The Issue Whether Petitioner failed to obtain workers’ compensation insurance meeting the requirements of Chapter 440, Florida Statutes, and, if so, the penalty that should be imposed.
Findings Of Fact Olender is a Delaware corporation that is registered to do business in Florida and engaged in the business of construction. Primarily, Olender frames the walls of structures and installs siding, windows and moisture barriers to such structures. Such activities are construction activities under the Florida’s workers’ compensation law. See Ch. 440, Fla. Stat., and Fla. Admin. Code R. 69L-6. On June 22, 2006, an investigator for the Department visited the Alta Westgate Apartment complex construction project, located at 6872 Alta Westgate Drive, Orlando, Florida. The visit was prompted by a “confidential tip” received by the Department from Tyler Balsinger, a former employee of Petitioner. The Alta Westgate complex is owned by Alta Westgate, LLC. The general contractor responsible for the construction of the complex was W.P. South Builders. The overall project manager for the general contractor was Robert Beliveau. The on-site representative for the general contractor was Danny Campbell. Mr. Campbell provided the Department’s investigator with a list of subcontractors on the project worksite. The list reflected that the subcontractor for framing was Olender and that John Olender was the person in charge of the company’s work at the project site. Among other things, the contract also included the installation of a moisture barrier, generally known as Tyvek, on the framed structures. Because of the nature of construction work, it is not unusual to have several subcontractors on a construction worksite at the same time. It is unlikely that Olender was the only subcontractor working on the day the Department’s investigator visited the Alta Westgate project. The subcontract required that Olender secure the payment of workers’ compensation on its employees. The evidence was not clear regarding whether the general contractor, under its subcontract with Olender, would provide workers’ compensation insurance on the employees of Olender’s subcontractors. However, the evidence was clear that J.P. Builders did not secure such workers’ compensation insurance on the employees of Olender’s subcontractors. Mr. Campbell also provided the certificate of insurance for Petitioner. The certificate reflected that Modern Business Associates, Inc. (MBA), an employee leasing company, provided workers’ compensation for Olender’s leased employees. See § 468.520, Fla. Stat. MBA entered into a client service agreement with Olender. Under the agreement, Olender would lease employees from MBA and MBA would provide payroll services and workers’ compensation coverage for the employees it leased to Petitioner. The agreement terminated on August 30, 2006. MBA’s Client Service Agreement with Petitioner states on p. 3: Insurance Coverage. MBA is responsible for providing Workers’ Compensation coverage to workers employed by MBA and assigned to Client, in compliance with applicable law, and as specified in the Proposal. Workers performing services for Client not covered by this Agreement and not on MBA’s payroll shall not be covered by the workers’ compensation insurance. Client understands, agrees, and acknowledges that MBA shall not cover any workers with workers’ compensation coverage who has not completed and submitted to MBA an employment application and tri- fold, and which applicant has not been reviewed and approved for hire by MBA. (emphasis supplied) Other than information necessary to supply its services, MBA was not aware of any specific project or projects on which Olender was working when it leased employees from MBA. John Olender and Ruben Rojo were two employees that Olender leased from MBA and for whom MBA provided workers’ compensation insurance. The workers’ compensation policy complied with Florida’s workers’ compensation requirements. After speaking with Mr. Campbell, the Department’s investigator, who is fluent in Spanish, walked around the complex’s worksite. She did not have a hardhat on. She eventually saw about 10 to 12 workers on the third floor of one of the buildings under construction (Building 8 or 9). The Department’s investigator could not say if they were framing. At some point, John Olender, the company’s project superintendent, saw the Department’s investigator, noticed she did not have any safety equipment on, and went to meet her. The investigator yelled to the workers on the third floor and showed her Department badge or identification. She was speaking Spanish to them. The workers ran in an effort to avoid the Department’s investigator. Mr. Olender, who does not speak or understand Spanish, sent for Ruben Rojo. Mr. Rojo is the assistant superintendent for Olender and works under John Olender. He is fluent in Spanish. He does not hire employees for Olender, but oversees the work being performed under Olender’s subcontracts. The Department’s investigator continued to attempt to explain to the workers that she was not interested in their immigration status, but was there to make sure they were covered by workers’ compensation insurance. At least some of the workers came down to talk to her. Mr. Rojo thought the investigator was asking about the workers’ immigration status and told them that they did not have to talk to her. However, apparently some workers very reluctantly gave her limited information. The workers who talked to her were Pedro Antonio Mendez, Jaco Sarmentio, Juan Cardenas, Alvaro Don Juan Diaz, Jose Varela Orellana, Nesto Suarez Ventura, Miguel Martinez Diaz, Jose Perez Renaldo and Antonio Hernandez. She did not obtain any addresses, phone numbers or other identifying information from the employees. The evidence did not show whether these individuals gave the Department’s investigator the correct information. Importantly, they did not tell her who their employer was or what duties they were performing. None of these individuals testified at the hearing. John Olender did not recognize these workers. Mr. Rojo told the investigator that Olender subcontracted the framing portion of its contract to “T-Bo”. T-Bo was also known as Primitivo Torres. In his deposition testimony, Mr. Torres did not recognize these workers’ names. He also thought that most of the workers he employed for his framing subcontract with Olender were illegal immigrants. Mr. Torres was unclear in his testimony regarding his status with Olender. He did indicate that he worked in both Orlando and Tampa. Apparently, at times, he was an employee and at other times he was a subcontractor. He was listed as a leased employee under MBA’s contract with Olender. The evidence suggests, but does not prove, that Mr. Torres was a person who supplied immigrant workers to construction sites. In Orlando, Mr. Torres lived in an apartment complex in the Rosemond area with his employees. The rent was sometimes paid by Olender and then deducted from the remuneration paid to Mr. Torres. Mr. Torres paid his employees from the money he received under his subcontract with Olender. Mr. Torres also testified that when the Department’s investigator contacted him in June 2006, to discuss workers’ compensation insurance, he told her that he neither secured the payment of workers’ compensation for himself nor for the other workers in both Tampa and Orlando. Donna Knoblauch, who oversaw Olender’s main office, received a faxed copy of a certificate of workers’ compensation insurance from Mr. Torres. However, the faxed certificate was an illegible copy of what appeared to be a certificate of liability insurance issued by a company in Texas. The certificate does not have a legible “sent date,” a legible workers’ compensation policy number, legible dates of coverage, a legible producer name, or any information indicating that coverage includes the State of Florida. The document is insufficient to demonstrate that Mr. Torres provided workers’ compensation coverage for his employees that worked under his subcontract with Olender. John Olender testified that Mr. Torres utilized, at most, 20 framers for the construction at Alta Westgate. Mr. Torres corroborates that number and indicates that various people worked in crews of around five. On the other hand, Danny Campbell testified that Olender had approximately 20 workers when the project started, increased to approximately 75 people performing framing duties on the worksite and decreased to about 20 workers by the time the Department’s investigator visited the worksite. Mr. Campbell testified that on January 22, 2006, he believed that Olender had approximately five individuals for the punch-out group, three–to-five cleaners, a forklift operator, approximately two individuals installing the Tyvek moisture- barrier paper, two individuals performing window installation and approximately 15–to-20 individuals installing siding at the worksite. No other testimony supports the number of workers Mr. Campbell believed to be at the jobsite on June 22. On balance, the best evidence of the approximate number of workers was that of Mr. Olender and Mr. Torres. However, these figures were only estimates of the actual number which may have been less than 20 workers. In any event, the employment of these 12 workers on the third floor was not demonstrated by the evidence. Their names did not appear on the list of employees leased by Olender from MBA and were otherwise, unknown to the Mr. Olender, Rojo and Torres. While at the jobsite, the Department’s investigator also spoke with Victor Ibarra. Mr. Ibarra drove a forklift and indicated that he worked for Olender. Again, no address or other identifying information was supplied to the investigator. Later, the investigator spoke with a woman who purported to be Mr. Ibarra’s wife. There was no information on the forklift indicating that it belonged to Olender and Olender denies employing a person named Victor Ibarra. Mr. Campbell testified in his deposition that Olender had forklifts on the jobsite. However, he did not testify that the forklift Victor Ibarra drove on June 22, 2006, was owned by Olender. Likewise, Mr. Campbell did not testify that Mr. Ibarra was an employee of Olender. Mr. Ibarra’s name did not appear on the list of leased employees provided by MBA. The Department's investigator included Mr. Ibarra as an employee of Olender based on Mr. Ibarra’s statements. However, the evidence presented by the Department is not sufficient to establish that Mr. Ibarra was an employee of Olender, since Mr. Ibarra did not testify at the hearing. Mr. Campbell’s testimony does not corroborate the hearsay statements of Mr. Ibarra since the testimony does not indicate the forklift Mr. Ibarra drove belonged to Olender or to another subcontractor on the project. After talking to Mr. Ibarra, the Department’s investigator met Rosa Barden, Martha Alvarado and Ismael Ortiz, who were applying a moisture barrier paper known as “Tyvek” to a building at the construction site. The three individuals told the investigator that that they had been hired by Mr. Rojo on behalf of Olender and had only worked for about a day. The investigator included these three individuals as employees of Olender. No addresses or other contact information was obtained by the investigator. None of these individuals testified at the hearing. Mr. Rojo testified that he did not know the three individuals on the “paper crew” and did not hire them. None of the three individuals were listed as leased employees with MBA. However, Olender’s subcontract clearly lists the application of Tyvek as a part of its contract. Additionally, the payment information supplied by the general contractor shows that Olender was paid for Tyvek application on all the buildings in the complex. Unlike Mr. Ibarro’s testimony, the contract and payment evidence independently corroborates the otherwise hearsay statements of these three individuals and Olender should have provided workers compensation insurance on them. There was no evidence that Olender provided such workers’ compensation insurance; such failure violates Chapter 440, Florida Statutes. See §§ 440.10(1)(g) and 440.38(7), Fla. Stat., and Fla. Admin. Code R. 69L-6.019. In total, the Department’s inspector met with John Olender for approximately one hour discussing the work performed by Olender and the employees retained by Olender. During this meeting, Mr. Olender, identified members of a “punch-out” crew who had worked on the project. The punch-out crew repaired any defects in framing prior to inspection. The names supplied by Mr. Olender were Juan Gonzalez, Miguel, Sal, William, WI Gerardo (noted as El Guardo in the third Amended Order of Penalty assessment), Pedro, Jacobo and Boso. Mr. Olender did not know their last names. The evidence did not show the period of time that the punch-out crew would have been working at the project site. Presumably, they would have begun some time after the initial building was framed. The Department’s investigator did not personally see the punch-out crew at the project. Mr. Olender also informed the Department’s investigator that he did not handle matters concerning workers’ compensation insurance and that she would have to contact the Company’s main office in Missouri. He provided the number for the office. He also gave the investigator the number for Michael Olender, the president of the company and the number for Mr. Torres. The investigator issued a Workers’ Compensation Request for Production of Business Records to Olender. She left the Request with John Olender. The request for records asked for certain categories of Olender’s business records for the period of January 22, 2004 to June 22, 2004. Of importance here, the Department requested records in categories 1, 4, 5 and 6. In general, category 1 covers all payroll records, including checks and check stubs, time sheets, attendance records and cash payment records. Categories 4, 5 and 6 cover all records that relate to subcontractors, including their identity, contract, payment thereof, workers compensation coverage for all the subcontractor’s employees, and/ or the employees’ exemption status. These records are required to be maintained by a company doing business in Florida. Mr. Campbell testified that some members of the punch- out crew often approached him about whether he had paid Olender so that they in turn could be paid. Again, none of these individuals testified at the hearing. However, given the admissions of Olender’s employee and Mr. Campbell’s testimony, the evidence supports the conclusion that the eight individuals on the punch-out crew were employed by Olender. None of these employees were leased employees and therefore, were not covered by the workers’ compensation policy provided by MBA. There was no evidence that Olender secured any workers' compensation insurance on these eight employees. Such failure violates Chapter 440, Florida Statutes. See §§ 440.10(1)(g) and 440.38(7), Fla. Stat., and Fla. Admin. Code R. 69L-6.019. The Department’s investigator contacted Ms. Knoblauch while she was on her way to a medical appointment. The investigator requested Olender’s proof of workers’ compensation insurance. Ms. Knoblauch told the investigator that she was not at the office where the records were kept, but on the way to a medical appointment. She said she would be returning to the office after the appointment. The investigator said she needed the records immediately. Ms. Knoblauch offered to skip her appointment and requested time to turn around and return to the office. The investigator refused to permit her the time to return to the office. At some point, MBA supplied the Department’s investigator with a list of Olender’s leased employees. The list did not contain any of the names she had gathered during her visit to the worksite. Within a few hours from the beginning of the investigation, the Department's investigator issued a Stop Work Order and an Order of Penalty Assessment on June 22, 2006. The Order was served via certified mail on Michael Olender and Olender’s legal counsel. The Stop Work Order required that Olender "cease all business operations in this state" and advised that a penalty of $1,000.00 per day would be imposed if Olender were to conduct any business in violation of the Stop Work Order. Additionally, along with the Order, the Department issued and served on Petitioner via certified mail a Division of Workers’ Compensation Request for Production of Business Records for Penalty Calculation, requesting records for a period of three years. The request, made pursuant to Section 440.107(7), Florida Statutes, asked the employer to produce, for the preceding three years, documents that reflected payroll, proof of insurance, workers’ compensation audit reports, identity, duration, contracts, invoices and check stubs reflecting payment to subcontractors, proof of workers’ compensation coverage for those subcontractors, employee leasing company information, temporary labor service information, and any certificate of workers’ compensation exemption. The request asked for the same type of records that had been requested earlier. Neither request for records was specific to a particular construction job that Olender may have performed work on. The investigator informed Mr. Campbell that Petitioner was being issued a Stop-Work Order and gave him a copy of the Order. Mr. Campbell faxed the Order to Olender’s office in Missouri. The Department’s investigator also checked the Department’s Coverage and Compliance Automated System (“CCAS”) database. The system tracks workers' compensation insurance policy information provided by workers’ compensation carriers on an insured employer. The database did not contain an entry that reflected a current State of Florida workers' compensation insurance policy for Olender. The database did reference that Olender had a stop-work order served on it on July 12, 2002, which had been lifted on July 31, 2002, with payment of the penalty. Florida law requires that employers maintain a variety of business records involving their business. See § 440.107(5), Fla. Stat., and Fla. Admin. Code R. 69L-6.015. The Rule is limited to records regarding a business’ employees and any payout by the employer to any person. In this case, under the Rule, the only records Olender was required to maintain related to its employees and its subcontractor, Mr. Torres. There was no evidence regarding any other subcontractors Olender may have contracted with. The only records supplied by Olender to the Department were the records from MBA that included workers’ compensation information and W-2 forms for Olender’s leased employees, the illegible proof of insurance for Mr. Torres and copies of checks from Olender to Mr. Torres for the subcontract. Those records reflected that John Olender, Ruben Rojo and Primitivo Torres were leased employees and covered by workers’ compensation insurance under Olender’s contract with MBA. Olender supplied no records regarding workers’ compensation coverage for the eight employees who were members of the punch- out crew, the three workers who were members of the paper crew or the 12 workers who were on the third floor. When an employer fails to provide requested business records that the statute requires it to maintain, the Department is required to impute the employer's payroll using "the statewide average weekly wage as defined in Section 440.12(2)." § 440.107(7)(e), Fla. Stat., and Fla. Admin. Code R. 69L-6.028. The penalty for failure to secure the workers' compensation insurance coverage required by Florida law is 1.5 times the premium that would have been charged for such coverage for each employee identified by the Department. The premium is calculated by applying the approved manual rate for workers' compensation insurance coverage for each employee to each $100.00 of the gross payroll for each employee. In this case, the Department, after several amended assessments, imputed the payroll for Olender for the period beginning January 22, 2004, Petitioner’s date of incorporation, and ending June 26, 2006. Included in the calculation were the eight individuals on the punch-out crew identified by John Olender, the 12 employees who were working on the third floor, the forklift driver Victor Ibarra, and the three individuals on the paper crew. In calculating the premium for workers' compensation insurance coverage, the Department's investigator used the risk classifications and definitions of the National Council of Compensation Insurance, Inc. ("NCCI") SCOPES Manual. The appropriate code for Olender’s employees was classification code 5561 which covers framing of multiple family dwellings. The gross payroll imputed to each of the 27 employees was $683.00 per week. The Department then utilized the imputed payroll for same employees for the years 2004 and 2005. The Department’s calculation resulted in an assessed penalty of $1,205,535.40. However, the evidence establishes that Olender had 11 direct employees rather than 27 employees during the period of the Alta Westgate contract. Olender’s performance under that contract began on April 3, 2006. Other than the period of time involved with the Alta Westgate project, there was no evidence regarding the period of time Olender conducted business in Florida that would require it to comply with Florida law. The date of incorporation of Olender is insufficient to demonstrate that Olender engaged in any business in Florida that would require it to comply with Florida’s workers’ compensation law. Therefore, the penalty calculation must be modified to reflect only those eleven employees for the time period Olender performed under its contract on the Alta Westgate project.
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 Olender Construction Co., Inc., failed to have Florida workers' compensation insurance coverage for 11 of its employees, in violation of Sections 440.10(1)(a) and 440.38(1), Florida Statutes; and Recalculating the penalty against Olender. DONE AND ENTERED this 14th day of March, 2008, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER 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 14th day of March, 2008. COPIES FURNISHED: Colin M. Roopnarine, Esquire Department of Financial Services, Division of Workers Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 Jeremy T. Springhart, Esquire Broad and Cassel 390 North Orange Avenue, Suite 1500 Orlando, Florida 32801 Honorable Alex Sink Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Daniel Y. Sumner, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issue in this case is whether Respondent, Sunburst Construction, Inc. ("Sunburst"), failed to properly maintain workers' compensation insurance coverage for his employees and, if so, what penalty should be assessed.
Findings Of Fact The Department is the state agency responsible for ensuring that all employers maintain workers' compensation insurance for themselves and their employees. It is the duty of the Department to make random inspections of job sites and to answer complaints concerning potential violations of workers' compensation rules. Sunburst is a business created by Cecil Moore and has been in operation for 35 years in the construction industry. At all times relevant hereto, Sunburst was duly-licensed to do business in the State of Florida. Construction work is assigned a Class Code of 5651 for purposes of calculating workers' compensation insurance coverage. On April 30, 2014, the Department’s investigator, Stephanie Scarton, was driving on South Peninsula Drive in Daytona Beach, Florida, when she noticed what appeared to be construction activity going on. As she is charged with doing, Scarton went to find out whether people working at the construction site were legally covered by workers’ compensation insurance. She talked to four people at the job site and made a determination that workers’ compensation coverage was missing. Scarton’s and Sunburst’s statements of the facts surrounding the coverage are significantly different in detail. Each will be set forth below. Scarton’s Version of the Facts According to Scarton, she observed three people working at the site: Two men were engaged in carpentry, specifically, securing bolts to beams on a form used for pouring concrete. One man was grinding a screw or some other metal object. Scarton identified herself to the man who was grinding the metal object. The man was Carlos Barbecho. The man did not speak English very well, but conversed with Scarton, telling her that he (Barbecho) worked for Sunburst. According to Scarton, Barbecho also told her that the other two men, Edlezar “Eddie” Cano-Lopez and Jeronimo Cano-Lopez, also worked for Sunburst. Neither of the two men (who were brothers) spoke English. Barbecho acted as an interpreter for Scarton as she asked the brothers if they worked for Sunburst. They allegedly “shook their heads up and down,” i.e., they nodded affirmation. However, Scarton could not verify exactly what question Barbecho posed to the brothers in Spanish. Meanwhile, another man, Raley, showed up at the site on his bicycle. He reported that he was an independent contractor and was not related to Sunburst. He was doing some pressure washing on the house located at the site. The investigator then went to her vehicle to research Sunburst, finding it to be a duly-registered Florida corporation. She checked the building permit which had been issued by the City of Daytona Beach and found that it had been pulled by Sunburst. She then checked the Coverage and Compliance Automated System (CCAS) used by the Department to track workers’ compensation coverage by businesses and individuals. According to CCAS, there was no coverage for Sunburst but Moore had a personal exemption. When she found there was no coverage for Sunburst but that its employees were working at the job site, Scarton contacted Moore directly via telephone. Barbecho had provided Scarton with Moore’s number. Scarton testified that Moore admitted the men were his employees, but that he believed he had up to 24 hours to obtain workers’ compensation coverage for them. Scarton eventually ascertained that Sunburst did have appropriate workers’ compensation coverage for Barbecho through a leasing company, but neither of the Cano-Lopez brothers was on the policy. Sunburst’s Version of the Facts Moore has owned Sunburst for over 35 years. He has always maintained workers’ compensation coverage for his employees and has never been cited for failing to do so. In April 2014, Sunburst was in the midst of renovations at the South Peninsula Drive job site. Barbecho was the foreman on the job. He had been working for Sunburst for about two years as a foreman or job manager. Moore had obtained workers’ compensation coverage for Barbecho through a leasing company. On April 30, 2014, Barbecho was working at the job site when the Cano-Lopez brothers came up and asked if there was work for them to do. They had been referred to the site by Pillo, a man who had worked with Moore for many years and often found laborers for him. Barbecho called Moore to see if he wanted to hire the brothers or not. Meanwhile, the men stood around talking as they waited for a determination from Moore. Raley had also been at the site on that date. He was preparing to pressure-wash the outside of the house so that it could be painted. Just about the time he was leaving on his bicycle to retrieve a chair from his nearby home, the Cano-Lopez brothers arrived. Raley paid them no mind as he had never seen them before at the job site. When he returned with his chair, Raley met Scarton, who identified herself as an investigator for the Department. Although Raley told Scarton that he was an independent contractor, he was actually doing the pressure- washing because he owed a favor to Moore. Raley watched Scarton talk to the brothers and could see that there was a large communication problem based upon language. Scarton then began talking more to Raley because he spoke English much better than the other men there. Barbecho says he only met the Cano-Lopez brothers the morning that Scarton showed up at the work site. He did not have authority to hire them on behalf of Sunburst, but put a call into Moore to see if he wanted to hire the men. Barbecho maintains that he never told Scarton the men were employees of Sunburst. He does not remember being asked to ask the brothers, in Spanish, whether they were employees of Sunburst. The men had arrived on the job site just minutes prior to Scarton’s arrival, and Barbecho had not really talked to them at all other than to give a casual greeting. Edlezar Cano-Lopez says he is not now nor has he ever been an employee of Sunburst. He has never done any work for or received any money from Moore or Sunburst. (He was hoping that Moore would pay him for his time traveling to Tallahassee and appearing at the final hearing, but there was no specific agreement in that regard.) When Moore got a call from Scarton, he told her that he did not know who the Cano-Lopez brothers were, that they were not his employees, and that he had coverage for all of his bona fide employees. He has no recollection of telling Scarton that he believed he had 24 hours to get the workers covered by insurance. Scarton asked Moore to come to the job site and he complied with her request. At the job site, Scarton served Moore with a Stop Work Order (SWO) and explained that he needed to cease doing business until it was addressed. The basis of the SWO was that two putative employees, the Cano-Lopez brothers, did not have workers’ compensation insurance coverage. The Stop Work Order and Penalty Assessment At the same time, Scarton made a request for business records in order to determine what penalty should be assessed. The request had a list of various types of documents needed by the Department to make its penalty assessment. Moore was given 20 days to produce the records to the Department. Moore contacted his bank about obtaining the requested records. He was told that it would take five to seven days to pull the records together, but in fact it took more than three weeks. The records were therefore not timely submitted to the Department. Based upon the absence of business records, the Department calculated a penalty assessment which imputed income to the Cano-Lopez brothers for a period of three years. This assessment was in accordance with the Department’s rules and guidelines. A penalty assessment of $61,568.36 was imposed on Sunburst. After the penalty assessment was calculated by the Department, the requested business records were eventually received from the bank by Moore. The records contained summaries of statements, but did not include check images. The check images were provided at a later date. However, the check images showed a large number of checks made out to “cash” so the Department could not really ascertain whether any of them were for payroll or not. Moore explained that his employee leasing company required cash, so each week he would find out what amount was needed and issue a check made payable to “cash” and obtain the needed funds. Moore’s explanation is plausible. The Department did not take heed of the business records provided by Moore because they did not arrive within the prescribed 20-day window. The Department’s auditor did, however, create a draft penalty assessment based upon the records.1/ The Cano-Lopez Brothers The dispositive issue in this case appears to be the employee status of Eddie and Jeronimo Cano-Lopez. Eddie testified at final hearing (through an interpreter) that he has never been an employee of Sunburst. He and his brother were at the job site on April 30 for the purpose of obtaining employment, but they were never hired and have never been paid for doing any work for Sunburst. There are no check images or other business records that reflect Sunburst ever paid the Cano-Lopez brothers for doing work. Moore did not hire them and did not know they were at the work site on April 30 until advised by Barbecho and Scarton that very day. Moore’s denial that he told Scarton he was intending to add the Cano-Lopez brothers to his insurance coverage within 24 hours is credible. Scarton inspects 45 to 55 business sites per month and could easily be confused about who told her they were adding employees. After 35 years in the industry, it is unlikely Moore would be confused about the requirements for coverage of his employees. The foreman, Barbecho, met the Cano-Lopez brothers for the first time on April 30 at the job site. He knew that in order to work for Sunburst, the brothers would first have to fill out an application. In fact, the Cano-Lopez brothers filled out an application after the SWO had been entered. The applications were delivered to Sunburst’s employee leasing company the next day in hopes of alleviating the SWO. But as the SWO was still in place, the Cano-Lopez brothers never engaged in work for Sunburst, and have not to this day. And in the words of the Department’s investigator, “An employee is someone who is being paid by the business.” Scarton testimony, transcript page 46. The Department calculated its penalty assessment as follows: It ascertained the average wage for construction laborers and assigned that figure to each of the Cano-Lopez brothers. The appropriate class code was assigned. A period of three years of non-compliance was imputed, per rule. The gross payroll for that three-year period was assigned to each of the brothers. The gross payroll amount was divided by 100. The resulting sum was multiplied by the manual rate, resulting in a premium. The premium was then multiplied by 1.5 to reach the penalty amount. The calculation of the penalty was based upon the mistaken presumption that the Cano-Lopez brothers were employees of Sunburst. It is clear from the evidence presented that neither Eddie nor Jeronimo Cano-Lopez were ever employees of Sunburst. Scarton’s recollection of the events (without the benefit of any contemporaneous note) was refuted by the testimony of Moore, Barbecho, Raley, and Eddie Cano-Lopez, thus her testimony does not constitute clear and convincing evidence.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department of Financial Services rescinding the Stop-Work Order and Amended Penalty Assessment. DONE AND ENTERED this 5th day of January, 2015, 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 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of January, 2015.
The Issue Whether Respondent violated the provisions of chapter 440, Florida Statutes (2013)1/, by failing to obtain workers? compensation insurance coverage, as alleged in the Stop-Work Order and Amended Order of Penalty Assessment; and, if so, the appropriate penalty.
Findings Of Fact The Department is the state agency responsible for enforcing the requirement that employers secure the payment of workers? compensation insurance coverage, pursuant to chapter 440, Florida Statutes, for their employees. Respondent is a Florida-limited liability company engaged in business operations for the time period of March 16, 2010, through March 15, 2013. Mark Markisen is the managing member of Respondent listed with the State of Florida, Division of Corporations. On March 15, 2013, Jack Gumph, an investigator with the Department, conducted a random on-site compliance inspection of a construction site for a single family residence. Gumph determined that the general contractor for the job was Gulf Shore Homes and that it had subcontracted with Tradewinds Design for certain work inside the home. As Gumph interviewed the different workers present on the worksite, he spoke with Mark and Brett Markisen, who informed him that they worked for Tradewinds Design. Gumph observed Brett Markisen installing a wine cabinet in the home. Gumph confirmed through the Department?s online records that Gulf Shores Homes and Tradewinds Design had current workers? compensation insurance coverage on March 15, 2013. Based on this initial information, Gumph left the worksite. On March 19, 2013, Gumph subsequently learned from a conversation with Mark Markisen that Mark and Brett Markisen were not employees of Tradewinds Design. Rather, Tradewinds had subcontracted with Respondent, Cabinetry by Design of Collier County, L.L.C., to build and install the wine cabinets. Mark Markisen stated that he was the managing member of Cabinetry by Design of Collier County, L.L.C., and that he had selected to be exempt from workers? compensation insurance coverage. Gumph confirmed that Mark Markisen had selected to be exempt from workers? compensation insurance coverage. However, because Respondent did not have worker?s compensation coverage for Brett Markisen, the Department issued a Stop-Work Order on March 19, 2013, and Request for Production of Business Records for Penalty Assessment Calculation on April 8, 2013. Mark Markisen possessed an exemption from the workers? compensation insurance coverage requirement during the penalty period of March 16, 2010, through March 15, 2013. Brett Markisen did not possess an exemption from the workers? compensation insurance coverage requirement during the penalty period. Brett Markisen was employed by Respondent throughout the penalty period. During the penalty period, Brett Markisen received approximately $187,000.00 from Respondent. The amount of this money attributed to wages is unclear, based on the fact that Mark Markisen indicated that some of the payments reflected loans, not wages. Respondent was an “employer” as defined in chapter 440, Florida Statutes, throughout the penalty period. On March 15, 2013, Brett Markisen was Respondent?s “employee” working on the installation of cabinets in the single family residence.2/ On March 15, 2013, Respondent failed to provide workers? compensation insurance coverage for Brett Markisen. Respondent also failed to provide coverage during the penalty period of March 16, 2010, through March 15, 2013. Therefore, the Department properly entered a Stop-Work Order on March 19, 2013. Respondent failed to provide sufficient business records in order to establish a payroll. Therefore, the Department correctly imputed payroll against Respondent. The Amended Order of Penalty Assessment used the proper class code for the calculation of the penalty, concerning the installation of cabinets, and correctly followed the procedure set out in section 440.107(7)(d)1, Florida Statutes, and Florida Administrative Code Rule 69L-6.028.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order upholding the Stop-Work Order and Amended Order of Penalty Assessment, assessing a penalty against Respondent in the amount of $21,436.61. DONE AND ENTERED this 30th day of December, 2013, in Tallahassee, Leon County, Florida. S THOMAS P. CRAPPS 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 30th day of December, 2013.
The Issue The issue is whether Respondent properly dismissed Petitioner's Petition for Resolution of Workers' Compensation Reimbursement Dispute, pursuant to section 440.13(7), Florida Statutes.
Findings Of Fact At all material times, C. G. was employed by Solo Printing, Inc., which had workers' compensation coverage through Intervenor. On March 2, 2012, C. G. was injured at work as a result of falling onto his knee during a fight with a coworker. C. G. was transported from the worksite by ambulance to Petitioner's hospital, where he was admitted. Later the same day, C. G. underwent emergency surgery to his knee. He was discharged from the hospital on March 8, 2012. On April 2, 2012, Petitioner billed Intervenor for services rendered to C. G. during his hospitalization. On May 11, 2012, Intervenor issued a Notice of Denial. On June 8, 2012, Petitioner filed with Respondent the Petition. On June 14, 2012, Respondent issued the Dismissal. Intervenor's Notice of Denial cites three grounds for denying payment for the bill: section 440.09(3), which prohibits compensation for injuries to an employee "occasioned primarily" by his willfully trying to injure another person; lack of authorization for services; and any other defense that may become available. The Dismissal cites one ground for dismissing the Petition: Petitioner's failure to submit an EOBR with its Petition. The only ground cited in the preceding paragraph that is relevant is the first cited by Intervenor. This ground raises the issue of compensability by disclosing that Intervenor has not conceded that C. G.'s injuries are compensable. Nor has a Judge of Compensation Claims (JCC) ever entered an order determining that C. G.'s injuries are compensable. In fact, G. has never filed a claim for benefits. At the time in question, C. G. had health insurance, but his insurer reportedly denied coverage on the ground that it insured's injuries were covered by workers' compensation. It does not appear that Petitioner has commenced a legal action against C. G. for payment for the services that it rendered to him in March 2012.
Recommendation It is RECOMMENDED that the Department of Financial Services enter a Final Order dismissing the Petition. DONE AND ENTERED this 25th day of February, 2013, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 25th day of February, 2013. COPIES FURNISHED: Lorne S. Cabinsky, Esquire Law Offices of Lorne S. Cabinsky, P.A. Suite 1500 101 Northeast 3rd Avenue Fort Lauderdale, Florida 33301 Mari H. McCully, Esquire Department of Financial Services Division of Workers' Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 James T. Armstrong, Esquire Walton Lantaff Schroeder and Carson, LLP Suite 1575 200 South Orange Avenue Orlando, Florida 32801 Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Division of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390
The Issue The issue for consideration is whether the Petitioner qualifies for participation in the Firefighter's Supplemental Compensation Program at the Bachelor's level.
Findings Of Fact At all times pertinent to the issues herein, the Petitioner, Jorge Du Quesne, was a fire fighter, (driver/engineer), employed by the City of Miami Fire Department. The Respondent, Department of Insurance and Treasurer, Bureau of Fire Standards and Training, was and is the state agency in Florida responsible for the management and certification of fire fighters in this state. It is also the agency charged by statute with the responsibility of determination of the eligibility of any fire fighter to receive supplemental compensation under the Program, and the decision of the Bureau is final subject to the provisions of Chapter 120, Florida Statutes. Petitioner was awarded a Bachelor of Civil Engineering degree in 1973 by Georgia Tech. The Bachelor of Civil Engineering degree is equivalent to a Bachelor of Science degree in Engineering. While a student, Mr. Du Quesne majored in structural engineering. In addition to his undergraduate degree, he has also taken several courses sponsored by the Miami Fire Department in hydraulics, structures, construction materials and the like. The questions on the examinations came from materials provided at the course presentation. While a student at Georgia Tech, Mr. Du Quesne took many courses which relate, to some degree, to fire fighting. Included in these are pump operation and efficiency in fluid functions lab, which dealt with a centrifugal pump similar to that which is used on the fire trucks he operates. Others included chemistry, physics, fluid mechanics, thermodynamics, applied electricity, constructions materials, structural analysis, metal structural components, concrete structural components, sanitary engineering, and timber and pre- stressed concrete. All of these subjects have a bearing on fire fighting and give him a background upon which fire training can be based. Petitioner's current position as a driver/engineer of a pumper truck does not require a college degree. By the same token, the fire fighting courses he has taken since becoming a member of the Department do not provide college credit. The Department sponsored courses were designed to make him a better fire fighter, and most attendees did not possess the civil engineering background he has. In his work he relies on both his fire training and that material he studied during his training as a civil engineer. Admittedly the formulae he learned while a student in college do not necessarily relate to the work he performs on a daily basis dealing with hoses pipes and the other functions of a fire fighter. On the other hand, however, much of the information and the formulae he has learned do relate. Petitioner feels his civil education helps him make better decisions while on the fire scene. He believes that the two careers, that of a civil engineer and that of a fire fighter, aredirectly related and he contends his civil engineering background qualifies him for participation in the program and the resultant award of additional compensation. His civil engineering background, for example, gives him a better understanding of the structure of a building, how it works, how it will come down, and how it will react to the pressures of the fire and the fire fighting efforts applied. It is his firm opinion that his understanding of those problems, based on the training as a civil engineer he received in college, makes him far better qualified than someone who does not have this training. The general thrust of Petitioner's argument is supported by the testimony of Fire Lieutenant Erdozain, himself a graduate in engineering from Florida International University. Lt. Erdozain is familiar with the duties of a fire fighter and those of a civil engineer. When he responds to a fire, the first thing he has to take into consideration are those factors dealing with the structure on fire. He needs to know if he can safely enter it or not and the information he learned in his engineering training helps him with that decision. The Miami Fire Department does not offer any courses in building structure. Most knowledge in that area possessed by fire fighters is gained from experience, but the information received as a result of an education in civil engineering would help in the resolution of those problems. Another example is service on the hazardous material team, (HAZMAT). In performing that service, a fire fighter has toknow the properties of the material he will be dealing with in responding to a fire involving them. In that regard, according to Lt. Erdozain, a thorough knowledge of chemistry, beyond that which is taught by the fire department, is helpful. Though Petitioner is not now serving on a HAZMAT team and has not ever served on one during his career, he has had the opportunity to work with hazardous materials, as has most every other fire fighter employed by the Department. It is a constant potential. All fire fighters are trained in the life safety code which relates to the interior construction of buildings. The books used by the Department in the courses it teaches on this subject do not go as far or as thoroughly into it as does the course material given in a civil engineering education, and in Lt. Erdozain's opinion the knowledge possessed by a civil engineer regarding materials and construction would be of great benefit to a fire fighter. Petitioner's application for enrollment in the Program was forwarded to the bureau chief of the Department of Insurance's Bureau of Fire Standards and Training which has the responsibility for determining eligibility. The application was reviewed by Mr. Stark, the Bureau chief, who has a background of 20 years experience as a fire fighter, and subsequent to retirement from that position, as an instructor, curriculum writer, and chief of the Bureau since 1982. He is thoroughly familiar with the Program and has dealt with it since its conception. Mr. Stark determined that the Petitioner was not qualified for entry into the program based on the fact that his bachelor's degree is in civil engineering and is not either a bachelor of science or a bachelor of arts degree. Civil engineering is not one of the concentrations which qualifies for entry into the program. Section 633.382(2)(a)2, Florida Statutes, lists as a qualification: ... a bachelor's degree which bachelor's degree curriculum includes a major study concentration area readily identifiable and applicable to fire related subjects. Rule 4A-37, F.A.C., outlines the qualifying areas of concentration and it is Mr. Stark's opinion that Petitioner's civil engineering degree did not contain the major concentration areas identified by the rule as qualifying for admittance into the program. There were no other reasons for denial. As Mr. Stark sees it, Petitioner is a driver/engineer. He has a responsibility to provide a water supply to hoses in the proper amount for fighting the fire to which he has responded. The particular course material to which Petitioner was exposed while in college constituted a curriculum which does not, in Mr. Stark's opinion, qualify as a fire science curriculum. He is has reviewed the comments furnished by the Petitioner in his letter of response to the Department's letter of denial, but determined that those explanatory comments were not a catalogue description of the courses taken. Petitioner's comments contain much which is not put there by the college. Under the provisions of Section 4A-37.084(3), F.A.C., a bachelor's degree is acceptable provided the major studyconcentration area is readily identifiable and applicable as fire related, and in the major study concentration area, at least 18 semester hours or 27 quarter hours must be so related. The major study concentration areas means a major in fire science, fire science technology, fire science administration, fire protection engineer, municipal management, public administration, emergency medical technology, paramedic technology, and fire science vocational education. Applicants whose major study concentration area does not fall within one of those categories may nonetheless petition the Division for entry into the program but the burden of proof is on the applicant to prove that his major is fire related. Mr. Stark determined that Petitioner's course background does not closely enough relate to his current job. His education background contains no fire science courses which would be more appropriately related to fire fighting than the general engineering courses he took. In short, the Petitioner's educational background, while of a related type, was not sufficiently related to fire science. The intent of the statute and the rule is to require fire fighters to qualify themselves for the performance of their duties by taking fire science courses, not general courses which might be somewhat generally related to the fire fighting career. For example, in the area of hydraulics, Mr. Stark contends that the formulae used by fire fighters in this area are somewhat different than those used by a general civil engineer and the fire fighting approach to this course is more specialized. However, he readily admits that a prior knowledge of basic hydraulics will give a fire fighter an advantage in learning those specifics of fire service related hydraulics. The same would apply to any course which bears some relationship to or has some application in fire fighting. Mr. Stark indicates that if Petitioner had been an officer with the Fire Department as opposed to a fire fighter, his review of the application might have been more detailed. In this comment he does not infer that officers are given preference over fire fighters in entry into the program. He means, instead, that the job of the officer, with its management responsibilities, is what controls - not the rank itself. In that regard, Lt. Erdozain, who is an officer, was denied entry into the program. He contends, as does Petitioner, that any fire fighter who is placed in charge may assume the function of an officer at any given time at the scene of a fire. The over-all additional responsibility of the officer is what controls, however.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED THAT a Final Order be entered denying Petitioner qualification for entry into the Fire Fighter's Supplemental Compensation Program. DONE and ENTERED in Tallahassee, Florida this 23rd day of October, 1991. ARNOLD H. POLLOCK 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 23rd day of October, 1991. APPENDIX TO RECOMMENDED ORDER The following constitutes my specific rulings pursuant to Section 120.59(2), Florida States, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER: Petitioner submitted no Proposed Findings of Fact. His three page letter, dated September 30, 1991, containing his observations, and the other materials therein have been carefully considered in the preparation of this Recommended Order. FOR THE RESPONDENT: Accepted and incorporated herein. Accepted. Accepted and incorporated herein. Not a Finding of Fact. & 6. Accepted and incorporated herein. Accepted and incorporated herein except for last sentence which is contra to the evidence of record. Rejected as not necessarily consistent with the evidence. Petitioner indicated that depending upon the situation at the scene of a fire, he could be called upon to make almost any fire related decision. Accepted. Not a Finding of Fact but a comment on the evidence. Accepted. Accepted and incorporated herein. - 15. Accepted. Accepted. Petitioner is not on nor has he ever been on a HAZMAT team. However, the evidence, uncontradicted, indicated he could be called upon to work with them at any given time. Accepted. Not a true Finding of Fact but more a comment on the evidence. Accepted. COPIES FURNISHED: Jorge Du Quesne 2500 SW 79th Court Miami, Florida 33155 Andrew Kenneth Levine, Esquire Department of Insurance Division of Legal Services 412 Larson Building Tallahassee, Florida 32399-0300 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, Florida 32399-0300
The Issue Whether Respondent, Randall Lee Southerland, conducted operations in the construction industry 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 Petitioner, Department of Financial Services, Division of Workers’ Compensation, pursuant to Section 440.107, Florida Statutes (2007), and Florida Administrative Code Chapter 69L.
Findings Of Fact Petitioner 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. Respondent is a sole proprietor, allegedly engaged in the construction industry, providing tile and grouting services and carpet removal to private residences in Florida. On November 30, 2007, Eric Duncan and Alison Pasternak, both of whom are workers’ compensation investigators for Petitioner, were conducting random compliance checks in Lee County. Investigator Duncan noticed two men working outside of a residence in Cape Coral, one using a power saw and the other mixing a substance in a bucket. Investigators Duncan and Pasternak decided to conduct a compliance check of these two men to ensure they were workers’ compensation coverage compliant. The two men identified themselves as Randall Lee Southerland and Tim Weaver. Weaver produced his Exemption Certificate for workers’ compensation coverage. No further action was taken in regards to that investigation. Southerland was observed mixing the substance, which was later determined to be tiling grout. Southerland did not have a workers’ compensation insurance policy, a coverage exemption certificate, nor was he employed via a leasing agency. After consulting with his supervisor, Investigator Duncan issued SWO No. 07-364-D7 to Respondent along with a Business Records Request for the time-period of December 1, 2004, through November 30, 2007. Respondent provided records to Petitioner shortly thereafter, and, subsequently, a penalty assessment was calculated. The calculations of Respondent’s gross payroll was necessary since it was alleged that he worked in the construction field of tiling. Respondent disputes this classification and argues that grouting is separate from the installation of tiles and is not a classification within the construction field. Therefore, neither a workers’ compensation insurance policy, nor an exception is required. The National Counsel on Compensation Insurance (NCCI) established a codification of construction employment activities; all of which have been adopted by Petitioner and are commonly referred to as “class codes.” The NCCI class code for tiling is “5348.” It is undisputed that Respondent was doing the grout- work for the newly installed tiles. It is further undisputed that the definition of tiling, per the NCCI class code “5348,” included the finishing, setting, and installation of tiles. It was also established that loose tiles, merely laying on the floor, are not finished, nor set, until the grout is laid. Pursuant to Section 440.107, Florida Statutes, the calculation of the penalty was completed on a penalty calculation worksheet. The worksheet was completed by examining the records received from Respondent and calculating the gross payroll that was paid to him. The penalty was later amended to reflect additional records provided through discovery, the evidence of the payment for the November 30, 2007, job consisting of a $500.00 check from the real estate agent. The Amended Order assessed a penalty of $1,168.68, which is the applicable amount of the premium evaded and includes the 50 percent penalty for the time period of December 1, 2004, through November 30, 2007.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order: Finding that Respondent failed to secure the payment of workers’ compensation coverage for the sole proprietor, Randall Lee Southerland, in violation of Subsections 440.10(1)(a) and 440.38(1), Florida Statutes; and Assessing a penalty against Respondent, in the amount of $1,168.68, which is equal to 1.5 times the evaded premium based on the payroll records provided by Respondent and the applicable approved manual rate and classification code. DONE AND ENTERED this 3rd day of June, 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 3rd day of June, 2008.
The Issue The issues for determination are whether Petitioner, Paul F. Meloy (Meloy), is an employee of Petitioner, Alva Fire Protection and Rescue District (District), and is entitled to participate in the Florida Retirement System (FRS) pursuant to Section 121.051, Florida Statutes (2001). (All references to statutes are to Florida Statutes (2001) unless otherwise stated.)
Findings Of Fact Section 121.051 requires participation in the FRS by all employees hired after December 1, 1970. The District hired Meloy after 1970. Meloy has worked for the District as the fire chief and administrator since the District's inception in 1976. Meloy was instrumental in establishing the District. The other requirement imposed by Section 121.051 for participation in the FRS is that Meloy must be an employee. Section 121.021(11), in relevant part, defines an employee as any person receiving salary payments for work performed in a regularly established position. Respondent denies that the payments Meloy receives from the District are salary payments. Respondent asserts that the payments are reimbursement for expenses. Respondent denies that the payments to Meloy are compensation. Section 121.021(22) defines the term "compensation" to mean: . . . the monthly salary paid a member by his or her employer for work performed arising from that employment. The payments from the District to Meloy since October 1990 have been compensation. In October 1990, the District began paying Meloy a monthly salary "for work performed arising from his employment with the District." Before October 1990, the District reimbursed Meloy for expenses he incurred in housing fire trucks in the garage at Meloy's auto service business. The District also reimbursed Meloy for the maintenance and repair of District vehicles. In 1988, the District began reporting the payments made to Meloy as salary for purposes of the federal income tax. Each year from 1988 to the present, the District has reported the payments to Meloy on a W2 Wage and Tax Statement. Between 1988 and October 1990, the District stopped housing vehicles in Meloy's garage, and Meloy stopped servicing vehicles for the District. In October 1990, the amount of the monthly payment to Meloy increased substantially. Thereafter, the District provided annual cost of living increases to Meloy. The payments to Meloy from October 1990 to the present have been unrelated to expenses incurred by Meloy. Those payments have been regular monthly salary payments for work performed to implement the policy of the District and to administer the day-to-day operations of the District. Even if the payments are salary payments, Respondent argues that Meloy did not receive those payments for work performed in a regularly established position. Section 121.021(52)(b) defines a regularly established position as one that will be in existence for six months. Meloy's position has been in existence since 1976. It will be in existence for six months. Respondent asserts that the position occupied by Meloy is a temporary position defined in Section 121.021(53)(b). Section 121.021(53)(b) defines a temporary position as one that will exist for less than six months or as defined by rule, regardless of its duration. Respondent claims that the position occupied by Meloy is a temporary position because it is an "on call position" defined in Florida Administrative Code Rule 60S- 1.004(5)(d)5. The rule defines an on call position as one filled by employees who are called to work unexpectedly for brief periods and whose employment ceases when the purpose for being called is satisfied. (All references to rules are to rules promulgated in the Florida Administrative Code in effect on the date of this Recommended Order.) Meloy performs some of his duties unexpectedly when called anytime 24 hours a day. He performs his other duties in the normal course of business. Meloy does not maintain any time sheets, and the District does not require Meloy to perform his duties within an established work schedule. Meloy does not occupy an "on call position" within the meaning of Rule 60S-1.004(5)(d)5. Meloy's employment does not cease when the purpose of his being called is satisfied. Meloy has been performing his on-call duties and his other duties for approximately 25 years. In 1994, Mr. William D. Wilkinson became the Chairman of the District (Wilkinson). Wilkinson is also the Court Administrator for the Circuit Court in the Twentieth Judicial Circuit of Florida, in which the District is located. After Wilkinson became Chairman, he determined that Meloy receives compensation in a regularly established position and is entitled to membership in the FRS. Wilkinson testified at the hearing. Meloy has sole responsibility for implementing the District's policy and administering the day-to-day operation of the District. Relevant portions of Wilkinson's testimony are instructive. Q. And whose job is it to carry out that policy? A. Mr. Meloy. Q. When you came on board in 1994, Mr. Meloy, was he employed by the district? A. That's correct. Q. How many other administrators does the district employ? A. None. Q. Who runs the day-to-day affairs of the fire district? A. Mr. Meloy. Q. He is required to work a certain work schedule? A. No, sir. Q. What is he required to do as far as hours go? A. Once we set the policy, then we expect, you know, the chief to carry that out. And for however many hours it takes during the week, you know, the month to see it is fulfilled. Q. Do you know if he is on call? A. He is on call 24/7. Q. And what does that mean? A. 24 hours a day, seven days a week. Q. Is that 365 days a year? A. That's correct. * * * Q. Let me ask you to put your other hat on as the court administrator for the 20th Judicial Circuit. Are you involved with the Florida Retirement System? A. Yes, I am. Q. And you are a participant? A. Yes, I am. Q. Your duties as the court administrator, how would you compare that to Mr. Meloy's duties as the fire chief administrator of the Alva Fire District? A. Well, with the exception that I certainly make a lot more than he does for the duties that he has, it is similar. You know, I'm paid an annual salary and expected to get the job done. If you have to work 60 hours, you have to work 60 hours. If you get through sooner, hopefully you do. But that never happens. The District requires Meloy to spend as much time as is needed to implement the policy of the District and to administer the day-to-day business of the District. The hours vary, and there are no set hours. Some days, Meloy's day begins at 6:00 a.m. Other days, Meloy does not get to work until 9:00 a.m. or noon. Some days, Meloy leaves work at 5:00 p.m. and then must return immediately to the office. "It is whatever is needed." The District employs four individuals. One is Meloy. Two are certified firefighters. The other is a part- time bookkeeper. The bookkeeper and the two certified firefighters are members of the FRS. The two full-time firefighters maintain time sheets, and the District pays them for overtime. The District compensation of its full-time firefighters is consistent with compensation on an hourly basis. Meloy is not a certified firefighter, and the District does not compensate Meloy on an hourly basis. Meloy does not maintain or submit time sheets. The District does not pay Meloy for overtime. Like the certified firefighters, Meloy performs some of his duties when called anytime, 24 hours a day. However, neither the certified firefighters nor Meloy has the option to refuse to work when called. The employment positions of the certified firefighters and Meloy do not cease when the purpose for being called is satisfied. Although the bookkeeper for the District is never on call, she maintains a schedule similar to that of Meloy. She works those hours necessary to perform her duties. Like Meloy, the bookkeeper's position does not cease when she completes her work. The District pays compensation to Meloy in accordance with an annual salary rather than an hourly rate. Meloy does not have an established schedule during which he must implement the board's policy and administer the day-to- day operations of the District. Meloy occupies a regularly established position within the meaning of Section 121.021(52)(b). Meloy is the District administrator. The position has been in existence since 1988 and is not a temporary position within the meaning of Section 121.021(53)(b) or Rule 60S-1.004(5). Respondent's final argument is that a determination of Petitioners' request to enroll Meloy in the FRS is barred by the judicial doctrines of res judicata or collateral estoppel. Respondent argues that final agency action determined that the payments received by Meloy through June 29, 1992, are reimbursement for expenses. Respondent argues that nothing has changed since that time, and Meloy cannot now revisit the issue of his compensation. Findings regarding Respondent's final argument require some historical perspective. The District joined the FRS in 1988. At that time, the District purchased past service credit for a number of employees, including Meloy. Meloy enrolled as a member of the Special Risk Class. When Meloy enrolled as a member of the Special Risk Class, a question in the enrollment form asked Meloy if the applicant was certified as a firefighter or required to be certified as a firefighter. Meloy answered in the affirmative. Meloy has always been required to be certified as a firefighter in order to receive retirement benefits as a member of the Special Risk Class. However, Meloy has never been certified as a firefighter pursuant to Section 633.35. Meloy has never completed an essential firefighting course that is a statutory prerequisite to certification. By letter dated June 29, 1992, Respondent notified Meloy that Respondent was terminating Meloy's membership in the FRS. The letter stated two grounds for termination. One ground was that Meloy had not completed the firefighting course required for membership in the Special Risk Class. The second ground was that the payments Meloy received from his employer are reimbursement for expenses rather than compensation. Meloy did not appeal either ground stated by Respondent on June 29, 1992, for the termination of benefits. Meloy does not contest the first ground and is not now seeking enrollment in the FRS as a member of the Special Risk Class. Rather, Meloy now seeks benefits as a member in a regularly established position defined in Section 121.021(52)(b). Meloy does contest the second ground stated by Respondent on June 29, 1992, for terminating Meloy's membership in the FRS. Respondent determined that Meloy did not receive compensation from 1988 through June 29, 1992. The time for appealing that determination has expired, and Meloy cannot now amend the scope of this proceeding to include any payments he received on or before June 29, 1992. Respondent asserts that its determination on June 29, 1992, also establishes that payments received by Meloy after June 29, 1992, are not compensation. Respondent argues that Meloy's duties have not changed, and the payments Meloy receives are reimbursement for expenses. On June 1, 1999, Respondent sent a letter to Wilkinson explaining Respondent's denial of Meloy's application for enrollment in the FRS. In relevant part, the letter stated: By certified letter dated June 29, 1992 (copy enclosed), the State Retirement Director, Mr. A.J. McMullian III, advised Mr. Meloy that he was inelligible for Florida Retirement System (FRS) participation since the monthly payments he received were for "expenses" and not compensation. Subsequent to Mr. McMullian's letter, a hearing was conducted by the Division of Administrative Hearings and Mr. Meloy's payments were defined as expenses as a statement [sic] of fact (copy enclosed). In light of this, the Division has already made a determination that Mr. Meloy is ineligible for FRS participation from 1979 through 1992. Since your letter indicates that Mr. Meloy's duties and payments he has received have not changed since 1988, he remains ineligible for FRS participation. Respondent's Exhibit 10. The DOAH hearing referred to in the letter on June 1, 1999, involved allegations that Meloy had violated state ethics laws when he first attempted to enroll in the FRS in 1988. In 1992, the Florida Commission on Ethics (Commission) investigated Meloy's participation in the FRS. The Commission entered an order finding probable cause that Meloy violated Section 112.313(6) when he submitted his enrollment form for retirement benefits by corruptly using or attempting to use his official position to retain retirement benefits for himself and his assistant fire chief when neither was qualified to receive benefits. The findings concerning the assistant fire chief are neither relevant nor material to this proceeding. Meloy requested an administrative hearing, and the Commission referred the matter to DOAH to conduct the hearing. ALJ Susan B. Kirkland conducted the administrative hearing and entered a Recommended Order on July 8, 1994. The Recommended Order found that Meloy misrepresented his entitlement to membership in the Special Risk Class and did so with wrongful intent. The Order concluded that Meloy violated the relevant statute because Meloy attempted to use his position, or the property and resources entrusted to him, to secure a benefit. The Order recommended a civil penalty, public censure, and a reprimand. The Final Order of the Commission adopted the Recommended Order. The Recommended Order contains three paragraphs that discuss the payments received by Meloy. Those three paragraphs state: 3. In 1976, the . . . District was established. The firefighting equipment and vehicles were originally located in Meloy's garage, where he maintained an automotive repair shop. Meloy received a fixed reimbursement from the District each month for the use of his garage and for repair services which he rendered for the District. * * * 5. In 1988, the District joined the . . . (FRS). At that time the District employed four full-time firefighters and a part-time secretary. Meloy worked part-time as the administrator of the District but did not draw a salary and continued to receive remuneration in the form of the monthly reimbursement for expenses. . . . * * * 18. By letter dated June 29, 1992, [Respondent] notified Meloy that his membership in the FRS . . . was being terminated. The grounds for termination were that Meloy had been receiving payments for expenses and not compensation. . . . The Recommended Order does not operate under the judicial doctrines of res judicata or collateral estoppel to preclude a determination of whether the payments received by Meloy after 1988 are compensation. The Recommended Order limits the finding that Meloy received payments for expenses to those received in 1988. Paragraph 5 expressly states, "At that time. . . Meloy . . . continued to receive . . . reimbursement for expenses. . . ." The findings in paragraph 18 merely recite the grounds stated by Respondent but do not make findings on the merits of the stated grounds. The findings in paragraph 3 are not probative. The Recommended Order made no findings concerning the payments Meloy received after 1988. Respondent determined that the payments between 1988 and June 29, 1992, were payments for expenses rather than compensation. Irrespective of whether Respondent's determination was legally and factually correct, Meloy did not appeal Respondent's determination. The determination by Respondent on June 29, 1992, involved a separate and distinct application from the application at issue in this case. No determination has been made that the payments since June 29, 1992, either are or are not compensation. The application at issue in this case is a new application for different benefits. Meloy is not applying for benefits to which he would be entitled if he were a member of the Special Risk Class. Nor can Meloy apply for benefits related to the payments received on or before June 29, 1992. Respondent argues that nothing has changed in the course of Meloy's tenure with the District. Payments that were reimbursement for expenses before 1992 arguably have not now been transformed into compensation. Respondent is incorrect. Something has changed in the course of Meloy's tenure with the District. Sometime after September 1990, the payments to Meloy changed from reimbursement for expenses to monthly salary payments. The District no longer housed equipment at Meloy's garage, Meloy no longer serviced the equipment at the garage, and the amount of the monthly payments to Meloy increased from $540 to $833. Relevant portions of the transcript of the administrative hearing in the ethics case are instructive. Meloy asserted in the ethics case that in 1988, he was a volunteer fireman. As a volunteer, rather than a salaried employee, Meloy argued that he was not required to be certified as a firefighter. The attorney who represented the Commission sought to show that Meloy was not a volunteer after 1990 but was a salaried employee of the District. As long as I'm volunteering, I don't have to have it. Q. Okay. You are also the administrator for the full-time firemen, is that right? A. Yes. Q. You have the power to hire and fire them? A. Yes. Q. You set their hours? A. Yes. Q. The district also has a part-time secretary, is that right? A. Yes. Q. And currently that's Ms. Connie Bull? A. Correct. Q. She handles payroll matters? A. Yes. Q. She writes checks? A. Yes. Q. Pays bills? A. Yes. Q. She and you both answer questions that the full-time firemen might have about vacation or sick leave or retirement, is that right? A. To the best of our ability, yes. Q. Okay. Now, before 1990 you were not an employee of the fire district, is that right? A. According to how you define it, I guess. I was paid more as an expense type arrangement up until sometime around '90. I don't remember the exact date. Q. Okay, you received the expense reimbursement prior to 1990 for working on the fire equipment; is that right? A. It covered a lot of things. We worked on the fire equipment there in my business, we housed a lot of equipment there, used my facilities for -- well, we have used my facilities as a station for awhile. Q. When you say your facilities, you mean the Alva garage that you used to own? A. Right. Q. When you got the expense reimbursement, you would get the same amount every month, is that right? A. Yes. Q. It changed some over time, though, didn't it from '73 to 1990? A. Yes. Q. You got that same reimbursement amount regardless of the number of hours that you worked for the district? A. Yes. Q. And regardless of what any actual expenses might be? A. Correct. Q. Now, sometime in 1990 you became an employee of the district on a part-time basis; is that right? A. That's when they started taking out taxes and all and that reverted to more of a salary type reimbursement rather than expense. In other words, I was paying income tax and Social Security and everything and at that time it was considered more of a salary. Q. And they started doing that in 1990 sometime? A. I don't remember the date. It was approximately then. Q. When you started receiving a salary, you stopped getting the reimbursement; is that right? A. Right. Q. Isn't it true that when you first started getting the salary that the amount of the salary was several hundred dollars a month more than what the reimbursement had been? A. I couldn't tell you. Q. Isn't it a fact that the last-- A. I don't believe that would be right, though, because it didn't go up very much any one time, I don't think. I would have to see the figures to tell for sure. Q. All right. Isn't it a fact that the last time you received a monthly reimbursement you were receiving about $540 a month? A. I don't have those figures in front of me. Q. You don't remember? A. No. Q. Isn't it a fact that when you first got a salary in October 1990, you got $833 a month? A. I still couldn't tell you. I don't have those figures in front of me. I have them wrote down if I can get my papers. Q. All right. You don't know how much you get now? A. Yeah, but this ain't 1990. Respondent's Exhibit 3 at 29-32. The state argued in the ethics case that Meloy has been salaried since October 1990 and was required to be certified as a firefighter before enrolling in the FRS as a member of the Special Risk Class. The state now argues that Meloy has never been salaried and cannot enroll in the FRS as member of the regular class. The state cannot have it both ways. Meloy is entitled to membership in the FRS for the period after June 29, 1992. During that time, the District has paid a salary to Meloy that is compensation for duties performed in a regularly established position.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a Final Order granting Petitioners' request for Meloy to participate in the FRS. DONE AND ENTERED this 7th day of January, 2002, in Tallahassee, Leon County, Florida. _________ ________________ DANIEL MANRY 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 7th day of January, 2002. COPIES FURNISHED: J. Frank Porter, Esquire Porter & Jessell, P.A. 1424 Dean Street Ft. Myers, Florida 33901 Thomas E. Wright, Esquire Division of Retirement P.O. Box 3900 Tallahassee, Florida 32315-3900 Erin B. Sjostrom, Director Division of Retirement Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399-1560 Mallory Harrell, General Counsel Department of Management Services 4050 Esplanade Way Tallahassee, Florida 32399-0950
The Issue The issues are: (1) Whether Respondent, Bravo Construction, Inc. ("Respondent"), was in violation of the workers’ compensation requirements of Chapter 440.107, Florida Statutes (2003),1/ by failing to secure workers’ compensation coverage for its workers; (2) Whether such individuals possessed current valid workers’ compensation exemptions; and (3) Whether Respondent paid its workers remuneration outside of Respondent’s employee leasing company.
Findings Of Fact The Department is the state agency responsible for enforcing the requirement of Section 440.107, Florida Statutes, which requires that employers secure the payment of workers’ compensation coverage for their employees. Respondent is a company engaged in the construction industry. Specifically, Respondent's business is framing houses. At all time relevant to this proceeding, Elias Bravo was president of the company. On May 26, 2004, the Department’s investigators, Carol Porter and Kelley Dunning, conducted a random visit of a work site in Grassy Point, a gated community in Port Charlotte, Florida, and discovered Mr. Bravo and his workers on site as the house-framers. When the investigators arrived at the site, they spoke with Mr. Bravo, who advised the investigators that Respondent utilized a personnel leasing company, Time Management, which was actually a brokerage firm for Southeast Personnel Leasing, Inc. ("SEPL"), to secure workers’ compensation coverage. On May 26, 2005, Mr. Bravo was the only person in his crew who had coverage with SEPL. At the time of the site visit, the other men were not listed with SEPL because Mr. Bravo still had their applications in his car. After Respondent was unable to provide proof that the men had workers' compensation coverage pursuant to Subsections 440.107(3) and (7)(a), Florida Statutes, the investigators issued a Stop Work Order to Respondent while at the work site on May 26, 2004. On the same day that the Stop Work Order was issued, Investigator Dunning served Mr. Bravo with a Request for Production of Business Records for Penalty Assessment Calculation ("Request for Production of Business Records"). The Department requested copies of Respondent's business records in order to determine whether Respondent had secured workers' compensation coverage; whether Mr. Bravo or Respondent's employees had workers' compensation exemptions; and, if not, to determine the penalty assessment. In response to the Request for Production of Business Records, Mr. Bravo provided certificates of insurance, Respondent's check stubs written to various entities or individuals on behalf of Respondent, payroll records, and Form 1099s for the year ending 2003. Many of the documents provided by Mr. Bravo indicated that Respondent made payments directly to the entities and individuals. The Department maintains records regarding the workers' compensation coverage of individuals and entities in a statewide database called Compliance and Coverage Automated System ("CCAS"). The CCAS database is utilized by the Department to verify if an individual or entity has workers' compensation coverage or a valid exemption from coverage. As part of the Department's investigation, Investigator Porter conducted a CCAS search for Respondent's workers’ compensation insurance coverage records. This search verified that Mr. Bravo had workers' compensation coverage. However, many of the workers or entities to whom Respondent made direct payments did not have workers’ compensation coverage or current valid workers’ compensation exemptions. Based on a review of the payroll records, check stubs, and the Form 1099s that Respondent provided to the Department, Investigator Porter determined that Respondent was an "employer" as that term is defined in Subsection 440.02(16), Florida Statutes. Subsequently, the Department reassessed the original penalty and issued the Amended Order with the attached penalty worksheet which detailed the basis of the penalty assessment. In determining the amended penalty assessment, Investigator Porter disregarded and did not include Respondent's payments to any individual or entity that had workers’ compensation coverage or an exemption from such coverage. The Amended Order, which reflected a penalty assessment of $97,416.68, was issued to Respondent on May 28, 2004.2/ Respondent paid remuneration to the individuals listed on the penalty worksheet of the Amended Order for work they performed. Nonetheless, during the period covered by the penalty assessment, Respondent did not secure workers' compensation coverage for the individuals listed on the penalty worksheet, and none of them had workers' compensation coverage or exemptions from such coverage. The individuals listed on the penalty worksheet of the Amended Order were Respondent's employees during the relevant period, in that they were paid by Respondent, a construction contractor, and did not have workers’ compensation coverage or an exemption from such coverage. Mr. Bravo had workers' compensation coverage through SEPL. However, none of the employees listed on the Amended Order had workers' compensation coverage through SEPL, because they were paid directly by Respondent. A personnel leasing company provides workers' compensation coverage and payroll services to its clients, then leases those employees back to the clients for a fee. Respondent was a client of SEPL, and based on that relationship, Mr. Bravo believed that he and his workers received workers' compensation coverage through that personnel leasing company. However, the workers' compensation coverage provided by SEPL applied only to those employees SEPL leased to Respondent. In the case of leased employees, Respondent would have to make payments to the leasing company and not directly to his workers. The leasing company would then, in turn, pay the leased employees. When, as in this case, the construction company makes direct payments to individuals performing construction work, those workers are not leased employees and, thus, are not secured by the workers’ compensation coverage provided by the personnel leasing company. See § 468.520, Fla. Stat. Some of the individuals listed on the penalty worksheet may have been "dually employed"; that is, sometimes they were employed by Respondent and at other times, they were employees of SEPL and were leased to Respondent. However, during the periods in which individuals worked for Respondent and were paid by Respondent, and were not paid by SEPL, they were without workers’ compensation coverage unless Respondent provided such coverage. With regard to the individuals listed on the penalty worksheet, Respondent provided no such coverage. Respondent, through Mr. Bravo, paid its employees directly, thus, circumventing SEPL and losing the coverage that the employees may have had through it. The Department assessed the penalty against Respondent based on the remuneration Respondent gave directly to the employees outside of SEPL, the class code assigned to each employee utilizing the SCOPES Manual adopted by the Department in Florida Administrative Code Rule 69L-6.021, and the guidelines in Subsection 440.107(7)(d), Florida Statutes.
Recommendation Based upon 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 that affirms the Stop Work Order and the Amended Order of Penalty Assessment, which imposes a penalty of $97,416.68. DONE AND ENTERED this 10th day of May, 2005, in Tallahassee, Leon County, Florida. S CAROLYN S. HOLIFIELD 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 10th day of May, 2005.
Findings Of Fact At all times relevant and material to these proceedings, the Petitioner has been employed as a firefighter with the Metro-Dade Fire Department. The Petitioner's primary function with the Metro-Dade Fire Department is as a firefighter. By letter dated May 30, 1991, and received on June 10, 1991, the Petitioner applied to the Respondent for Firefighters Supplemental Compensation at the Bachelor degree level. Three transcripts were submitted with the Petitioner's application. The first was from Miami-Dade Community College, and showed that an Associate of Science degree in Fire Science was awarded to the Petitioner on May 4, 1991. The second transcript was from Broward Community College, showing many courses taken by Petitioner, but no degree awarded. 3/ The third transcript was from Florida International University, and showed that a Bachelor of Science degree with a major in Industrial Technology was awarded to Petitioner on December 12, 1980. Petitioner's Bachelor degree from Florida International University is not based upon, and does not include, any of the courses in fire science that formed the basis for Petitioner's Associate degree from Miami-Dade Community College. 4/ Petitioner's transcript of her Bachelor degree does not reveal a major study concentration area of at least 18 semester hours or 27 quarter hours which is readily identifiable and applicable as fire-related. On or about June 24, 1991, the Respondent notified the Petitioner that she was eligible for the Firefighters Supplemental Compensation Program at the Associate degree level by virtue of her Associate of Science degree in Fire Science from Miami-Dade Community College. On or about June 26, 1991, the Respondent notified the Petitioner that she was not eligible for the Firefighters Supplemental Compensation Program at the Bachelor degree level because Petitioner's major in Industrial Technology from Florida International University was not a recognized Major Study Concentration Area in Rule 4A-37.084. The denial letter cites and quotes the definition of "Bachelor's Degree" at Rule 4A- 37.084(3), Florida Administrative Code. Rule 4A-37.084(3)(a), Florida Administrative Code, the rule which is the subject of this rule challenge proceeding, reads as follows (with the challenged portion underscored [<> --Ed.]): "Bachelor's Degree" means a Bachelor of Arts or Bachelor of Science degree conferred by an accredited post-secondary institution provided the major study concentration area is readily identifiable and applicable as fire- related. A firefighter may receive Supplemental Compensation based on possession of a Bachelor's Degree regardless of whether or not an Associate Degree was previously earned. <In no event shall receipt of a transcript for an Associate Decree be used in consideration for qualification of the Bachelor's Degree Supplemental Compensation.> The major study concentration area, at least 18 semester hours or 27 quarter hours, must be readily identifiable and applicable as fire-related. Those major study concentration areas specifically defined in this rule chapter are considered to be readily identifiable and applicable as fire-related.
The Issue The issue in the case is whether Moonlight General Contractors, Inc. (Respondent), should be assessed a penalty for an alleged failure to comply with the workers' compensation requirements referenced herein, and, if so, in what amount.
Findings Of Fact Pursuant to section 440.107, Florida Statutes (2015),1/ the Petitioner is the state agency charged with enforcing compliance with Florida’s workers’ compensation requirements. At all times material to this case, the Respondent was a business providing services in the construction industry with a main office located at 1900 18th Avenue South, St. Petersburg, Florida. On April 1, 2015, Kent Howe, employed by the Petitioner as a Compliance Investigator, observed two men working on a roof of a residential structure located at 2513 Anastasia Drive South, Daytona, Florida (the “subject property”.) Mr. Howe specifically observed that a portion of the roof structure was exposed and that the individuals were working on the roof trusses. Mr. Howe testified that the men identified themselves as “Milan Kreal” and “Svatopluk Vavra” and that they identified the Respondent as their employer. Mr. Howe accessed corporate records maintained online by the Department of State, Division of Corporations, and identified Abbey Khdair as the sole corporate officer for the Respondent. Mr. Howe accessed the Petitioner’s Coverage and Compliance Automated System (CCAS) to determine whether the Respondent was in compliance with applicable workers’ compensation requirements. CCAS is a database maintained by the Petitioner that contains workers’ compensation coverage information provided to the Petitioner by insurance providers. Pursuant to section 440.05, corporate officers can be exempted from workers’ compensation coverage requirements. Mr. Howe determined through CCAS that Mr. Khdair had an active exemption for himself as the corporate officer, but the two individuals working on the subject property had no workers’ compensation coverage. Mr. Howe contacted Mr. Khdair, who told Mr. Howe that the two men were employed through an employee leasing company identified as “Skilled Resources.” Personnel employed through licensed employee leasing companies can have workers’ compensation coverage arranged through the leasing companies. Mr. Howe contacted Skilled Resources and determined that, although on occasion the Respondent had obtained employees from Skilled Resources, the individuals working on the subject property had not been supplied to the Respondent by Skilled Resources. Mr. Howe thereafter issued a Stop-Work Order and posted it at the jobsite. On April 2, 2015, the Stop-Work Order was personally served on Mr. Khdair, along with a Request for Production of Business Records for Penalty Assessment Calculation for the period from April 2, 2013, through April 1, 2014 (the “audit period”). On that same date, Mr. Khdair paid a $1,000 penalty down payment towards the penalty assessment, in order to obtain a release from the Stop-Work Order and allow the subject property roof to be secured from potential inclement weather. By letter dated April 10, 2015, Mr. Khdair advised the Petitioner that, prior to April 1, 2015, the Respondent and the property owner had entered into a contract to perform work related to “a new gable roof, electrical, plumbing, and HVAC work.” Mr. Khdair wrote that he obtained the building permit for the project and that the property owner was to hire additional subcontractors to work under the permit Mr. Khdair had obtained. Mr. Khdair wrote that he “inadvertently” referred Mr. Howe to Skilled Resources when Mr. Howe contacted him on April 1, 2015, and that the property owner had hired the workers without Mr. Khdair’s knowledge or consent. Mr. Khdair wrote that, prior to Mr. Howe’s telephone call, Mr. Khdair was unaware that there were any people working at the subject location, other than those who were to have obtained their own sub-permits in relation to the project. On April 10, 2015, Mr. Khdair also submitted a letter purporting to be from the property owner stating that the owner had personally hired Mr. Vavra and “Guy Ackerly” to work on the roof. Neither of the two individuals observed by Mr. Howe working at subject property on April 1, 2015, identified himself as “Guy Ackerly.” The task of calculating the penalty assessment was assigned to Eunika Jackson, employed by the Petitioner as a Penalty Auditor. The Respondent failed to provide any business records to the Petitioner. Accordingly, Ms. Jackson calculated the penalty assessment pursuant to section 440.107(7)(e), which provides that in the absence of business records sufficient to determine payroll, the Petitioner is required to impute wages for the employees working without workers’ compensation coverage. As the corporate officer, Mr. Khdair had obtained an exemption from the coverage requirements. The National Council on Compensation Insurance (NCCI) assigns classification codes for various occupations related to levels of risk presented by the specific tasks performed by an employee. The codes are used to establish rates charged for workers’ compensation coverage and are relevant for determining the penalty assessed for violations of workers’ compensation requirements. For purposes of enforcing compliance with Florida’s workers’ compensation requirements, the Petitioner has adopted the NCCI codes through Florida Administrative Code Rules 69L- 6.021. Ms. Jackson correctly determined that NCCI Code 5551 is applicable in this case. NCCI Code 5551 (titled “Roofing-All Kinds & Drivers”) specifically applies to “the installation of new roofs and the repair of existing roofs” and includes “the installation and/or repair of joists, trusses, rafters, roof decks, sheathing, and all types of roofing materials.” In determining the penalty assessment, Ms. Jackson calculated the penalty based on the Respondent having three employees without workers’ compensation coverage. Ms. Jackson applied the procedures set forth in section 440.107(7)(d) and rules 69L-6.027 and 69L-6.028, and determined that the penalty assessment was $192,425.94, which reflects a penalty of $64,141.98 for each of the three individuals. Although Ms. Jackson’s calculation of the penalty was procedurally correct, the evidence establishes only that there were two individuals working on the roof of the subject property.
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 against the Respondent imposing a penalty assessment in the amount of $128,283.96, as set forth herein. DONE AND ENTERED this 23rd day of October, 2015, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM 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 23rd day of October, 2015.
