr. Barnes, like Mr. Flanders, was permitted to keep his higher pay as a fireman pursuant to the City's Compensation and Pay Plan. Mr. Barnes stayed in the street department until Sammy Oliver, a white male, encouraged Mr. Barnes to apply for a meter reader opening. Mr. Barnes filled out an application and was given the job. He has been a meter reader approximately six years during which Mr. Barnes has received job training in computerized meter reading. James Powell, a black male, worked for the City approximately 22 years before he retired in 1991. At the time of his retirement, Mr. Powell was sign foreman making $10.77 per hour. Although Mr. Powell testified he did not know he was the sign foreman, the payroll records of the City showed that Mr. Powell was classified as "sign foreman." In addition, Mr. Powell admitted on cross examination that, besides himself, numerous other blacks held position outside of the sanitation department, as follows: a black police officer, a black meter reader, a black school guard, two blacks in the recreation unit, and Charlie Smith, a black member of management working in the administrative department of City Hall. Willie Mallard is a black male working in the sanitation department. Mr. Mallard testified that he has worked for the City for ten years, and no one has ever asked him to be foreman. Mallard admitted on cross examination, however, that he had never expressed any interest in becoming foreman. Mallard further testified that the only promotion he ever sought was given to him when it came open. L. D. Marlowe is the current supervisor of the street department. He has worked for the City approximately seven years and is making approximately $11.00 per hour. His position carries greater responsibility than Howard Steele's, and he supervises a greater number of employees than Mr. Steele. Bob Gray, a white male, is the current foreman in the sanitation department. Mr. Gray has worked for the City on two occasions, the latest tenure being in 1987 when he was hired to work on the back of a garbage truck. After two years he worked his way up to foreman. Mr. Grays quick promotion was due to his work ethic and desire to work. Ralph Hester, the former city manager, approached him about the foreman position when Tommy Flanders was demoted in 1987. Mr. Gray had previously expressed to Mr. Hester interest in advancement and was more qualified than Mr. Steele for such a position. 6/ Mr. Gray testified that he is currently making $22,000 a year. However, at the time Mr. Steele filed his first Charge of Discrimination, Mr. Gray was making $8.00 per hour. In 1986, Ralph Hester, city manager at the time, appointed Tommy Flanders, a white male, to be the new foreman of the sanitation crew. Hester's decision was based upon the recommendation of the administrative assistant to the public works director, Jackie D. Cornette. Cornette's recommendation was based on the fact that Flanders was the "best worker." Although Mr. Steele did not express any interest in the position, he objected to Mr. Flanders' promotion. When the promotion was announced at a group meeting, Mr. Steele questioned why Mr. Flanders was given the job instead of other workers with more seniority. Mr. Steele did not ask that he be given the sanitation foreman's position. In 1987, the position of foreman was again open when Mr. Flanders was injured and was placed on light-duty work assignment. Although Mr. Steele did not express any interest in the sanitation foreman's job he was considered for the job, but was rejected because of his excessive tardiness, abuse of sick leave, and his inability to work unsupervised. In fact, Mr. Steele never sought the position or expressed any interest in advancing outside of the recreation unit. Mr. Steele did complain repeatedly that his current position should be better compensated; however, there was no evidence Mr. Steele ever actively sought any other position available under the City's pay and classification plan. Additionally, there was no higher position in the recreation unit under the City's pay and classification system to which Mr. Steele could be promoted. Finally, the evidence demonstrated that the City's promotion policy was based on merit rather than on seniority. However, the evidence did not demonstrate that the City's promotion policy was discriminatory. In fact, black employees who merited promotion were encouraged to seek such promotions and were promoted. The evidence was clear that Mr. Steele was not personally sought for promotion because of his excessive tardiness, abuse of sick leave and his inability to work unsupervised. Mr. Steele's lack of promotional offers had nothing to do with his race. Given these facts, Mr. Steele has failed to establish that he has been subjected to any unlawful employment practice and the Petition for Relief should be dismissed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore RECOMMENDED: That a Final Order be entered by the Florida Human Relations Commission denying and dismissing the Petition for Relief filed herein. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 10 day of September, 1992. DIANE CLEAVINGER, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SC 278-9675 Filed with the Clerk of the Division of Administrative Hearings this 10 day of September, 1992.
The Issue Whether proposed Rules 69O-175.003, 69O-170.005-007, 69O- 170.013, 69O-170.0135. 69O-170.014, 69O-170.0141, 69O-170.0142, and 69O-170.0155 are valid exercises of delegated rulemaking authority.
Findings Of Fact Section 20.05, Florida Statutes, addresses the structure and powers of the Department. Section 20.05 provides as follows, in pertinent part: 20.05 Heads of departments; powers and duties.-- (1) Each head of a department, except as otherwise provided by law, must: * * * (b) Have authority, . . ., to execute any of the powers, duties, and functions vested in the department or in any administrative unit thereof through administrative units . . . designated by the head of the department, . . . unless the head of the department is explicitly required by law to perform the same without delegation. * * * (e) Subject to the requirements of chapter 120, exercise existing authority to adopt rules pursuant and limited to the powers, duties, and functions transferred to the department. The Financial Services Commission (Commission) was created within the Department pursuant to Section 20.121, Florida Statutes. However, the Commission is not “subject to control, supervision or direction by the Department of Financial Services in any manner.” § 20.121(3), Fla. Stat. The Commission is composed of the Governor and Cabinet, who collectively serve as the agency head of the Commission. Action by the Commission can only be taken by majority vote “consisting of at least three affirmative votes.” Id. OIR is a structural unit of the Financial Services Commission. Section 20.121(3) states in relevant part, as follows: Structure.— The major structural unit of the commission is the office. Each office shall be headed by a director. The following offices are established: 1. The Office of Insurance Regulation, which shall be responsible for all activities concerning insurers and other risk-bearing entities . . . * * * * Organization.-- The commission shall establish by rule any additional organizational structure of the offices. It is the intent of the legislature to provide the commission with the flexibility to organize the offices in any manner they determine appropriate to promote both efficiency and accountability. Powers.— Commission members shall serve as the agency head for purposes of rulemaking . . . by the commission and all subunits of the commission. . . . (emphasis supplied) Clearly, under the Department’s, the Commission’s and the OIR’s organizational structures, only the Commission may promulgate rules for both itself and OIR. The Department does not have rulemaking authority over areas that have been given to the Commission. On the other hand, nothing in the statute prohibits OIR, as directed by the Commission, to perform steps, preliminary to proposing a rule, that often occur in the rule development process prior to the actual Notice of proposed rulemaking. See also § 120.54, Fla. Stat. To that end, the Commission, by non-rule policy, has delegated authority to OIR to engage in rulemaking activities on behalf of the Commission. However, this delegation is not limited to rule development activities that occur prior to the Notice of proposed Rules, but authorizes publication of the Notice prior to approval by the Commission of any proposed language or policy statement. As indicated, the Notices for the proposed Rules were published in the Florida Law Weekly in November 2004, with various changes made thereafter. The proposed Rules were published as OIR rules. Disturbingly and misleadingly, all the Notices for the proposed Rules state that the agency head approved the Rule that is the subject of the Notice on September 3, 2004 or November 2, 2004. However, none of the proposed Rules were approved by the Commission, the agency head, prior to their publication as a proposed rule in the Florida Administrative Weekly. The specific agency authority listed in the Notices for promulgating the proposed Rules was Section 624.308(1), Florida Statutes. Section 624.308(1) grants the Department of Financial Services (Department) and the Financial Services Commission (Commission) the general authority to adopt rules, pursuant to Sections 120.536(1) and 120.54 in order to implement laws that confer duties upon them. The statute does not confer the authority on the Office of Insurance Regulation (OIR) to adopt rules. See § 624.05, Fla. Stat. The statutes that confer a specific grant of rulemaking authority over the areas of the laws implemented in the proposed Rules are Sections 627.0651 and 627.331, Florida Statutes. These two statutes confer specific rulemaking authority over certain areas of insurance ratemaking only to the Commission; specific rulemaking authority is not granted to the Department or to OIR. Other than rulemaking authority, the various duties assigned in the laws implemented by proposed Rules are given to OIR.
Findings Of Fact At the times pertinent to this proceeding, Petitioner held a career service position with the Department of Health and Rehabilitative Services (DHRS). His job title was Public Assistance Specialist II. On September 10, 1990, Petitioner requested authorization to use 120 hours of accumulated annual leave beginning September 17, 1990, through October 5, 1990. Because of the office work load, Petitioner's supervisor, Doreen Moskowitz, authorized him to take 80 hours of leave beginning September 17, 1990, through September 28, 1990. Petitioner accepted this authorization and agreed to return to work on the morning of Monday, October 1, 1990. While on leave, Petitioner traveled to his native country of Nigeria to visit his mother who was ill. While in Nigeria, Petitioner became ill and was under the care of a doctor in Nigeria between September 27, 1990, and October 5, 1990. On October 5, 1990, Petitioner was determined by his doctor to be fit to travel. Because his travel plans had been disrupted by his illness, Petitioner had difficulty making arrangements to return to Miami. On Monday, October 8, 1990, Petitioner flew from London to New York and from New York to Miami. On Tuesday, October 9, 1990, Petitioner reported to work. Petitioner's wife did not accompany him to Nigeria, but remained in the Miami area. Petitioner contacted his wife from Nigeria by telephone and caused her to call his supervisor on several occasions to advise that Petitioner would not be returning to work on October 1, 1990, as scheduled and the reasons for his absences. On October 1, 1990, Petitioner's wife called Ms. Moskowitz and informed her that Petitioner had fallen ill in Nigeria and would not be able to return to work as scheduled. Petitioner's wife was informed that Petitioner's leave was unauthorized. Petitioner's wife called Ms. Moskowitz again on October 4 and on October 5, 1990, and informed her that Petitioner was still ill in Nigeria. Petitioner's wife also called Ms. Moskowitz on October 8, 1990, and told her that Petitioner was in London en route to Miami. On October 1, 1990, Petitioner left a telephone message with a coworker, Shirley Franklin, advising that he was ill in Nigeria and hoped to return to work on October 5, 1990. Ms. Franklin, at Petitioner's request, gave this message to Ms. Moskowitz. Petitioner also called another coworker, Sylvester Onyemeziem, to advise him of his illness in Nigeria and asked that he contact Ms. Moskowitz and to make sure that Petitioner's wife had spoken to Ms. Moskowitz. Mr. Onyemeziem gave this information to Ms. Moskowitz and confirmed with Petitioner's wife that she had also contacted Ms. Moskowitz. The DHRS Employee Handbook, dated October 1, 1988, advises employees at page 13 under the heading of Absences: If you expect to be absent from work for any reason, you must request leave from your supervisor as much in advance as possible, so that suitable disposition of your work may be made to avoid undue hardship on fellow employees and clients. As soon as you know you will be late or absent from work you must notify your supervisor. Absence without approved leave is cause for disciplinary action. If you are absent for three consecutive workdays without authorization, you may be considered to have abandoned your position and thus resigned. The standard procedure followed by this DHRS office is to require employees to make personal contact with his or her supervisor to advise the supervisor of any absences and to explain the reasons therefor. This standard procedure has not been adopted as a rule. In this instance, it was very difficult for Petitioner to call Ms. Moskowitz during her business hours because of his limited access to international telephone lines. (The telephone calls Petitioner made to his wife and to his coworkers were placed either before or after normal business hours.) Petitioner was absent from his employment without authorized leave on October 1, 2, 3, 4, 5, and 8, 1990. On October 8, 1990, DHRS terminated Petitioner's employment as a career service employee. The letter of termination provided, in pertinent part, as follows: In accordance with Chapter 22A-7 of the State of Florida Career Service Rules and Regulations, since you did not report to work as scheduled October 4, 5, 8, 1990 and you have not reported to work since that time; you have abandoned your position of Public Assistance Specialist II. Your resignation was effective at the close of business October 4, 1990.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered which finds that Petitioner did not abandon his career service position and which orders that Petitioner be reinstated with back-pay to his career service position with the Department of Health and Rehabilitative Services. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 4th day of April, 1991. CLAUDE B. ARRINGTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 4th day of April, 1991. COPIES FURNISHED: William C. Robinson, Esquire 220 Courthouse Plaza 28 West Flagler Street Miami, Florida 33130 Jacqueline S. Banke, Esquire Department of Health and Rehabilitative Services 201 West Broward Boulevard, Room 513 Fort Lauderdale, Florida 33301 Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Linda K. Harris Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Linda Stalvey Acting General Counsel Department of Administration 435 Carlton Building Tallahassee, Florida 32399-1550
The Issue Validity of Petitioner's reduction in pay pursuant to Chapter 22A-2, Florida Administrative Code. These are appeals of 12 career service employees of the Department of Environmental Regulation to the Career Service Commission, pursuant to Section 110.061, Florida Statutes and Rule 22A-10.05, Florida Administrative Code. The appeals were consolidated for purposes of hearing by Prehearing Conference Order, dated July 14, 1976, by reason of similar issues of law and fact. A list of the appellants is attached hereto and this order applies to all of the cases. Prior to the hearing, the parties stipulated to undisputed facts and contested issues of law. Although the Department of Administration objected to the relevancy of the facts and exhibits stipulated to in Paragraph I of the "Pretrial Stipulation", it is determined that such facts and exhibits are relevant to these proceedings and the objection is overruled. (Composite Exhibit 1) The stipulated facts and the exhibits referred to therein are as follow: Stipulation of Facts Petitioners are twelve (12) career service employees of the Department of Environmental Regulation. All have attained the requisite employment status for pursuing this action, and all jurisdictional requirements, including the proper and timely filing of appeals, have been met. This cause arises from a reduction in Petitioners' pay which resulted from actions set forth below. Petitioners seek an order increasing their pay in an amount equal to the reduction, and retroactive reimbursement of the amount of the reduction for each month from January 26, 1976, the effective date of the reduction, plus reasonable attorneys fees and expenses. The amount of reduction for each employee is set forth in Exhibit no. 1 attached hereto. In accordance with Section 4(5), Chapter 75-22, Laws of Florida, the Department of Environmental Regulation collocated their Ft. Lauderdale district office with the Water Management District located in West Palm Beach. This action resulted in the physical relocation of the DER district office from Broward to Palm Beach County, a distance of approximately 40 miles. The Ft. Lauderdale office was closed on January 26, 1976 and all employees reported for work to West Palm Beach on January 27, 1976. No change in the working status of the employees pertinent to this appeal resulted from this move. Nine of the twelve employees continue to reside in or near Ft. Lauderdale. The remaining three employees moved to West Palm Beach after the relocation (collocation) of the district office. The competitive geographical pay differential has also been known as the geographical special appointment rate (GAR). See F.S. s. 110.022 and F.A.C. s. 22A-2.04 & 2.06. This differential represented a salary adjustment for certain positions in areas where the statewide minimum salaries were not competitive with that of local government and subsequently other employers. Its purpose was to meet competition in a local area and act as an incentive to attract qualified employees to state positions. It was not a differential based on a Cost of Living study. The manner in which the petitioners' reduction in pay was calculated by Respondents was: Subtract the statewide minimum salary for the employee's class, as found in the Classification and Pay Plan issued by the Department of Administration, Division of Personnel, from the minimum salary approved for the class for Broward County, as found in the Classification and Pay Plan. This amount is then subtracted from the employee's rate of pay to determine the new rate of pay. if a competitive geographical pay differential had been approved by the Division of Personnel for the class to which the employee was being assigned in Palm Beach County, subtract the statewide minimum salary for the class from the minimum salary approved for the class for Palm Beach County, as found in the Classification and Pay Plan. The amount in (3) would then be added to the employee's rate of pay as determined in (2) above to obtain the new rate of pay. Exhibit 1 attached hereto contains the competitive geographical pay differential (GAR) for each employee as computed in the manner above. No employee's salary prior to reduction (Broward County) would have exceeded the maximum pay scale for Palm Beach County set forth in the Classification and Pay Plan as shown in Exhibit no. 2 attached hereto. The employees were advised by letter of January 8, 1976, copies of which are attached as composite Exhibit no. 3. The Department of Environmental Regulation opposed the reductions in pay of Petitioner employees as well as others not parties to this action. This opposition included a letter, attached as Exhibit no. 4, to Lt. Governor Williams requesting no reductions be made and a conference on the subject between Mr. Steven Wilkerson, Director, Division of Administration for the Department and Mr. William H. Wilder, Chief, Bureau of Classification and Pay, Division of Personnel, Department of Administration. The Ltd. Governor's response is attached as Exhibit no. 5. Competitive geographical pay differentials became a matter of concern between the Division of Personnel and the Department in September of 1975. Mr. Gene Witkowski of the Division of Personnel (DOA) referred to the memorandum of Mr. William H. Wilder of October 1972 as governing the situation. The Department requested a copy of the memorandum. Mr. Witkowski stated the opinion that the Department was bound to follow the guidelines of the October 1972 memorandum, attached as Exhibit 6. This conversation was followed by a letter attached as Exhibit no. 7 from Mr. Conley Kennison, State Personnel Director, essentially reaffirming Mr. Witkowski's remarks. On December 18, 1976, Ms. Yates requested guidance as to whether affected employees could appeal their salary reductions. That letter is attached as Exhibit no. 8. Mr. Kennison, by letter of January 5, 1976, attached as Exhibit 9, stated these reductions were not appealable. The Department processed the reduction in pay pursuant to the October 1972 memorandum of Mr. William H. Wilder. The reductions were effective January 26, 1976. The monthly reduction for each employee is shown by Exhibit no. 1. The Department of Administration objects to the relevancy of the facts and Exhibits stipulated to in this paragraph I, but does not contest the factual truth of the matters or the authenticity of the Exhibits. The Petitioners in this cause are as follows: Patricia A. Murphy was employed June 17, 1974 as Clerk Typist III. She attained permanent status December 17, 1974. She was a Clerk Typist III at the time of her pay reduction January 26, 1976. Her position remained the same after the relocation of the district office to West Palm Beach. Faye W. Stone was employed July 17, 1974 as a Clerk Typist II. She received several promotions and was a Secretary III at the time of her pay reduction January 26, 1976. She achieved permanent status as a Secretary III. Her position remained the same after the relocation of the district office to West Palm Beach. Ruth Seward was employed July 21, 1972 as a Secretary III. She attained permanent status January 21, 1973. She was a Secretary III at the time of her pay reduction January 26, 1976. Her position remained the same after the relocation of the district office to West Palm Beach. Janet Bigelow was employed March 8, 1971 as a Secretary III. On September 29, 1973, she attained permanent status as an Administrative Assistant I (promotion). Her position remained the same after the relocation of the district office to West Palm Beach. Patricia K. Galyon was employed by the state on January 11, 1971 and was transferred to the Department of Pollution Control (now DER) on January 28, 1974 as a Secretary II. At the time of her pay reduction on January 26, 1976, she had achieved permanent status as an Engineering Technician III (promotion). Her position remained the same after the relocation of the district office to West Palm Beach. Clifford S Rohlke was employed May 21, 1974 on OPS, and then on September 6, 1974 received an original appointment as an Engineering Technician IV. At the time of his pay reduction January 26, 1976, he had achieved permanent status as an Engineering Technician IV. His position remained the same after the relocation of the district office to West Palm Beach. Patricia Valkenaar was employed May 15, 1974. She attained permanent status as an Engineering Technician IV November 6, 1975. Her position remained the same after the relocation of the district office to West Palm Beach. Albert W. Townsend was employed January 18, 1971 as an Engineering Technician II. He achieved permanent status as an Engineer I April l, 1975 (promotion). His position remained the same after the relocation of the district office to West Palm Beach. Michael R. Fawley was employed October 16, 1972 as an Engineering Technician II. He was promoted to Engineering Technician III January 4, 1973, prior to attaining permanent status as an Engineering Technician II, and achieved permanent status in that class December 2, 1975. He received several promotions and was a trainee Engineer III as of January 26, 1976. His position remained the same at the time of the relocation of the district office to West Palm Beach. He is presently a probationary Engineer III. David J. Karsmarski was employed as a federal employee/ state assignee June 1972 in the capacity of Engineer. (GB-9 or Engineer II). He was sequently employed by the state as an Engineer III where he achieved permanent status. His position remained the same at the time of the relocation of the district office to West Palm Beach. Julian A. Bucklin, Jr. was employed November 29, 1974 as an Engineer III. He has achieved permanent status. His position remained the same at the time of the relocation of the district office to West Palm Beach. Dennis M. Stotts was employed August 23, 1974 as a Pollution Control Specialist II. He requested a voluntary demotion and transfer to Chemist I, a lower position, from the Northeast region to Southeast due to marriage, and attained permanent status in that position on May 29, 1975. His position remained the same at the time of the relocation of the district office to West Palm Beach. An addendum stipulation provides as follows: "The legislative language was understood by Department of Environmental Regulation to be more than just a simple request to study collocation. It was understood to mean if practicable any Department of Environmental Regulation Office should be collocated with a Water Management District Office. The Fort Lauderdale Office was collocated for several reasons. Rent in Fort Lauderdale was $30,000 a year. Rent in the West Palm Beach Central and Southern District Office is $1.00. The Water Management District owned the building which is a multimillion dollar complex with excellent accessibility to the local airport and major transportation arteries. Collocation allowed for fewer meetings for applicants who had to travel between Fort Lauderdale and West Palm Beach. Greater permit coordination was achieved in terms of Chapter 403 and 373, Florida Statutes, as well as surface water management. The delegation of certain water quality responsibilities was also made possible. Since Dade, Broward and Palm Beach Counties have local programs the move to West Palm Beach was not considered inconvenient to Palm Beach and other counties in the northern end of the district. The Department knew in advance of collocation there might be salary problems because of the interpretation that might be placed on the GAR by the Department of Administration. In addition to Composite Exhibit 1 (Pretrial Stipulation) and the exhibits attached thereto, the following additional exhibits were received in evidence. Composite Exhibit 2 - Employment status forms Exhibit 3 - Recommendations to the Administration Commission for changes in the personnel rules and regulations. Exhibit 4 - Classification and Pay Plan, effective, July 1, 1974. Composite Exhibit 5 - Attorney's affidavits and attorney's fees. Exhibit 6 - DER Staff Legal Opinion concerning geographic pay differentials, DER, February 10, 1976.
Recommendation That the Petitioner's appeal be denied. Done and Entered this 22nd day of September, 1976, in Tallahassee, Florida. THOMAS C. OLDHAM Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Ross A. McVoy, Esquire Assistant General Counsel Department of Environmental Regulation 2562 Executive Center Circle, E. Montgomery Building Tallahassee, Florida 32301 M. Stephen Turner, Esquire THOMPSON, WADSWORTH, MESSER, TURNER AND RHODES 131 N. Gadsden Street P.O. Box 1876 Tallahassee, Florida Mr. Conley M. Kennison State Personnel Director Department of Administration Division of Personnel Carlton Building Tallahassee, Florida 32304 Mrs. Dorothy Roberts Appeals Coordinator Division of Personnel & Retirement Department of Administration 530 Carlton Building Tallahassee, Florida 32304 APPENDIX LIST OF CLAIMANTS D.O.A.H. Case No. 76-962 - Patricia Galyon - Clifford S. Rohlke - Patricia Ann Murphy - Dennis Stotts - Julian Bucklin - Faye Stone - Michael R. Fawley - Ruth G. Seward - David Karsmarski - Patricia C. Valkenaar - Albert Townsend - Janet Bigelow ================================================================= AGENCY FINAL ORDER ================================================================= BEFORE THE SERVICE COMMISSION OF THE STATE OF FLORIDA IN THE APPEAL OF: JANET C. BIGELOW, et al. against REDUCTION IN PAY DOCKET NOS. 76-16, 76-17, and 76-19 thru 76-28 by the DEPARTMENT OF ENVIRONMENTAL REGULATION Chairman Catherine W. Chapin and members Clare C. Leiby and Edwin G. Fraser participating. /
Findings Of Fact The parties executed and filed a Prehearing Stipulation in this proceeding stipulating to the facts and agreeing that there were no issues of fact which remain to be litigated. Based upon the stipulation of facts, the facts found relevant to the issues in this rule challenge proceeding are as follows: Petitioner, American Telephone and Telegraph Company, is the parent corporation of the "Bell System," a group of corporations consisting of twenty- three associated operating telephone companies and other related corporations. For the 1972, 1973 and 1974 tax years, petitioner and its qualified subsidiaries filed a consolidated return for federal income tax purposes. Having made a valid election of the 100 percent dividend received deduction under Section 243 of the Internal Revenue Code, the Internal Revenue Service did not tax dividends received by petitioner from its affiliates. Petitioner's federal income tax returns were audited by the Internal Revenue Service and the respective tax liabilities were determined and paid for each of the years in question. For the same 1972, 1973 and 1974 tax years, petitioner filed Florida income tax returns on a separate unconsolidated basis. Petitioner did not elect and was not required to file a Florida consolidated income tax return under Section 220.131, Florida Statutes. Having timely made a valid election of the 100 percent dividend received deduction under Section 243 of the Internal Revenue Code for the 1972, 1973 and 1974 tax years, such dividends were excluded from taxable income on petitioner's Florida income tax returns. For each of the tax years in question, petitioner reported on line 1 -- "federal taxable income (line 30, Form 1120 or corresponding line on related form in 1120 series, 990C or 990T)" -- of its Florida corporation income tax return (Form F-1120) its taxable income for federal income tax purposes computed as if petitioner had filed a separate federal income tax return for each of the years in question and for each preceding taxable year for which it was a member of an affiliated group. Petitioner, on its Florida corporation income tax return for each of the years in question, made the additions and subtractions required by the return in computing "adjusted federal income" and apportioned this amount of the prescribed three-factor formula to obtain "Florida net income." The Department of Revenue adjusted the amount of "federal taxable income" and hence "Florida net income" of petitioner for each of the years in question by adding thereto 15 percent of the dividends received from petitioner's affiliates which were deductible for federal income tax purposes under Section 243(a)(3) of the Internal Revenue Code. The income which the respondent seeks to tax is derived from dividends received by petitioner primarily from earnings generated by the property and employees of petitioner's affiliates which are devoted to furnishing intrastate and inter- state telecommunications services in their operating territories in states other than the State of Florida. These earnings are subject to income taxes in all states in which the petitioner's affiliates provide telecommunications services that impose income taxes on corporations. On April 10, 1978, the Department of Revenue issued a notice of proposed deficiency for petitioner's tax years ended December 31, 1972, December 31, 1973 and December 31, 1974, representing a potential tax liability to the petitioner in the amount of $304,103 for 1972, $387,429 for 1973, and $439,626 for 1974, plus accrued interest on each proposed deficiency. Petitioner timely filed a protest to the proposed deficiencies, an informal conference was held and, on April 16, 1981, the respondent Department of Revenue issued a final notice of proposed deficiency. This document applied the policies which are being challenged in this proceeding so as to add back to petitioner's taxable income an amount equal to 15 percent of the dividends received by petitioner from affiliated corporations which were not incorporated, located or engaged in business in the State of Florida. Stated differently, the respondent's policy is to allow the 100 percent dividend received deduction for those dividends received from subsidiaries or affiliates subject to the Florida tax, but to allow only an 85 percent deduction on those dividends received from subsidiaries which are not subject to the Florida tax. This policy has been applied to other similarly situated taxpayers in Florida and it has not been promulgated as a rule. The Florida corporate income tax forms in use for 1972, 1973 and 1974 did not require taxpayers to add back any amount of dividends received from affiliates. There is no existing statute or rule which specifically imposes such a requirement.
The Issue The first issue in this case is whether Respondent violated the Fair Housing Act, Section 760.20, et seq., Florida Statutes (2004),1 by denying Petitioners housing based on their race. There is also a jurisdictional issue in this matter: whether Petitioners' initial complaint of housing discrimination was timely filed pursuant to the Florida Fair Housing Act, Section 760.34, Florida Statutes.
Findings Of Fact Callie Glover is an elderly African-American woman. She and her daughter, Debra Glover (jointly referred to herein as the Petitioners), are residents of the State of Florida. Respondent, The Summit at Hunter's Creek (now known as Camden Hunter's Creek and referred to herein as "Hunter's Creek"), is an upscale, multifamily apartment community located in Orlando, Florida. On April 17, 2004, Petitioners applied for residency at Hunter's Creek. Each Petitioner filled out an Application for Residency setting forth her current place of residence, occupation, educational background, etc. The application forms were pre-printed by Hunter's Creek and filled out in pen by the Petitioners. Each Petitioner signed her respective application on April 17, 2004, and each paid a non-refundable $50 application fee. A $150 administrative fee was also paid, but was refundable only if the application was denied or if the applicants canceled or withdrew their application within three days. Petitioners advised Hunter's Creek that they would be utilizing a Section 8 voucher to pay rent. The property manager, Lizzette Herron, who was ultimately responsible for the applications, had to consult with the property vice president on how to handle a Section 8 application because she had little experience with them. She was advised that Petitioners would need to meet the regular financial criteria, i.e., an income three times the rental amount, in order to be approved. At the time they filed the applications, neither Petitioner indicated a place of employment, but each had some income (Petitioner Callie Glover from Social Security and Petitioner Debra Glover from an undisclosed source). Hunter's Creek conducted a financial screening of the Petitioners through SafeRent, a company used by Hunter's Creek to investigate every applicant's financial condition. Upon completion of the screening, Petitioners were deemed to have insufficient income to meet the required threshold. However, Petitioners agreed to obtain a guarantee of payment from a friend with sufficient financial resources. This arrangement was acceptable to Hunter's Creek. Petitioners' application for a first-floor apartment was preliminarily approved pending receipt of a commitment letter from their chosen guarantor. A one-page fax sheet entitled "Promissory Note (The Summit Properties)" was received at Hunter's Creek on April 20, 2006. The sum and substance of the fax was this statement: "I Michelle McKnight promise to contribute $1400.00 a month towards rent to Debra Glover." This fax was accepted by Hunter's Creek as a sufficient guarantee of payment. Upon receipt of the guarantee, Hunter's Creek approved the application and issued a "Welcome Home" sheet to Petitioners, outlining the provisions of the rental agreement, i.e., apartment number, rent amount, move-in date, term of lease, and acknowledging that the application fee and administrative fee had been paid. The Welcome Sheet indicated Petitioners were approved to move in on June 1 and advised them how to arrange for utilities. The very day Hunter's Creek approved the application, Petitioners notified Hunter's Creek that Section 8 would not approve payment of the rent because the rental amount was too high. Petitioners cancelled (or withdrew) their application, and Respondent closed their file. Subsequently, Petitioners asked Hunter's Creek to refund their application fee and administrative fee. Both requests were denied because the application fees were non- refundable, and Petitioners had waited too long to request the administrative fee. Hunter's Creek calculated the time for requesting a refund as follows: April 17, the day the application was submitted, was day one. April 18 was day two, April 19 was day three, and April 20 was day four. A more traditional calculation of days would be for the day after the application (April 18) to be day one, meaning April 20 would have been day three. However, at no point did Petitioners contest the method of calculating the days. Herron noted the closing of Petitioner's file by a contemporaneous writing on the face of the file folder containing Petitioners' lease paperwork. Her note indicated the application had been cancelled on that day, April 20, 2004. Herron began to describe the reason for the cancellation when she wrote, "Section 8 would not . . . ," but for some reason did not complete the sentence. Her testimony that the file was closed on that date pursuant to discussions with Petitioners is credible. There is no evidence that Petitioners' applications were denied or rejected. Rather, it is clear that Petitioners withdrew their applications because Section 8 funds were not forthcoming to assist with rent payments. After being denied return of their fees, Petitioners filed a complaint with HUD on March 1, 2006. Petitioners maintain the complaint was filed on February 1, 2005, but there is no competent, substantial evidence to support that claim. In the alternative, Petitioners claim their request for reimbursement of fees is an on-going matter and that the complaint to HUD was made within one year of the last act of denial by Hunter's Creek. Petitioner's testimony and evidence on that issue is not credible. Hunter's Creek rents apartments to people of all races, nationalities, genders and backgrounds. The property manager, a female Cuban-American, has conducted training on fair housing laws for new employees. She is well versed in the law and strives to ensure compliance at the properties she manages. There is no evidence of discrimination. Hunter's Creek not only accepted Petitioners' applications, but had already approved them by the time Petitioners withdrew the applications.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Commission denying Petitioners' claim of discrimination. DONE AND ENTERED this 22nd day of March, 2007, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN 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 22nd day of March, 2007.
The Issue Whether Petitioner, Brian’s Painting and Wall Papering, Inc., conducted operations in the State of Florida without obtaining workers’ compensation coverage, meeting the requirements of Chapter 440, Florida Statutes (2007),1 in violation of Subsection 440.107(2), Florida Statutes. If so, what penalty should be assessed by Respondent, Department of Financial Services, Division of Workers’ Compensation, pursuant to Section 440.107, Florida Statutes, and Florida Administrative Code Chapter 69L.
Findings Of Fact Respondent is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees. § 440.107, Fla. Stat. Petitioner is a corporation domiciled in Florida and engaged in the construction industry, providing painting and wallpapering services to private residences in Florida. On December 4, 2007, Investigator Ira Bender conducted a random workers’ compensation compliance check of a new home construction site located at 4009 Twenty-second Street, Southwest, in Lehigh Acres, Florida. Investigator Bender observed two men painting. He later identified the two men as Larry Zoelner and Brian Zack, who were later determined to be Petitioner’s employees. Investigator Bender continued the investigation of Petitioner, utilizing the Respondent’s Compliance and Coverage Automated System (“CCAS”) database that contained all workers’ compensation insurance policy information from the carrier to an insured and lists all the workers’ compensation exemptions in the State of Florida. Based on his search of CCAS, Investigator Bender determined that for the period, December 3, 2004, through December 4, 2007 (“assessed penalty period”), Petitioner did not have a State of Florida workers’ compensation insurance policy or a valid, current exemption for any of Petitioner’s employees, including Zoelner and Zack. Based on his search of CCAS, he also determined that Petitioner did not have a State of Florida workers’ compensation insurance policy or a valid, current exemption for Brian Galvin, Petitioner’s owner and operator, for the assessed penalty period. Galvin admitted that he did not have an exemption prior to December 4, 2007. Section 440.05, Florida Statutes, allows a corporate officer to apply for a construction certificate exemption from workers’ compensation benefits or compensation. Only the named individual on the application is exempt from carrying workers’ compensation insurance coverage. Petitioner was not in possession of a current, valid construction industry exemption for its corporate officer, Galvin, during the three-year search period. To be eligible for the exemption in the construction industry, an employer must pay a $50 processing fee and file a “notice of election to be exempt” application with Respondent for each corporate officer and have that application processed and approved by it. 7. Subsections 440.107(3) and 440.107(7)(a), Florida Statutes, authorized Respondent to issue SWOs to employers unable to provide proof of workers’ compensation coverage, including proof of a current, valid workers’ compensation exemption. Failure to provide such proof is deemed “an immediate serious danger to public health, safety, or welfare . . .” § 440.107(7)(a), Fla. Stat. Based on the lack of worker’s compensation coverage and a current, valid workers’ compensation exemption for its employees, including Galvin, Respondent issued a SWO on Petitioner on December 4, 2007. The SWO ordered Petitioner to cease all business operations for all worksites in the State of Florida. On the day the SWO was issued, Investigator Bender also served Petitioner with a “Request for Production of Business Records for Penalty Assessment Calculation,” for the purpose of enabling Respondent to determine a penalty under Subsection 440.107(7), Florida Statutes. Pursuant to Florida Administrative Code Rule 69L-6.015, Investigator Bender requested business records from Petitioner for the assessed penalty period. The requested records included payroll documents, copies of certificates of exemptions, employee leasing records, and other business records. Investigator Bender was satisfied that the records produced by Petitioner were an adequate response to the business records request. Based on Investigator Bender’s review of the business records, he determined that Galvin was dually-employed during the assessed period. Dual employment occurs when an employee is paid remuneration by two different employers. Galvin was simultaneously employed by SouthEast Personnel Leasing, Inc., as a painter and by Petitioner as its chief operating officer. In calculating the assessed penalty, Investigator Bender only took into account Petitioner’s payroll. It was determined that the payroll from the leasing company demonstrated secured payment of workers’ compensation coverage for the two painters and for Galvin, when he was operating as a painter. Pursuant to Florida Administrative Code Rule 69L- 6.035, Investigator Bender included “dividends” paid by Petitioner to Galvin during the assessed penalty period, in calculating Petitioner’s total payroll amount used in the calculation of the assessed penalty. Galvin argued that dividends paid to him by Petitioner should be excluded from the calculation. However, the dividends that Petitioner paid to Galvin constituted unsecured payment for workers’ compensation coverage, in violation of Chapter 440, Florida Statutes, and the Florida Insurance Code. Through the use of the produced records, Respondent calculated a penalty for the assessed period. The Amended Order, which assessed a penalty of $45,363.76, was issued and served to Petitioner on December 13, 2007. Based on business records Investigator Bender received from SouthEast Personnel Leasing, Inc., on December 17, 2007, Investigator Bender determined that the classification code assigned for Galvin should be changed from 5474 to 5606. Classification code 5474 represented the designation for a painter while classification code 5606 represented the designation for a manager. In the course of his investigation, Investigator Bender also deleted Charlie Galvin after he determined Charlie Galvin was not Petitioner’s employee. Investigator Bender assigned the new class code to the type of work performed by Galvin while working as a manger for Petitioner, utilizing the SCOPES Manual. He multiplied the class code’s assigned approved manual rate with the payroll per $100, and then multiplied all by 1.5. Consequently, the 2nd Amended Order, which was issued and served to Petitioner on December 18, 2007, assessed a penalty in the amount of $19,943.08. The recalculated penalty, as calculated, was consistent with the method in which the investigator had calculated the previous penalties.
Recommendation Based on the Findings of Fact and Conclusions of Law, it RECOMMENDED that Petitioner enter a final order, as follows: Petitioner failed to secure workers’ compensation coverage for its employees, including its corporate officer, as required by statute; and Petitioner be assessed a penalty of $19,943.08. DONE AND ENTERED this 22nd day of May, 2008 in Tallahassee, Leon County, Florida. S DANIEL M. KILBRIDE 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 22nd day of May, 2008
Findings Of Fact Petitioner is a civil engineer and registered land surveyor in Massachusetts, New York, and Pennsylvania. He took and passed the examination for land surveyor in Massachusetts in 1957 and was subsequently licensed by endorsement in New York and Pennsylvania based on having passed the Massachusetts examination. He has been a practicing land surveyor for some 28 years and is an experienced and well-qualified practitioner. Petitioner was unable to produce a copy of the 1957 examination he took in Massachusetts since no copy could be located in the files of the Massachusetts agency which licenses land surveyors. Similarly, no copy of the 1957 Florida examination is contained in the files of the Florida Board of Land Surveyors. By reason of Petitioner's experience he was exempted from taking the Fundamentals portion of the Florida examination but was required to take the Principles and Practices section. After recomputation Petitioner was awarded a final grade of 68 on this examination, two points below a passing grade of 70. Petitioner acknowledged in his testimony that retention of the workbook he was issued at the examination would not have changed any of the wrong answers he put on the answer sheet. He also acknowledged that to a question asking for the size of the survey marker used in Florida surveying he guessed 2" instead of the correct answer of 3". Had Petitioner correctly answered two questions regarding size of survey markers, he would have passed the examination. He also acknowledged that the answer to several of the questions he missed would have been known by a Florida land surveyor and had he familiarized himself with Florida law regarding land surveying he would have passed the examination. He also acknowledged it was customary to take a refresher course before sitting for an examination. Petitioner lost eight points on one question, the answer to which was premised on changing a filed plat plan as the question directed. In Massachusetts a filed plat plan may not be changed and, since Petitioner considered the question to require the examinee to perform an unlawful act, viz., change the filed plat plan, he declined to do so and received a zero grade on this eight-point question.
The Issue The issues are whether Respondent conducted business operations in Florida without obtaining workers’ compensation coverage that met the requirements of Chapter 440, Florida Statutes (2009), for its employees, and if so, what penalty should be assessed.
Findings Of Fact Petitioner is the state agency that is responsible for enforcing Chapter 440, Florida Statutes, which requires employers to secure the payment of workers’ compensation for the benefit of their employees. Respondent is a Louisville, Kentucky-based corporation that is engaged in the construction, maintenance, and painting of elevated water tanks. Respondent has a second fabrication facility located in Newnan, Georgia. Respondent’s work constitutes construction. On March 4, 2010, Petitioner’s investigator, Lawrence F. Eaton, observed Respondent’s employees working on a water tower in Pace, Florida. While visiting the worksite, one of Respondent’s employees stated that he did not have any information regarding if and how the men were covered by workers’ compensation. The employee gave Mr. Eaton a telephone number for Respondent. Next, Mr. Eaton consulted the Kentucky Secretary of State website to find information concerning the corporate status of Respondent. The website indicated that Respondent was incorporated in 1892 and that it had three corporate officers. Mr. Eaton then consulted Petitioner’s Coverage and Compliance Automated System (CCAS) database. CCAS contains workers’ compensation policy information for each employer that has a Florida policy and information relative to workers’ compensation exemptions that have been applied for and issued to individuals by Petitioner. Mr. Eaton was unable to find any indication on CCAS that Respondent had secured workers’ compensation coverage by purchasing a Florida policy. CCAS also provided no evidence that Respondent had entered into an arrangement with an employee leasing company to provide workers’ compensation coverage to its employees. Additionally, CCAS did not show that Respondent had obtained exemptions for its corporate officers. Mr. Eaton subsequently spoke with one of Respondent’s representatives. Mr. Eaton was informed that Respondent was self-insured for workers’ compensation in Kentucky. Mr. Eaton also learned that Respondent had another workers’ compensation policy. Respondent’s representative indicated that she would send Mr. Eaton the policy paperwork. When he received the paperwork from Petitioner, Mr. Eaton determined that the insurance coverage did not comply with the requirements of Florida’s workers’ compensation law. The paperwork included an excess policy of workers’ compensation and a Georgia workers’ compensation policy. On March 5, 2010, Mr. Eaton issued a Stop-Work Order and Order of Penalty Assessment against Respondent. Specifically, the Stop-Work Order states that Respondent was not in compliance with Chapter 440, Florida Statutes, because Respondent failed to obtain workers’ compensation coverage for its employees. On March 5, 2010, Mr. Eaton issued a Request for Production of Business Records for Penalty Assessment Calculation to Respondent. On March 8, 2010, Respondent provided Mr. Eaton with additional workers’ compensation policy information. The information included the declarations page for Chartis Company Policy No. WC 005-73-7942. The Chartis policy is a Workers’ Compensation and Employers Liability Policy. In Item 3A, the policy lists the states that are covered, in Part One of the policy, pursuant to each state’s workers’ compensation law. Georgia is named as a covered state in Item 3A. In Item 3C, the Chartis policy lists the states that are covered, in Part Three of the policy, as "other states insurance." Florida is listed only in Item 3C. Item 4 of the Chartis policy states that "[t]he premium of this policy will be determined by our Manuals of Rules, Classifications, Rates and Rating Plans. All information required below is subject to verification and change by audit." In response to the request for business records, Respondent provided Petitioner with payroll information for work it had performed in Florida between September 2007 and February 2010. After receiving this information, Respondent’s Penalty Calculator, Robert McAullife, calculated a penalty. Because Respondent had not provided all of the requested business records, Mr. McAullife imputed Respondent’s payroll for a portion of the relevant time period. In calculating the penalty, Mr. McAullife first sought to determine the amount of premium that Respondent would have paid had it been properly insured for the relevant three-year period. Mr. McAullife assigned a class code for each of Respondent’s employees, reflecting the work they performed. Mr. McAullife then took 1/100th of the payroll and multiplied that figure by the approved manual rate applicable to each class code. Mr. McAullife then took the previously obtained product and multiplied it by 1.5 to find a penalty in the amount of $122,242.23. This penalty is based on Respondent having $382,146.90 in Florida payroll that would have required $81,494.66 in workers’ compensation premium. There are no errors in Mr. McAullife’s penalty calculation. Mr. Eaton issued an Amended Order of Penalty Assessment on March 23, 2010. On March 24, 2010, Respondent and Petitioner entered into a Payment Agreement Schedule for Periodic Payment of Penalty that required ten percent of the penalty to be paid in advance and the remainder to be paid in 60 interest-free monthly payments. Respondent also produced a policy that provided coverage in compliance with Florida law with an effective date of March 12, 2010. As a result, Petitioner issued an Order of Conditional Release, permitting Respondent to return to work. During the hearing, Respondent presented evidence that it is a registered self-insured company in Kentucky for the first $500,000.00 of workers’ compensation. Additionally, Respondent has excess insurance for any workers’ compensation claims that exceed the $500,000.00 threshold. Because it is self-insured in Kentucky, Respondent must purchase letters of credit on an annual basis. Respondent paid the following for its recent letters of credit: (a) 2007, $26,755.54; (b) 2008, $32,438.48; (c) 2009, $33,626.38; and (d) 2010 to date, $8,931.39. The State of Kentucky assesses qualified self-insureds a six and one half percent tax based on an annual simulated premium. The amount of the simulated premium represents what a qualified self-insured would pay for a "first dollar" policy of workers’ compensation insurance. Respondent’s recent simulated premiums are as follows: (a) 2007, $453.440.00; (b) 2008, $480,637.00; (c) 2009, $623,940.00; and (d) 2010, $1,006,243.00. Respondent also maintains a "high dollar" deductible policy of insurance that provides workers’ compensation coverage for its Georgia employees. Respondent’s Georgia policy, Chartis Company Policy No. WC 005-73-7942, which includes Florida as part of "all other states" in Item 3C of the declarations page, also requires the payment of premiums. Respondent recently paid the following premiums for this insurance: (a) 2007, $124,736.78; (b) 2008, $125,950.08; and (c) 2009, $64,465.28. The premiums paid by Respondent for the Chartis Company Policy No. WC 005-73-7942 are not based on Florida rates. From 2007 to 2010, Respondent provided workers’ compensation benefits for at least four different workers that were injured while performing work for Respondent in Florida. The workers’ compensation benefits paid by Respondent on these claims totaled $147,958.25.
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, finding that Caldwell Tanks, Inc., failed to comply with Chapter 440, Florida Statutes, and imposing a penalty in the amount of $122,224.22. DONE AND ENTERED this 8th day of December, 2010, in Tallahassee, Leon County, Florida. S SUZANNE F. HOOD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 8th day of December, 2010. COPIES FURNISHED: Claude M. Harden, III, Esquire Carr Allison 305 South Gadsden Street Tallahassee, Florida 32301 Jamila Georgette Gooden, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399 Julie Jones, Agency Clerk Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0390 Benjamin Diamond, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0390 Honorable Alex Sink Chief Financial Officer The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0390
Findings Of Fact This cause comes on for consideration based upon the Petitioner's challenge to the Notice of Proposed Assessment of Tax, Penalties and Interest under Chapter 212, Florida Statutes, that was filed by the Respondent March 13, 1978. A copy of the Notice of Proposed Assessment together with the attendant work papers may be found as the Respondent's composite Exhibit #3, admitted into evidence. (By stipulation of the parties, in view of certain evidence presented by the Petitioner in the course of the hearing a First Revised Notice of Proposed Assessment of Tax, Penalties and Interest under Chapter 212. Florida Statutes, has been filed and it is this First Revised Notice of Proposed Assessment of Tax, Penalties and Interest which is in dispute between the parties. A copy of the First Revised Notice of Proposed Assessment of Tax, Penalties and Interest, dated October 17, 1978 may be found as Hearing Officer's composite Exhibit #1, admitted Info evidence. That composite exhibit contains the First Revised Notice of Proposed Assessment, together with the applicable work sheets and Petitioner's Exhibits #1 through 3, admitted into evidence in the course of the hearing. These Petitioner's exhibits are those referred to as constituting the basis of the stipulation previously mentioned.) The Petitioner is registered with the State of Florida, Department of Revenue as a wholesale business, for purposes of Florida taxes. A copy of the certificate which shows this regis- tration may be found as Respondent's Exhibit #1 admitted into evidence. The Respondent, State of Florida, Department of Revenue is an agency of the State of Florida that audits business record, to include the Petitioner's records. Specifically, in this instance, an audit was conducted in accordance with Chapter 21, Florida Statutes, to ascertain whether or not the Petitioner was responsible for the payment of sales and use tax under the authority of Chapter 212, Florida Statutes. The tax examiner assigned to conduct the audit was carrying out that function as a follow-up to an audit performed on a business known as Quail Ridge located in Delray Beach, Florida. The audit of Quail Ridge led the Respondent to believe that the Petitioner had made certain retail sales to Quail Ridge without collecting sales tax. If this were true, then the Petitioner would become responsible for the payment of those sales taxes under the provision of Section 212.07(2), Florida Statutes. There ensued an audit of the Petitioner's books and records, which were constituted of certain bank statements and a ledger book together with invoices and signed resale certificates that were made available. In the course of this audit process, the Petitioner was allowed a period of two months within which time to collect certain invoices and signed resale certificates. The significance of the invoices and resale certificates was, assuming the sales had been made for purposes of resale; thereby constituting a wholesale transaction, no sales tax would be due because the collection of that sales tax would become the responsibility of the purchaser who had obtained the item from the Petitioner in a wholesale transaction. That purchaser would become the "dealer", within the meaning of Chapter 212, Florida Statutes, and therefore would be responsible for the collection of the sales tax upon a further sale to a third party in a retail transaction. After the Petitioner had been given time to establish those wholesale transactions in his flower business and given credit for certain months in which no business income was gained, the calculations were made by the tax examiner of the Respondent and the March 13, 1978, Notice of Proposed Assessment of Tax, Penalties and Interest under Chapter 212, Florida Statutes, was issued. This Notice of Proposed Assessment taxed the Petitioner for all business transactions arising from the sale of flowers which could not be established as exempt sales in the capacity of a wholesaler. (This requirement for the establishment of an exemption by the proof of the petitioner is found in Chapter 212, Florida Statute and in accordance with Rule 12A-1.38, Florida Administrative Code.) After the Notice of Proposed Assessment of March 13, 1978, had been served on the Petitioner, an informal conference was held between the tax examiner and the petitioner. This conference was held on April 26, 1978, and at that time the Petitioner offered to introduce further invoices and resale certificates. Brandjes claimed that these invoices and resale certificates established further exemptions. The invoices and resale certificates were not accepted at that time because the tax examiner felt that the case was to be submitted for formal hearing and he was not of the opinion that he could make further adjustments to the proposed assessment at that juncture. The same invoices and resale certificates which were of fered at the April 26, 1978 conference were produced in the course of the hearing before the undersigned. After such production, the Exhibits, 1 through 3, were submitted to the Respondent's tax examiner for review to establish possible further reduction of the proposed assessment, through the process of showing other exempt sales, or wholesale transaction. That review led to the First Revised Notice of Proposed Assessment of October 17, 1978, which reduces the amount of tax, penalties and interest claimed by the Respondent. The amount claimed, effective October 17, 1978, was $3,129.77. This included tax, penalties and interest computed to that date. The audit period is November 1, 1974 through October, 1978. The Petitioner in this cause has pled ignorance to the requirements of law in the question of collecting sales and use taxes under Chapter 212, Florida Statutes, and the necessity to establish exempt sales which were made as wholesale transactions. He makes his contention premised upon the belief that his registration as an inactive business relieved him of the necessity to collect the taxes and to establish an exemption from tax. Notwithstanding this belief on the part of the Petitioner, it is clear that Chapter 212, Florida Statutes through its provisions places an obligation on the Petitioner to collect sales and use taxes for a retail transaction and the failure to meet that obligation places the responsibility for that payment of sales and use taxes on business transactions entered into by the Petitioner, with the Petitioner. This carries with it the potentiality of the assessment of penalties and interest for the failure to collect and remit those taxes under Chapter 212, Florida Statutes. The only possibility to escape the payment of the sales and use taxes under Chapter 212, Florida Statutes exists with the ability of the Petitioner to establish that the sales were sales at wholesale and not taxable under Chapter 212, Florida Statutes. To the extent that the Petitioner has established the exemptions in keeping with Chapter 212, Florida Statutes and Rule 12A-1.38, Florida Administrative Code, the Petitioner has been given credit for those exemptions. The balance of the sales transactions in the audit period November 1, 1974 through October 1978, as reflected in the First Revised Notice of Proposed Assessment of Tax, Penalties and Interest, under Chapter 212, Florida Statutes, becomes the responsibility of the Petitioner for his failure to collect the taxes for the sales. Therefore, the Petitioner is responsible for the payment of tax, penalties and interest through October 17, 1978 in an aggregate amount of $3,129.77.
Recommendation It is recommended that the Petitioner, Jack Brandjes, d/b/a Jack's Flowers be required to pay the tax, penalties, add interest under Chapter 212, Florida Statutes in the amount of $3,129.77 as set forth in the October 17, 1978 First Revised Notice of Proposed Assessment of Tax, Penalties and Interest. DONE AND ENTERED this 31st day of October, 1978. CHARLES C. ADAMS Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32399-1550 (904) 488-9675 COPIES FURNISHED: Jack Brandjes c/o Jack's Flowers Ixora Market 4700 Canal 14 Road Lake Worth, Florida 33463 Cecil Davis, Esquire State of Florida Department of Legal Affairs The Capitol Tallahassee, Florida 32304 John D. Moriarty, Esquire Attorney, Division of Administration Department of Revenue Tallahassee, Florida 32304
