Findings Of Fact 13. The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment issued on February 11, 2009, the Amended Order of Penalty Assessment issued on March 5, 2009, the 2"4 Amended Order of Penalty Assessment issued on March 11, 2009 and the 3 Amended Order of Penalty Assessment issued on October 30, 2009, which are fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Alex Sink, Chief F inancial Officer of the State of Florida, or her designee, having considered the record in this case, including the Stop- Work Order and Order of Penalty Assessment and the Amended Orders of Penalty Assessment served in Division of Workers’ Compensation Case No. 09-036-D1, and being otherwise fully advised in the premises, hereby finds that: 1. On February 11, 2009, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop-Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 09-036-D1 to BEST WELDING AND FABRICATION, INC. 2. On February 11, 2009, the Stop-Work Order and Order of Penalty Assessment was served by personal service on BEST WELDING AND FABRICATION, INC. A copy of the Stop-Work Order and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On March 5, 2009, the Department issued an Amended Order of Penalty Assessment in Case No. 09-036-D1 to BEST WELDING AND FABRICATION, INC. The Amended Order of Penalty Assessment assessed a total penalty of $196,980.30 against BEST WELDING AND FABRICATION, INC. 4. On March 16, 2009, the Amended Order of Penalty Assessment was served by certified mail on BEST WELDING AND FABRICATION, INC. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On March 11, 2009, the Department issued a 2°4 Amended Order of Penalty Assessment in Case No. 09-036-D1 to BEST WELDING AND FABRICATION, INC. The an Amended Order of Penalty Assessment assessed a total penalty of $50,968.94 against BEST WELDING AND FABRICATION, INC. . 6. On March 26, 2009, the 2°4 Amended Order of Penalty Assessment was served by certified mail on BEST WELDING AND FABRICATION, INC. A copy of the 2"! Amended Order of Penalty Assessment is attached hereto as “Exhibit C” and incorporated herein by reference. 7. The Employer requested a formal hearing on April 6, 2009. A copy of the Request for Hearing is attached hereto as “Exhibit D” and incorporated herein by reference. 8. On April 21, 2009, the request for formal hearing was forwarded to the Division of Administrative Hearings for assignment of an Administrative Law Judge. The matter was assigned to Administrative Law Judge Barbara Staros and given case number 09-2138. 9. On October 30, 2009, the Department issued a 3rd Amended Order of Penalty Assessment in Case No. 09-036-D1 to BEST WELDING AND FABRICATION, INC. The 3rd Amended Order of Penalty Assessment assessed a total penalty of $10,179.61 against BEST WELDING AND FABRICATION, INC. 10. On October 30, 2009, the 3™ Amended Order of Penalty Assessment was served on legal counsel for BEST WELDING AND FABRICATION, INC. A copy of the 3" Amended Order of Penalty Assessment is attached hereto as “Exhibit E” and incorporated herein by reference. 11. On November 9, 2009, BEST WELDING AND FABRICATION, INC. filed a Notice of Voluntary Dismissal. A copy of the Notice of Voluntary Dismissal is attached hereto as “Exhibit F” and incorporated herein by reference. 12. On November 12, 2009, an Order Closing File was entered. The Order Closing File relinquished jurisdiction to the Department. A copy of the Order Closing File is attached hereto as “Exhibit G” and incorporated herein by reference.
Findings Of Fact 12. The factual allegations in the Stop-Work Order and Order of Penalty Assessment issued on February 3, 2009, and the Third Amended Order of Penalty Assessment issued on November 4, 2009, which are fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Alex Sink, Chief Financial Officer of the State of Florida, or her designee, having considered the record in this case, including the Stop-Work Order and Order of Penalty Assessment and the Third Amended Order of Penalty Assessment served in Division of Workers’ Compensation Case No. 09-042-D4, and being otherwise fully advised in the premises, hereby finds that: 1. On February 3, 2009, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Stop-Work Order and Order of Penalty Assessment in Division of Workers’ Compensation Case No. 09-042-D4 to GILLION ENTERPRISES, INC. The Stop-Work Order and Order of Penalty Assessment included a Notice of rights wherein GILLION ENTERPRISES, INC. was advised that any request for an administrative proceeding to challenge or contest the Stop-Work Order and Order of Penalty _ Assessment must be filed within twenty-one (21) days of receipt of the Stop-Work Order and Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 2. On February 3, 2009, the Stop-Work Order and Order of Penalty Assessment was served via personal service on GILLION ENTERPRISES, INC. A copy of the Stop- Work Order and Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On March 10, 2009, the Department issued a Second Amended Order of Penalty Assessment to GILLION ENTERPRISES, INC. in Case No. 09-042-D4. The Second Amended Order of Penalty Assessment assessed a total penalty of $24,732.08 against GILLION ENTERPRISES, INC. The Second Amended Order of Penalty Assessment included a Notice of Rights wherein GILLION ENTERPRISES, INC. was advised that any request for an administrative proceeding to challenge or contest the Amended Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Amended Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 4. The Second Amended Order of Penalty Assessment was served on GILLION ENTERPRISES, INC. by certified mail on March 19, 2009. A copy of the Second Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. | 5. On March 3, 2009, GILLION ENTERPRISES, INC. filed a timely Petition for a formal administrative hearing in accordance with Sections 120.569 and 120.57, Florida Statutes. The Petition was forwarded to the Division of Administrative Hearings and assigned Case No. 09-1389. 6. On November 4, 2009, the Department issued a Third Amended Order of Penalty Assessment to GILLION ENTERPRISES, INC. in Case No. 09-042-D4. The Third Amended Order of Penalty Assessment assessed a total penalty of $21,729.49 against GILLION ENTERPRISES, INC. The Third Amended Order of Penalty Assessment was served on GILLION ENTERPRISES, INC. through the Division of Administrative Hearings. A copy of the Third Amended Order of Penalty Assessment is attached hereto as “Exhibit C” and is incorporated herein by reference. 7. On November 5, 2009, GILLION ENTERPRISES, INC. filed a Notice of Voluntary Dismissal in DOAH Case No. 09-1389. A copy of the Notice of Voluntary Dismissal . filed by ROYMO, INC. is attached hereto as “Exhibit D.” 8. On November 9, 2009 Administrative Law Judge Susan B. Harrell entered an Order Closing File, relinquishing jurisdiction to the Department. A copy of the November 9, 2009 Order Closing File is attached hereto as “Exhibit E.”
The Issue Whether Respondent violated the provisions of chapter 440, Florida Statutes, by failing to secure payment of workers’ compensation coverage, as alleged in the Second Amended Order of Penalty Assessment; and, if so, the appropriate penalty.
Findings Of Fact Jurisdiction The Department is the state agency responsible for enforcing the requirement of chapter 440 that employers in Florida secure workers’ compensation coverage for their employees and corporate officers, pursuant to section 440.107. Patrick Hoffman was the owner and sole corporate officer for American. At all times material to this proceeding, American sold materials for window screens, patio sliding doors, screws, and spline screening; and it provided window and screen installation services. Investigation On June 29, 2016, the Department commenced an investigation following the observation of Patrick Hoffman and Timothy Barnett (also known as Adam Barnett) performing window installation services at a residential property. Kent Howe, an investigator in the Department’s compliance division, conducted an investigation regarding American’s operation of its business without proper workers’ compensation coverage. On June 29, 2016, Mr. Howe personally served a Stop-Work Order requiring American to cease all business operations and Order of Penalty Assessment on Mr. Hoffman. On June 29, 2016, Mr. Howe also served Mr. Hoffman with a Request for Production of Business Records for Penalty Calculation, requesting records to enable the Department to calculate the appropriate penalty for the period of June 30, 2014, through June 29, 2016. On June 30, 2016, the Department issued a conditional release from the Stop-Work Order. The conditional release required Respondent to pay $1,000, and agree to pay the penalty assessment within 28 days after the penalty calculation. American paid the $1,000 payment but it disputed the calculated penalty amount. An employer is required to maintain workers’ compensation coverage for employees unless there is an exemption from coverage. In the construction industry, a company must maintain coverage if it employs one or more persons. In the non-construction industry, a company is required to maintain coverage if it employs three or more persons. A contractor serving as a corporate officer in the construction industry may obtain an exemption from coverage requirements. See § 440.05, Fla. Stat. A contractor must demonstrate compliance with the workers’ compensation requirements or produce a copy of an employee leasing agreement or exemption for each employee. If an employee is a subcontractor without their own workers’ compensation coverage or an exemption, the individual is considered an employee of the contractor. American did not dispute that Timothy Barnett and Roger Wilson were employees of the company. American also did not dispute that it did not have workers’ compensation coverage for the employees as required by chapter 440. As a corporate officer, Mr. Hoffman elected to be exempted from workers’ compensation coverage. Penalty Calculation The Department assigned Eunika Jackson, a Department penalty auditor, to calculate the appropriate penalty for American. Ms. Jackson conducts penalty audits for construction and non-construction employers. Ms. Jackson testified that workers’ compensation coverage penalties are calculated based on a statutory formula in which the auditor calculates two-times the amount of the insurance premium the employer would have paid for each employee over the two-year period preceding the Stop-Work Order. The two-year period is commonly referred to as the look-back period. The penalty calculation is based on the employer’s payroll, the classification code for the industry of operation during the audit period, and the manual rate assigned to that classification code. To determine the appropriate code, the auditor uses the classification code in the Scopes® Manual, which has been adopted by Petitioner through Florida Administrative Code Rules 69L-6.021 and 69L-6.031. Ms. Jackson used business records Mr. Hoffman provided to determine the appropriate industry code and the penalty amount for each employee. Ms. Jackson reviewed bank statements to determine the gross payroll paid to Mr. Wilson and Mr. Barnett during the two-year non-compliance period. The records demonstrated that Roger Wilson received payment during the period of June 30, 2014, through December 31, 2015. Timothy (Adam) Barnett received payment during the period of January 1, 2015, through June 29, 2016. Ms. Jackson determined that American operated in the construction industry and initially assigned each employee a classification code of 5102. On August 11, 2016, the Department issued the Amended Order that assessed a total penalty of $10,785.04. The Amended Order was personally served on Mr. Hoffman on August 16, 2016. In response to the Amended Order, Respondent disputed the classification code assigned to Mr. Wilson. Mr. Hoffman testified that Mr. Wilson did not perform construction work, but rather worked as a retail employee selling merchandise in the store front. Mr. Hoffman further testified that contractors purchased items at American for use in their businesses. Mr. Hoffman’s description of Mr. Wilson’s job responsibilities and description of merchandise sold at American clearly demonstrates that Mr. Wilson did not perform construction work. Ms. Jackson correctly determined that the classification code 8018, which applies to retail and wholesale salespersons, was the appropriate code for Mr. Wilson. The classification code change resulted in a manual rate reduction and a reduced assessment applied to Mr. Wilson. On November 18, 2016, the Department filed a Motion for Leave to Amend Order of Penalty Assessment, which the undersigned granted. The Second Amended Order reduced the penalty assessment to $6,818.00. During the hearing, American continued to dispute the calculation of the penalty for Mr. Hoffman because he maintained an exemption as a corporate officer. The Department ultimately agreed to remove Mr. Hoffman from the penalty assessment worksheet and reduced the penalty assessment to $6,764.96. At hearing, there was no dispute regarding the penalty assessment related to Mr. Barnett. However, Respondent argued in the post-hearing statement for the first time that Timothy Barnett had an exemption. There was no evidence to support Respondent’s assertion. Therefore, Ms. Jackson correctly included payment to Mr. Barnett as payroll for purposes of calculating the penalty. Regarding Mr. Wilson, Mr. Hoffman argued that Mr. Wilson had an exemption from workers’ compensation coverage when he began working for American.1/ However, Mr. Hoffman could not produce a copy of the exemption and Mr. Wilson was not present at the hearing for testimony. Ms. Jackson conducted research using the Coverage Compliance Automated System (“CCAS”), a database used by the Department to maintain information regarding workers’ compensation policies, employee leasing plans, and exemptions for employees. Ms. Jackson found no record of an exemption for Mr. Wilson in CCAS. While Ms. Jackson did not exhaust all efforts to locate an exemption for Mr. Wilson, it was American’s burden to produce evidence of an exemption. Mr. Hoffman’s testimony with nothing more was insufficient to demonstrate that Mr. Wilson had an exemption and as such, Ms. Jackson appropriately included payments to Mr. Wilson as payroll to calculate the penalty. The calculation of the penalty for Mr. Wilson in the amount of $2,784.58 is correct. However, the penalty calculation for Mr. Barnett is incorrect. The amount should be $3,872.27. Therefore, the amount of the penalty should be reduced to $6,656.85. Ultimate Findings of Fact American was actively involved in business operations within the construction industry during the audit period of June 30, 2014, through June 29, 2016. Based upon the description of American’s business and the duties performed, Mr. Wilson was properly classified with a code 8018. Ms. Jackson used the correct manual rates and methodology to determine the appropriate penalty.
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 determining that: Respondent, American Aluminum Concepts, Inc., violated the requirement in chapter 440, by failing to secure workers’ compensation coverage for its employees; and Imposing a total penalty assessment of $6,656.85. DONE AND ENTERED this 16th day of December, 2016, in Tallahassee, Leon County, Florida. S YOLONDA Y. GREEN 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 16th day of December, 2016.
The Issue The issue in this case is whether Respondent violated the provisions of chapter 440, Florida Statutes, by failing to secure the payment of workers' compensation, as alleged in the Stop-Work Order and 3rd Amended Order of Penalty Assessment, and, if so, what penalty is appropriate.
Findings Of Fact Petitioner, Department of Financial Services, Division of Workers' Compensation, is the state agency responsible for enforcing the requirement that employers in the State of Florida secure the payment of workers' compensation for their employees and corporate officers. Respondent, Shriji Krupa, Inc., is a Florida corporation engaged in business operations as a gas station (self-service and convenience-retail) in the State of Florida. Mr. Hemant Parikh, one of Respondent's corporate officers, testified that, on November 20, 2012, Respondent was inspected by Petitioner's Compliance Investigator, Mike Fuller. Mr. Fuller advised Mr. Parikh that Respondent needed to close the store. According to Mr. Hemant Parikh, at the time of inspection, Respondent had two corporate officers and four additional employees. Mr. Parikh explained that, at the time of inspection, Respondent had two store locations with three employees working at each locale. Mr. Shrikant Parikh, another corporate officer, testified that, at the time of inspection, Respondent was operating under the mistaken belief that its corporate officers were exempt from workers' compensation coverage. Pursuant to the record evidence, on November 28, 2012, Mr. Fuller served a Stop-Work Order and Order of Penalty Assessment on Respondent. Pursuant to the Stop-Work Order, Respondent was ordered to cease all business operations for all worksites in the state based on the following: Failure to secure the payment of workers' compensation in violation of sections 440.10(1), 440.38(1), and 440.107(2) F.S., by: failing to obtain coverage that meets the requirements of Chapter 440, F.S., and the Insurance Code. After receiving the Stop-Work Order, on that same date, Respondent obtained workers' compensation coverage with an effective date of November 29, 2012. Respondent has maintained appropriate coverage to date. Following the Stop-Work Order, Respondent submitted various records for Petitioner's review.2/ Petitioner's sole witness was Ms. Lynne Murcia. Ms. Murcia works in Petitioner's Bureau of Compliance wherein she calculates penalties for those employers found in violation of the workers' compensation laws. Ms. Murcia performs approximately 200 penalty calculations per year. Ms. Murcia first became involved with Respondent in January 2013, when she received an assignment to perform a penalty calculation. Ms. Murcia reviewed all records previously submitted by Respondent. From the records received, Ms. Murcia was able to determine that Respondent employed four or more employees on a regular basis. Ms. Murcia explained that "employees" include corporate officers that have not elected to be exempt from workers' compensation. After conducting a search within the Florida Division of Corporations, Ms. Murcia was able to determine that no exemptions existed for Respondent's corporate officers. Ms. Murcia further conducted a proof of coverage search via Petitioner's Coverage and Compliance Automated System ("CCAS"), which is a database that contains all insurance coverage and exemptions for each employer throughout the State of Florida. The search revealed that Respondent possessed appropriate coverage from November 29, 2012, to the present; however, no prior coverage was indicated. Ms. Murcia conducted a penalty assessment for the non- compliance period of November 29, 2009, through November 28, 2012. From the records submitted by Respondent, Ms. Murcia correctly identified Respondent's employees and gross wages paid during the penalty period. All of the individuals listed on the Penalty Worksheet of the 3rd Amended Order of Penalty Assessment, dated August 27, 2014, were "employees" (as that term is defined in section 440.02(15)(a), Florida Statutes) of Respondent during the period of noncompliance listed on the penalty worksheet. From a description of the Respondent's business operations, Ms. Murcia determined Respondent's classification code. She explained that classification codes are established by the National Council of Compensation Insurance ("NCCI"). A classification code is a four-digit code number that is assigned to a specific group of tasks, duties, and responsibilities for a specific grouping of business. Ms. Murcia further testified that the classification codes are associated with a manual rate which is the actual dollar amount of risk associated with a particular code.3/ The manual rates are also established by NCCI. Class Code 8061, used on the penalty worksheet attached to the 3rd Amended Order of Penalty Assessment, and as defined by the NCCI Scopes Manual, is the correct occupational classification for Respondent. From the assigned classification code number, 8061, Ms. Murcia calculated the appropriate manual rate for the penalty period. The manual rates used on the penalty worksheet attached to the 3rd Amended Order of Penalty Assessment are the correct manual rates. The total penalty of $21,205.19 is the correct penalty for the employees listed on the penalty worksheet attached to the 3rd Amended Order of Penalty Assessment.
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 determining that Respondent Shriji Krupa, Inc., violated the requirement in chapter 440, Florida Statutes, to secure workers' compensation coverage, and imposing a total penalty assessment of $21,205.19. DONE AND ENTERED this 30th day of October, 2014, in Tallahassee, Leon County, Florida. S TODD P. RESAVAGE 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 October, 2014.
The Issue The issues are whether nine workers were employees of Respondent, during part of the audit period; whether Respondent failed to secure the payment of workers' compensation coverage in violation of Section 440.107, Florida Statutes (2003); and whether Petitioner should impose a penalty against Respondent in the amount of $123,960.23.
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. (2002). Respondent is a closely held corporation domiciled in Florida and engaged in the sale and installation of floor coverings. Mr. Dennis Davison and Mrs. Lynne Davison, a married couple, own all of the outstanding stock of Respondent (the owners). Respondent has five in-office employees, including the owners, and had a net worth of approximately $100,000 before paying the proposed penalty. On April 2, 2004, Petitioner's compliance officer conducted a random site inspection of a single-family residence at 213 Northwest 3rd Place, Cape Coral, Florida. Mr. John Walega and Mr. Mike Stephens were laying carpet in the residence (Walega and Stephens, respectively). Walega was a sole proprietor who employed Stephens. The compliance officer determined that Walega was an employee of Respondent because Walega had an expired exemption and no proof of workers' compensation insurance coverage. The compliance officer issued separate stop work orders against Walega and Respondent. The stop work order against Walega is not at issue in this proceeding. The compliance officer issued the stop work order against Respondent even though: she knew that Respondent had compensation coverage for Respondent's five employees through a leasing company; and she had no knowledge that Respondent had subcontractors other than Walega working for Respondent. The compliance officer requested Respondent's business records for the three years from April 2, 2001, through April 2, 2004 (the audit period). Respondent fully complied with the request in a timely manner. The stop work order issued against Respondent on April 2, 2004, also assessed a penalty stated as the greater of $1,000 or 1.5 times the premium Respondent would have paid in premium charges during the period Respondent allegedly failed to secure the payment of workers' compensation insurance. Sometime between April 2 and 16, 2004, Petitioner amended the penalty assessment to $137,820.72. On April 16, 2004, the owners mortgaged their personal residence to pay the amended penalty assessment. Petitioner released the stop work order, but the owners lost business in an unspecified dollar amount while the stop work order was in effect and continue to incur monthly interest expense in the amount of $500 to service the mortgage on their home. On June 28, 2004, Petitioner issued a Seconded Amended Order of Penalty Assessment No. 04-157-D7-2 that reduced the assessed penalty to $123,960.23 (the Seconded Amended Order). Respondent is entitled to a refund in the amount of $13,860.49, but Petitioner had not paid the refund as of the date of hearing. The Second Amended Order is the proposed agency action at issue in this proceeding. The compliance officer is the only employee for Petitioner who investigated and developed the substantive information that forms the basis of Petitioner's proposed agency action. Other employees calculated the actual amounts of the proposed penalties. Respondent does not challenge the mathematical accuracy of the penalty calculations by Petitioner, but challenges the legal and factual basis of Petitioner's determination that nine workers were Respondent's employees. The nine workers are identified in the record as Walega; Messrs. James Allan, Bertin Flores, Cliff Hill, David Lancaster, Earl Lancaster, Jeff Dozier, Anthony Gioe; and Ms. Patricia Lancaster. The statutory definition of an employee for that part of the audit period before January 1, 2004 (the relevant period), was different than the statutory definition that became effective on January 1, 2004. Factual findings concerning the nine workers at issue are driven by one statutory definition during the relevant period and another statutory definition thereafter. Any of the nine workers that satisfied the statutory definition in former Subsection 440.02(15)(d)1, Florida Statutes (2003), of an independent contractor should not have been included in that part of the proposed penalty attributable to the relevant period. Effective January 1, 2004, however, Subsection 440.02(15)(d)1, Florida Statutes (2003), no longer excludes independent contractors in the construction industry from the definition of an employee. Thus, a determination of whether a worker was an independent contractor is not relevant to that portion of the proposed penalty covering any part of the audit period after December 31, 2003. Effective January 1, 2004, Subsection 440.02(15)(c)2, Florida Statutes (2003), no longer excludes a subcontractor, including those that would have satisfied the former definition of an independent contractor, from the definition of an employee unless the subcontractor either executes a valid exemption election or otherwise secures payment of compensation coverage as a subcontractor. There is insufficient evidence to support a finding that any of the nine workers at issue in this proceeding either elected a valid exemption or otherwise secured payment for compensation coverage after December 31, 2003. The nine workers at issue in this proceeding are not excluded from the definition of an employee after December 31, 2004, even if they were independent contractors throughout the audit period. Except for constitutional arguments raised by Respondent over which DOAH has no jurisdiction, Respondent owes that part of the penalty attributable to any period after December 31, 2003. It is undisputed that the nine workers included in that part of the penalty assessment attributable to the relevant period were subcontractors throughout the audit period. Respondent's ledger clearly treated the workers as subcontractors and reported their earnings on Form 1099 for purposes of the federal income tax. Petitioner treated the workers as subcontractors in the penalty calculation. Customers of Respondent paid Respondent for installation of floor coverings they purchased from Respondent, and Respondent paid each of the nine workers to install the floor coverings. The Workers' Compensation Law in effect during the relevant period did not expressly exclude from the definition of an employee those subcontractors who executed a valid exemption election or otherwise secured payment of compensation coverage as a subcontractor. Findings concerning the existence of an exemption election or payment of compensation coverage are neither relevant nor material to the statutory definition of an employee during the relevant period. During the relevant period, the nine workers at issue were excluded from the definition of an employee only if they satisfied the definition of an independent contractor in former Subsection 440.02(15)(d)1, Florida Statutes (2003). Each of the nine workers were required to satisfy all of the following requirements: The independent contractor maintains a separate business with his or her own work facility, truck, equipment, materials, or similar accommodations; The independent contractor holds or has applied for a federal employer identification number, unless the independent contractor is a sole proprietor who is not required to obtain a federal employer identification number under state or federal requirements; The independent contractor performs or agrees to perform specific services or work for specific amounts of money and controls the means of performing the services or work; The independent contractor incurs the principal expenses related to the service or work that he or she performs or agrees to perform; The independent contractor is responsible for the satisfactory completion of work or services that he or she performs or agrees to perform and is or could be held liable for a failure to complete the work or services; The independent contractor receives compensation for work or services performed for a commission or on a per-job or competitive-bid basis and not on any other basis; The independent contractor may realize a profit or suffer a loss in connection with performing work or services; The independent contractor has continuing or recurring business liabilities or obligations; and The success or failure of the independent contractor's business depends on the relationship of business receipts to expenditures. The preponderance of evidence shows that each of the nine workers at issue was an independent contractor during the relevant period. Respondent conducted the ordinary course of its trade or business with each of the nine workers in substantially the identical manner. None of the workers shared office space with Respondent. Each worker used his or her own truck, equipment, and tools to transport the floor coverings sold by Respondent and to install them in a customer's premises. Petitioner admits that Walega was a sole proprietor. Each of the other workers either held a federal employer identification number or was a sole proprietor who was not required to obtain a federal employer identification number. Each worker agreed to perform specific services or work for specific amounts of money and controlled the means of performing the services or work. Each worker incurred his or her own expenses to install floor coverings. Each worker transported floor coverings and necessary materials to the work site in the worker's own truck and used his or her own tools to perform the work. Each worker exercised independent professional judgment to perform the work. Respondent did not perform any pre-installation site inspection and did not perform any site preparation. Respondent did not train workers, instruct workers on how to perform their work, did not supervise their work while it was being performed, and did not perform any post-installation site inspection unless Respondent received a customer complaint. Each worker was responsible for the satisfactory completion of work or services that he or she performed. Each worker was liable to Respondent and the customer for any failure to complete the work or services or for inferior workmanship. Each worker warranted his or her work to the customer's satisfaction and absorbed the costs of rework and any damage to the customer's premises. Respondent paid each worker for work or services performed on a per-job or competitive-bid basis rather than any other basis. Respondent negotiated the price paid to a worker on a square-foot basis. The price did not change regardless of the amount of time the job required or the number of helpers the worker paid to assist the worker on the job. Each worker realized a profit or suffered a loss in installing floor coverings sold by Respondent. Each worker performed work for other vendors and had continuing or recurring business liabilities or obligations apart from installing floor coverings for Respondent. Each worker depended on the relationship of business receipts of expenditures for the success or failure of the worker's business. Each worker maintained his or her own occupational and professional licenses. Each worker maintained his or her own liability insurance. Respondent required each worker to sign a written form stating that the worker was an independent contractor. The form acknowledged the workers' warranty obligations and his or her obligations for their own taxes and insurance. Each form disclosed the workers' social security number or federal employer identification number. Respondent did not withhold federal income taxes from the payments to workers. Petitioner did not explicate the basis for reducing the proposed assessment in the Second Amended Order. However, the evidence reveals that the penalty reduction resulted from the exclusion of corporate subcontractors from the penalty base. The business relationship between Respondent and its corporate subcontractors during the relevant period was substantially the same as that between Respondent and the nine workers at issue. Early in this administrative proceeding on April 8, 2004, the compliance officer advised the owners that she was unable to release the stop work order against Respondent unless she could verify in Petitioner's data base, in relevant part, that the nine workers at issue each had a valid exemption or had insurance. However, Petitioner's database would not have disclosed compensation coverage maintained by a subcontractor through a leasing company. The compliance officer's advice to the owners did not reflect the law in effect during the relevant period. The Workers' Compensation Law in effect during the relevant period did not expressly exclude from the definition of an employee those workers who executed a valid exemption election or otherwise secured payment of compensation coverage as a subcontractor. The law excluded subcontractors from the definition of an employee only if the subcontractors satisfied the statutory definition of an independent contractor. The compliance officer made no effort to determine whether any of the workers she included in the penalty base satisfied the definition of an independent contractor. The compliance officer never advised the owners that establishing a subcontractor as an independent contractor would avoid part of the assessment against Respondent during the relevant period. The compliance officer never advised the owners that Respondent was free to choose to be represented by counsel during the audit process. The compliance officer told the owners that the only thing Respondent could do to avoid the assessment was to provide a certificate of insurance or an exemption for each of the subcontractors included in the penalty base. The compliance officer admitted that she was unaware that a subcontractor who was an independent contractor during the relevant period was legally excluded from the penalty base. Counsel for Respondent advised the compliance officer of the correct legal standard on April 12, 2004, but the compliance officer refused to release the stop work order unless Respondent paid the assessed penalty. The compliance officer knew that Walega had held a valid exemption at various times in the past as a sole proprietor. She knew Walega had renewed the exemption on October 29, 2003, for five years. However, Petitioner's database showed the exemption had expired on January 1, 2004, by operation of new law. Walega provided Respondent with a copy of the exemption he renewed on October 29, 2003. The exemption stated on its face that it was effective for five years. The owners had no actual knowledge that the exemption expired on January 1, 2004, as a result of a change in the Workers' Compensation Law. Petitioner admits that it issued the exemption to Walega knowing that the exemption would expire on January 1, 2004. Petitioner issued the exemption so that Walega could use it until January 1, 2004.
Recommendation Based on the Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order dismissing the disputed charges against Respondent for the relevant period, refunding any overpayment by Respondent, and sustaining the remaining allegations and penalties against Respondent. DONE AND ENTERED this 27th day of August, 2004, 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 27th day of August, 2004. COPIES FURNISHED: David C. Hawkins, Esquire Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 Susan McLaughlin, Esquire Law Offices of Michael F. Tew Building 800, Suite 2 6150 Diamond Center Court Fort Myers, Florida 33912 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Findings Of Fact 10. The factual allegations contained in the Stop-Work Order and Order of Penalty Assessment issued on February 17, 2009, the Amended Order of Penalty Assessment issued on May 19, 2009, and the 2nd Amended Order of Penalty Assessment issued on June 5, 2009, which are fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
The Issue The issues in this case are whether Respondent, Doherty Home Repair, Inc., failed to obtain workers’ compensation coverage that meets the requirements of chapter 440, Florida statutes (2017); and, if so, whether the penalty assessed in the 2nd Amended Order of Penalty Assessment was properly calculated.
Findings Of Fact Based on the evidence and stipulated facts, the undersigned makes the following Findings of Fact: Respondent was actively involved in business operations in the state of Florida during the period of January 22, 2014, through January 21, 2016, inclusively. Respondent received the Stop-Work Order and Order of Penalty Assessment from the Department on January 21, 2016. Respondent received the Request for Production of Business Records for Penalty Assessment Calculation from the Department on February 10, 2016. Respondent was an "employer," as defined in chapter 440, throughout the penalty period. Respondent received the Amended Order of Penalty Assessment from the Department on March 10, 2016. Respondent received the 2nd Amended Order of Penalty Assessment from the Department on July 5, 2016. All of the individuals listed on the penalty worksheet of the 2nd Amended Order of Penalty Assessment were "employees" of Respondent during the periods of noncompliance listed on the penalty worksheet of the Amended Order of Penalty Assessment. None of the individuals listed on the penalty worksheet of the 2nd Amended Order of Penalty Assessment had a valid Florida workers’ compensation coverage exemption at any time during the periods of noncompliance listed on the penalty worksheet of the Amended Order of Penalty Assessment. Respondent did not secure the payment of workers’ compensation insurance coverage, nor have others secured the payment of workers’ compensation insurance coverage, for any of the individuals named on the penalty worksheet of the 2nd Amended Order of Penalty Assessment during the periods of noncompliance listed on the penalty worksheet of the 2nd Amended Order of Penalty Assessment. None of the individuals listed on the penalty worksheet of the 2nd Amended Order of Penalty Assessment were "independent contractors" hired by Respondent for any portion of the periods of noncompliance listed on the penalty worksheet. Wages or salaries were paid by Respondent to its employees listed on the penalty worksheet of the 2nd Amended Order of Penalty Assessment, whether continuously or not, during the corresponding periods of noncompliance listed on the penalty worksheet of the 2nd Amended Order of Penalty Assessment. The Request for Production of Business Records for Penalty Assessment Calculation was served on Respondent on April 2, 2016. Respondent failed to provide all of the required business records for the period requested in the Request for Production of Business Records for Penalty Assessment Calculation. The employees on the penalty worksheet of the 2nd Amended Order of Penalty Assessment are classified under the correct class codes, as defined by the National Council on Compensation Insurance, Inc. ("NCCI"), "Scopes® Manual." The approved manual rates used on the penalty worksheet of the 2nd Amended Order of Penalty Assessment, as defined by the NCCI Scopes® Manual, are the correct manual rates for the corresponding periods of noncompliance listed on the penalty worksheets. Doherty Home Repair, Inc., is Respondent’s correct legal name. The Department is the state agency charged with the responsibility to investigate and enforce the workers’ compensation insurance coverage laws in the state under chapter 440 and to ensure that employers secure workers’ compensation coverage for their employees. § 440.107(3), Fla. Stat. Respondent is a private company providing general construction and home repair services. It maintained its primary business records on a computer during the relevant time periods. Ryan Doherty testified that his work computers were stolen during a "break in" at his office. 2/ However, he had possession of the computers containing most of his business records, for one to one and one-half months after the date the original Stop-Work Order was issued. Respondent did provide 2014 tax and other business records to the Department for purposes of (1) investigating alleged violations of the workers’ compensation insurance coverage laws and (2) calculating a penalty. Byron Fichs Active Electric3/ was included in the records provided by Respondent as an employee, for purposes of a penalty calculation. The period of noncompliance was January 23, 2014, through December 31, 2014. Pet. Ex. 6, p. 19. Gross payroll for the audit period for Byron Fichs Active Electric was determined based upon records provided by Respondent and totaled $4,342.27. Pet. Ex. 6, p. 19. Information contained in Respondent’s U.S. Income Tax Return for 2014 indicated that Respondent paid a total of $640,100.00 in labor-related expenses for 2014. Pet. Ex. 10, p. 62. That amount was broken down into essentially two categories in 2014--Subcontractors and Specific employees. Subcontractors: $535,980.00 of the labor-related expenses was for sub-contractors. Pet. Ex. 10, p. 62. Specific Employees: $104,120.00 of the total labor- expenses ($640,100.00) was attributable to specific employees. Pet. Ex. 10, p. 66, Overflow Statement. However, only $503,674.364/ was included by the Department as Gross Payroll for subcontractors in 2014 on the worksheet for purposes of a penalty calculation. Pet. Ex. 6, p. 19. Tax records for 2014 indicated payments totaling $104,120.00 were made to Seth Anthony, Shawn Bronson, Joseph Horucth, Mark Lucas, John Concepcion, Jordan Beene, James Stift, and Jerry Brunnell. Pet. Ex. 10, p. 66. Due to the payments indicated on the tax and business records, the individuals listed above were included as employees for purposes of penalty calculation. Pet. Ex. 6, p. 19. The amounts in the 2014 tax records were prorated to determine gross payroll for each individual for purposes of penalty calculation. The period of noncompliance for each person was January 23, 2014, through December 31, 2014. Pet. Ex. 6, p. 19. Mr. Doherty was listed as an employee for purposes of penalty calculation. The gross wage attributed to Mr. Doherty in 2014 was based upon the average weekly wage ("AWW"), since the records based on income were more than the AWW. Pet. Ex. 6, p. 19. Mr. Doherty’s period of noncompliance during the year 2014 was April 19, 2014, through December 31, 2014. Pet. Ex. 6, p. 19. Significantly, payroll for the remainder of the penalty audit period (January 1, 2015, through December 31, 2015, and January 1, 2016, through January 21, 2016) was imputed by the Department because it properly determined that Respondent did not provide adequate business records to determine Respondent’s actual payroll.5/ Pet. Ex. 6, pp. 19-20. The four employees that were found working on the job site on the day the Stop-Work Order was issued, as well as Mr. Doherty, a corporate officer, were included by the Department as employees for purposes of imputing payroll and calculating the penalty for the remainder of the audit period, January 1, 2015, through January 21, 2016. Pet. Ex. 6, p. 19. The four employees are identified in Respondent’s business records as Dave Mason, Dan, Erick, and Joe. Pet. Ex. 6, p. 19. Based upon the records provided for the period of January 23, 2014, through December 31, 2014, and the imputed payroll established for the period of January 1, 2015, through January 21, 2016, a penalty of $244,964.44 was calculated. Pet. Ex. 6, p. 19. As a result, a 2nd Amended Order of Penalty Assessment was issued assessing a total penalty of $244,964.44. Pet. Ex. 6, pp. 16-17. After the 2nd Amended Order of Penalty Assessment was issued, Respondent provided the Department with a "massive" amount of additional business records. The actual date of delivery of these additional records to the Department was not clear. Nonetheless, it was clear that it was on a date after the 2nd Amended Order of Penalty Assessment was issued. These business records, despite being voluminous, were incomplete, and the Department’s penalty auditor, if required, would have been unable to calculate or recalculate a penalty based on the records delivered by Respondent after the 2nd Amended Order of Penalty Assessment was issued. A large amount of timesheets for various workers were also received after the issuance of the 2nd Amended Order of Penalty Assessment, but again they were incomplete; and there were no wages associated with any of the timesheets, no hourly rates were stated, and no total amount paid to the employees for the week was listed.6/
Recommendation Based on the Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent, Department of Financial Services, Division of Workers' Compensation, enter a final order finding that Respondent, Doherty Home Repair, Inc., violated the workers’ compensation laws by failing to secure and maintain required workers’ compensation insurance for its employees, and impose a penalty of $244,964.44. DONE AND ENTERED this 27th day of December, 2017, in Tallahassee, Leon County, Florida. S ROBERT L. KILBRIDE 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 27th day of December, 2017.
The Issue Whether Respondent has committed the acts alleged in the Stop Work Order and Order of Penalty Assessment and if so, what penalty should be imposed.
Findings Of Fact The Department is the state agency responsible for enforcing the statutory requirement that employers secure workers' compensation insurance for the benefit of their employees. § 440.107, Fla. Stat. On August 11, 2006, Robert Lambert, the Jacksonville District Supervisor for the Division of Workers' Compensation, Bureau of Compliance, was contacted by Katina Johnson, an investigator for the Division.1/ Based on the information provided to him by Ms. Johnson, Mr. Lambert approved the issuance of a Stop Work Order against Capella Ventures, Inc. The investigator served a Stop Work Order and Order of Penalty Assessment, both by posting at the worksite and by hand delivery, on Capella Ventures. The Department investigator also issued a Request for Production of Business Records for Penalty Assessment, requesting records for a period of three years, from July 31, 2003. These records were requested in order to calculate the penalty required pursuant to Section 440.107, Florida Statutes, for not having workers' compensation insurance. The records were to be used in conjunction with the classification codes contained in the Basic Manual (Scopes Manual) published by the National Council on Compensation Insurance. Records were provided by Capella Ventures' counsel. Based on the records provided, an Amended Order of Penalty Assessment was prepared, assessing a penalty of $8,769.16. Mr. Peter King was, at all times material to this case, an officer of Capella Ventures, along with his father. His father is now deceased. Mr. King admitted that workers from Capella Ventures were assisting his father with a construction project on a home next to the home where they lived. He did not dispute that the workers were performing construction work and that the company had no workers' compensation coverage for them at the time. Nor did he dispute the amount of the penalty reflected in the Amended Order of Penalty Assessment. He contended that while his father performed the framing on the property, one of the two other employees did not have the skill to actually perform framing. The class code used by the Department to determine the appropriate penalty was 5645, which is used for carpentry operations on residential structures. Use of this code was appropriate. Capella Ventures filed for an address change in August of 2006, and voluntarily dissolved in January of 2008. No evidence was presented regarding what actions were taken by Capella Ventures with respect to the dissolution of the corporation. No evidence was presented regarding what, if any, distribution of assets was undertaken at the time of dissolution. No evidence was presented to indicate that any successor corporation or entity was formed upon the dissolution of Capella Ventures.
Recommendation Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED: That a final order be entered finding that Respondent, Capella Ventures, Inc., violated Section 440.107, Florida Statutes, by failing to secure workers' compensation for its employees, and assessing a penalty of $8,769.16. DONE AND ENTERED this 10th day of September, 2008, in Tallahassee, Leon County, Florida. S LISA SHEARER NELSON 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 September, 2008.
The Issue The issues are whether Petitioner was in violation of the workers' compensation requirements of Chapter 440, Florida Statutes (2006),1/ and, if so, what penalty should be assessed.
Findings Of Fact The Department 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 corporation, incorporated in the State of Florida, which conducted business operations in Florida during the period of February 8, 2004, through February 8, 2007. At all times relevant to this proceeding, David Griswold was the president, secretary, and registered agent of Griswold, Inc., as well as its sole employee. Lloyd Hillis is an investigator for the Department's Division of Workers' Compensation, Bureau for Compliance. As part of his job responsibilities, Mr. Hillis visits work sites of construction and non-construction businesses to determine if they are complying with applicable workers' compensation laws. On February 8, 2007, Mr. Hillis, on behalf of the Department, conducted a routine compliance check of all contractors in the Sunset Point Subdivision in Clearwater, Florida. During this compliance check, Mr. Hillis observed that Mr. Griswold was about to install kitchen cabinets at a house under construction at 2523 Colony Reed Lane. Cabinet installation is considered carpentry and is defined as construction work. As such, employees performing this work are required to have workers' compensation coverage unless they are exempted from such coverage. The type of work being performed by Mr. Griswold, cabinet installation or carpentry, has been designated by the SCOPES Manual as Class Code 5437. The Department has adopted the SCOPES Manual by reference in Florida Administrative Code Rule 69L-6.021. If and when there have been violations of the workers' compensation laws, the class codes are used in calculating the appropriate penalty. On the day of the inspection, Mr. Griswold told Mr. Hillis that he was employed by Griswold, Inc., that he was the sole employee of the corporation, and that he had an exemption from having workers' compensation coverage. Upon checking the computer database maintained by the Department, Mr. Hillis determined that Mr. Griswold did not have an exemption and had not had an exemption since 2002. Moreover, the same computer database showed that Griswold, Inc., did not have workers' compensation coverage. On February 8, 2007, Mr. Hillis issued a Stop Work Order against Griswold, Inc., after he determined that Mr. Griswold did not have workers' compensation insurance. That same day, Mr. Hillis issued to Mr. Griswold a Request for Production of Business Records for Penalty Assessment Calculation (hereinafter referred to as "Request for Production of Business Records") to determine the amount of the penalty assessment. In response to the Request for Production of Business Records, Mr. Griswold provided the Department with payroll documents for the period from 2004 to 2007 and an unsigned 2006 Federal Income Tax Return. The payroll documents submitted by Petitioner consisted of pay stubs, which reflected that Texwood Industries, a company in Texas, had issued payroll checks to Mr. Griswold as an employee of Petitioner. According to the records, during the time period from 2004 through 2007, the only employee who worked for Petitioner was Mr. Griswold. During this proceeding, Petitioner did not dispute that from February 8, 2004, through February 8, 2007, Mr. Griswold was not covered by workers' compensation coverage and did not have an exemption from such coverage. Mr. Hillis used the payroll documents provided to him by Mr. Griswold as the basis for calculating the penalty assessment for the period from February 8, 2004, through February 8, 2007. However, Mr. Hillis was unable to consider the 2006 Federal Income Tax Return because it was not signed.2/ Even if the 2006 Federal Income Tax Return had been signed, the 2004 and 2005 tax records were also needed. The tax records for all three years, if provided to the Department, would have been considered and may have affected or altered the amount of the penalty assessment. The Department correctly calculated the penalty assessment using the statutory guidelines in Subsection 440.107(7)(d), Florida Statutes. The calculation was based on the money paid to Petitioner's sole employee, Mr. Griswold; the class code assigned to the job being performed by Mr. Griswold, utilizing the SCOPES Manual; and the applicable approved manual rate. Based on that calculation, the correct penalty assessment in this case is $52,685.67.
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 issued February 8, 2007, and the Amended Order of Penalty Assessment issued February 21, 2007, which assigns a penalty of $52,685.67. DONE AND ENTERED this 7th day of November, 2007, 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 7th day of November, 2007.
