The Issue Whether the Respondent was required to carry workers' compensation insurance coverage for its employees and, if it failed to do so, whether the Amended Notice and Penalty Assessment Order is correct.
Findings Of Fact At all times material to this case, the Petitioner, the Department of Labor and Employment Security, Division of Workers’ Compensation was the state agency charged with the responsibility of administering compliance with state laws governing workers’ compensation (WC). The Respondent, A. J. Interiors, Inc., is a Florida corporation doing business at 1825 Mears Parkway, Margate, Florida. At all times material to this case, Robert Barnes was an investigator employed by the Department to perform compliance investigations for WC. On July 6, 2000, Investigator Barnes performed a random construction site inspection at a new construction project located at 16687 Jog Road, Delray Beach, Florida. While at that location, Investigator Barnes observed two men wearing T-shirts bearing the company name "A. J. Interiors, Inc." along with its telephone number. The men were installing metal framing in order to hang and finish drywall. The field interview with the two men, identified in this record as Sergio and Jaime Gonzalez, revealed that neither was covered by WC insurance. This information was later confirmed by Investigator Barnes. Additionally, neither man had obtained an exemption from coverage as the sole proprietor of a business. Based upon the field interview of the two men, a review of Department records, and contact with the Respondent's insurance agent, Investigator Barnes correctly determined that the men were the Respondent’s "employees” as that term is defined by the WC law. The men did not supply materials to the job site but agreed to perform work based upon a price described as a "per board" industry standard rate. In other words, the men would hang the drywall at a flat rate (established by and consistent with the local industry standard) for each job accepted through the Respondent. If the work were completed, the men expected to be paid by the Respondent. The men did not contract with or work for the general contractor of the job. The only requirement for payment was the performance of the work. The only risk incurred by the workers related to their relationship with the Respondent. Having concluded that the workers were not covered by WC and were not exempt, Investigator Barnes caused a stop work order to be issued against the Respondent. In conjunction with that order, the Department requested copies of the Respondent's business records. A review of the "vendor accounts” supplied by the Respondent established that its workers were paid amounts presumably based upon the number of boards hung per job identified. The payments were not always the same amount as the number of boards hung for a given job could vary. Additionally, the Respondent allowed workers to receive "draws" against the expected payments for uncompleted jobs. The Respondent’s claim that the workers were independent contractors has not been deemed credible. Based upon the testimony of the Respondent's witness all of the workers performed as outlined by the men interviewed by Investigator Barnes. The Respondent did not have a valid WC policy during the three years preceding the stop work order. The Amended Notice and Penalty Assessment Order prepared by Investigator Barnes accurately calculates the amounts owed by the Respondent for the three-year period.
The Issue The issue in this case is whether Respondent violated the provisions of chapter 440, Florida Statutes,1/ by failing to secure the payment of workers’ compensation, as alleged in the Stop-Work Order and Third Amended Order of Penalty Assessment, and if so, what is the appropriate penalty.
Findings Of Fact The Department is the state agency responsible for enforcing the statutory requirement that employers secure workers’ compensation coverage for the benefit of their employees. Respondent is a Florida, for-profit corporation with its principal office located at 3539 Apalachee Parkway, Suite 3-204, Tallahassee, Florida 32311. Respondent was incorporated on October 26, 2012, and has been engaged in the construction industry in Florida as a roofing company since October 31, 2012. From Respondent’s inception, Richard Paul Morejon has been Respondent’s president, secretary, and treasurer, and has received compensation from Respondent’s roofing contract proceeds. In July or August 2013, the Department received a complaint alleging that Respondent was not in compliance with Florida's Workers' Compensation Law. The Department assigned investigation of the complaint to then-Department investigator Carey Horn. Based upon materials apparently gathered and reports purportedly authored by Investigator Horn, the Department issued a stop-work order dated September 23, 2013, to Respondent alleging that Respondent did not secure workers’ compensation coverage for its employees as required. The Department, however, did not call Investigator Horn as a witness, and, despite Mr. Morejon’s attempt to subpoena her to testify in this case, Investigator Horn could not be found. The Department’s delay in referring this case for a final hearing either caused or contributed to Investigator Horn’s unavailability as a witness in this proceeding. The reports and conclusions of Investigator Horn were prepared in anticipation of litigation and are hearsay.2/ Therefore, they have not been used to support factual findings in this Recommended Order unless corroborative of non-hearsay evidence.3/ In addition, on October 20, 2014, the Department filed a document entitled "Joint Prehearing Stipulation" signed by the Department’s counsel and Mr. Morejon purporting to contain a number of stipulated facts and factual admissions by Mr. Morejon on behalf of Respondent. However, at the final hearing, the manner in which the Joint Prehearing Stipulation was procured was brought into question when Mr. Morejon advised that he was told to sign it and that the stipulation would be “ironed out” at the final hearing. The Department’s counsel confirmed that the conversation occurred regarding the correct classification code to be utilized in calculating the penalty against Respondent. Accordingly, it was ruled at the final hearing that the Joint Stipulation would not be used to support a finding regarding the classification. Upon further consideration of Mr. Morejon’s comments and the Department’s counsel’s admission as to the manner in which at least one of the stipulated facts was secured, the undersigned has not utilized and otherwise rejects as untrustworthy the document entitled "Joint Prehearing Stipulation" filed in this case on October 20, 2014, finding that it does not represent any bona fide stipulations or admissions. Nevertheless, in his testimony during his deposition and at the final hearing in this case, Mr. Morejon admitted a number of factual matters demonstrating that Respondent was not in compliance with Florida’s Workers’ Compensation Law on September 23, 2013. The factual findings in this Recommended Order are derived from Mr. Morejon’s testimony, non-hearsay evidence, and corroborative hearsay submitted during the final hearing. On September 23, 2013, Investigator Horn visited a jobsite at a residence located at 5747 Sioux Drive, Tallahassee, Florida (Jobsite), where Respondent, through employees, was performing roofing and related activities. On that date, Mr. Morejon was on the ground supervising two men on the roof engaged in roofing activities and two men on the ground picking up debris, for a total of five men, including Mr. Morejon, at the Jobsite working for Respondent. There was another man sitting in a vehicle at the Jobsite that day who never did any work for Respondent. There is no evidence that Respondent provided workers’ compensation coverage for any of the men working at the Jobsite that day. The two men working on the roof were Guadalupe Perez- Martinez and Hermilo Perez-Martinez. At the time, Guadalupe Perez-Martinez had an exemption from the requirements for workers’ compensation through his company, Lupe Builders, LLC. Although Hermilo Perez-Martinez previously had an exemption from the requirements of workers’ compensation through Perez Builders, LLC, that exemption expired the previous month, on August 3, 2013. There is no evidence that the two men picking up debris, Hermilo Pantaleon Paz and Timotio Aguilar, qualified for an exemption from workers’ compensation coverage that day. Although Mr. Morejon had an exemption from the requirements of Florida's Workers' Compensation Law for a separate and unaffiliated company, Comerxio, Mr. Morejon did not have an exemption from the coverage requirements of Florida's Workers' Compensation Law for Respondent on September 23, 2013, or during the relative time periods of this case. According to Mr. Morejon, other than Guadalupe Perez- Martinez, none of the other workers at the Jobsite that day had ever performed work for Respondent. Mr. Morejon also recalled that another person on the Jobsite that day, David Amaro- Rodriguez, just sat in a car and performed no work. Mr. Morejon’s recollections are unrefuted. The Department’s delay in referring this case undoubtedly affected the ability of either party to call other witnesses, including a number of the workers or the investigator, who were at the Jobsite that day. During the relevant time periods, Respondent did not maintain a bank account to pay its employees and it did not directly pay Mr. Morejon or other employees. Rather, historically, proceeds from roofing contracts performed by Respondent were deposited into a bank account held by another corporation named "A 2 Z Roofing, Inc." After paying various expenses, including permit fees, materials, and other costs associated with the roofing contracts, A 2 Z Roofing, Inc., paid Mr. Morejon, and any others performing work under the contracts, by check. On September 23, 2013, the Department personally served the Respondent with a stop work order (Stop Work Order) and a request for production of business records for penalty assessment calculation (Records Request). The Records Request requested Respondent’s corporate records, licenses, payroll documents, account documents, disbursements, contracts for work, employee leasing information, subcontractors, and workers' compensation coverage or exemptions "for the period from 10/31/2012 through 09/23/2013 [the Non- Compliance Period]." The Records Request further stated, in part: The employer should scan and email the records requested herein to the investigator with the Department of Financial Services, Division of Workers’ Compensation for examination within 5 business days after receipt of this Request for Production of Business Records. If the employer fails to provide the required business records sufficient to enable the Department of Financial Services, Division of Workers’ Compensation to determine the employer’s payroll for the period requested for the calculation of the penalty provided in section 440.107(7)(d), F.S., the imputed weekly payroll for each employee, corporate officer, sole proprietor, or partner shall be the statewide average weekly wage as defined in section 440.12(2), F.S. multiplied by 1.5. The Department shall impute the employer’s payroll at any time after ten, but before the expiration of twenty business days after receipt by the employer of a written request to produce such business records. (FAC 69L-6.028) If the employer is unable to scan and email these documents, please mail or deliver copies to our office located at 200 East Gaines Street Tallahassee, FL, 32399-4228. The next day, September 24, 2013, Mr. Morejon hand delivered Respondent’s business records to the Department in response to the Records Request. The business records delivered by Mr. Morejon included roofing permit applications; roofing permits issued to A to Z Roofing, Inc.; several contracts between homeowners and A to Z Roofing, Inc., identifying Mr. Morejon as project manager; five checks from A 2 Z Roofing, Inc. (not Respondent), payable to the City of Tallahassee; and 24 checks from A 2 Z Roofing, Inc., payable to "Mr. Morejon – Petty Cash." The 24 checks from A 2 Z Roofing, Inc., to Mr. Morejon totaled $55,955.4/ The checks, dated from November 17, 2012, to August 23, 2013, constitute all of the money paid to Mr. Morejon from Respondent’s roofing contract proceeds during the Non- Compliance Period. In addition to the 24 checks payable to Mr. Morejon, it is evident that the Department also received other checks from A 2 Z Roofing, Inc., from the records requests made in this case and in DOAH Case No. 14-2829, made payable to Lupe Builders, LLC, Gene Pfund, and perhaps others, during the Non- Compliance Period. The Department, however, did not utilize those records in its determinations in this case. In fact, the Department’s penalty auditor did not utilize payments made by A 2 Z Roofing, Inc., in calculating the penalty because, in the Department’s penalty auditor’s opinion, Respondent was not compliant because it did not have a bank account. Final Hearing Transcript, pp. 232-233. The determination of payroll, however, is not dependent on whether an employer has a bank account or whether the employer is the entity that pays its employees. Rather, the Department’s own rule defining payroll considers "[p]ayments, including cash payments, made to employees by or on behalf of the employer" in determining payroll. See Fla. Admin. Code Rule 69L-6.035(1)(b)(emphasis added). During the hearing, the Department, through counsel, stated that the payments from A 2 Z Roofing to Lupe Builders, LLC, or Gene Pfund were not considered because those entities had valid exemptions from the requirements of workers’ compensation. In addition, the Department complained that their receipt of bank records from A 2 Z Roofing, Inc., had been delayed and took the position that bank records from A 2 Z Roofing, Inc., would not be utilized in this case. The Department’s own discovery tactics, however, were responsible for delays in responses to its requests for records from A 2 Z Roofing, Inc.5/ Considering the records produced by Respondent introduced into evidence in this case, the testimony of Mr. Morejon regarding the checks payable to him from A 2 Z Roofing, Inc., the Department’s unwillingness to utilize other records from A 2 Z Roofing, Inc., in its possession, and evidence of the total payments to Mr. Morejon during the Non- Compliance Period, it is found that the Department’s decision to impute payroll is unfounded. Imputation of payroll would improperly allow the Department to benefit from its own lack of analysis. The imputed payroll determined by the Department in the amount of $347,334.69 exceeds Respondent’s total revenue for the Non- Compliance Period by more than $100,0006/ and is based, at least in part, upon hearsay evidence prepared by a witness whose unavailability was likely caused by the Department’s undue delay in referring Respondent’s Request for Hearing. Furthermore, the records produced by Respondent and the evidence in this case are sufficient to determine Respondent's payroll for use in the calculation of a penalty pursuant to section 440.107(7)(d)l. The evidence demonstrated that the $55,955 reflected in checks payable to Mr. Morejon from A 2 Z Roofing, Inc., represent all of the payments to Respondent’s employees who were not covered by workers’ compensation while performing services for roofing contracts during the Non-Compliance Period, other than payments reflected in records the Department may have in its possession but did not present at the final hearing. It was also shown, however, that the $55,955 was paid to Mr. Morejon without the maintenance of a cash log or cash journal and without securing the payment of workers' compensation coverage for Mr. Morejon or others receiving cash payments from those funds. And, there is no evidence that any of those employees were exempt from the requirements of workers’ compensation. Respondent was required to secure workers' compensation coverage and failed to secure that coverage under Florida’s Workers’ Compensation Law for its employees who were paid $55,955.00 during the Non-Compliance Period. Therefore, the Department was justified in issuing the Stop Work Order delivered to Mr. Morejon on September 23, 2013. Although the Department failed to show that Respondent’s payroll should be imputed, the evidence adduced at the final hearing demonstrated that a penalty should be imposed against Respondent for failure to pay workers’ compensation for its employees who were paid a total of $55,955 during the Non- Compliance Period. For determining the appropriate penalty, the Department has adopted a penalty calculation worksheet to aid in calculating penalties against employers pursuant to section 440.107, Florida Statutes. See Florida Administrative Code Rule 69L-6.027. The classification codes listed in the National Council on Compensation Insurance ("NCCI") Scopes® Manual have been adopted by the Department through Florida Administrative Code Rules 69L-6.021 and 69L-6.031. Classification codes are four-digit codes assigned to occupations by NCCI to assist in the calculation of workers' compensation insurance premiums. Under the descriptions listed in the NCCI Scopes® Manual, the proper classification code for Respondent’s employees is 5551, which corresponds to "Roofing - All Kinds and Drivers." The Department has adopted the approved manual rates in the Florida Administrative Code, as authorized by section 440.107(7). Rule 69L-6.027 adopts form number DFS-F4-1595, the Penalty Calculation Worksheet, which specifically incorporates approved manual rates. As accurately set forth in the Penalty Calculation Worksheets attached to the Amended Order of Penalty Assessment, the approved manual rates for the following periods of Non- Compliance were: From 10/31/2012 to 12/31/2012 the rate was 17.10; From 01/01/2013 to 06/30/2013 the rate was 18.17; From 07/01/2013 to 09/23/2013 the rate was 18.03. A breakdown of Respondent’s total payroll of $55,955 based upon check dates corresponding to the manual rates in effect during the Non-Compliance Period, is as follows: From 10/31/2012 to 12/31/2012 payroll totaled $6,300; From 01/01/2013 to 06/30/2013 payroll totaled $33,655; From 07/01/2013 to 09/23/2013 payroll totaled $16,000. Calculation of the penalty, using the Penalty Calculation Worksheet and Respondent’s payroll based on records (as opposed to imputed) during the Non-Compliance Period, results in a total penalty of $15,116.12, as follows: Calculation Method (a) Class Code (b) Non-Compliance period (c) Gross Payroll (d) /100 (e) Approved Rates (f) Premium (d)X(e) (g) Penalty (f)X 1.5 Records 5551 10/31/12 12/31/12 6,300 63 17.10 1,077.30 1,616.25 Records 5551 01/01/13 06/30/13 33,655 336.55 18.17 6,115.11 9,172.67 Records 5551 07/01/13 09/23/13 16,000 160 18.03 2,884.80 4,327.20 Totals: $55,955.00 $15,116.12 The clear and convincing evidence in this proceeding demonstrated that Respondent was in violation of Florida’s Workers’ Compensation law because it employed one or more uninsured employees in the construction industry throughout the Non-Compliance Penalty, and that the appropriate penalty, based upon Respondent’s payroll, is in the amount of $15,116.12.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department enter a Final Order consistent with this Recommended Order upholding the Stop Work Order, and reducing the penalty set forth in the Amended Order of Penalty Assessment to $15,116.12 by recalculating the penalty based upon Respondent’s payroll of $55,955.00 during the Non-Compliance Period. DONE AND ENTERED this 5th day of February, 2015, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of February, 2015.
The Issue Whether GMD Carpet, Inc., failed to comply with coverage requirements of the workers’ compensation law, Chapter 440, Florida Statutes, and if so, what penalty should be imposed.
Findings Of Fact Petitioner is the state agency responsible for enforcing provisions of Florida law, specifically Chapter 440 of the Florida Statutes, which require that employers secure workers’ compensation coverage for their employees. Respondent, whose principal is Emmanuel Simone, Jr. (Mr. Simone), is in the business of providing carpet installation services. At all times material to this case, Respondent is an employer within the meaning of Section 440.02(16)(a), Florida Statutes. At all times material to this case, Respondent was legally obligated to provide workers' compensation insurance in accordance with the provisions of Chapter 440, Florida Statutes, for Mr. Simone and four other individuals employed by GMD. On or about May 21, 2004, Petitioner became aware that Mr. Simone and another GMD employee were working a carpet installation job in Broward County, Florida. Upon inquiry, Petitioner accurately determined that GMD had not furnished the required coverage, and that there was no valid exemption from the coverage requirement. Accordingly, on May 21, 2004, a Stop Work and Penalty Assessment Order was properly entered. Thereafter, Petitioner reviewed Respondent's payroll records, which revealed that GMD employed three other individuals under circumstances which obliged Respondent to provide workers’ compensation for these employees. Based upon Respondent's payroll records, Petitioner recalculated the penalty assessment to be imposed in accordance with the requirements of Chapter 440, and issued an Amended Order in the amount of $1,916.65 on May 25, 2004. Respondent did not intend to violate the law. Rather, he mistakenly believed that he held a valid exemption; that his wife was not an employee, but rather a helper; and that the three other carpet installers were subcontractors to whom he had no insurance-related obligations. It is undisputed that Petitioner correctly calculated the penalty prescribed by law in the amount of $1,916.65 based upon Respondent's records and applicable law.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Petitioner enter a final order confirming the Stop Work Order and imposing a penalty in the amount of $1,916.65, as set forth in the Amended Order. DONE AND ENTERED this 15th day of October, 2004, in Tallahassee, Leon County, Florida. S FLORENCE SNYDER RIVAS 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 15th day of October, 2004. COPIES FURNISHED: Colin M. Roopnarine, Esquire Department of Financial Services Division of Workers’ Compensation 200 East Gaines Street Tallahassee, Florida 32399-4229 Emmanuel Simone, Jr. Debra Simone GMD Carpet, Inc. 717 North 31st Avenue Hollywood, Florida 33021 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florid a 32399-0300 Pete Dunbar, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Findings Of Fact 9. The factual allegations in the Stop-Work Order and Order of Penalty Assessment issued on August 23, 2010, and the 2nd Amended Order of Penalty Assessment issued on March 10, 2011, 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 Jeff Atwater, Chief Financial Officer of the State of Florida, or his designee, having considered the record in this case, including the Stop-Work Order and Order of Penalty Assessment, the Amended Order of Penalty Assesment, and the 2nd Amended Order of Penalty Assessment served in Division of Workers’ Compensation Case No. 10-216-D7, and being otherwise fully advised in the premises, hereby finds that: 1. On August 23, 2010, 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. 10-216-D7 to Chastang & Siegel Custom Builders, LLC (Chastang). The Stop-Work Order and Order of Penalty Assessment included a Notice of Rights wherein Chastang 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 September 7, 2010, the Stop- Work Order and Order of Penalty Assessment was served on Chastang by certified mail. 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 October 5, 2010, the Department issued an Amended Order of Penalty Assessment to Chastang in Case No. 10-216-D7. The Amended Order of Penalty Assessment assessed a total penalty of $82,917.81 against Chastang. The Amended Order of Penalty Assessment included a Notice of Rights wherein Chastang 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 Amended Order of Penalty Assessment was served on Chastang by certified mail on October 23, 2010. A copy of the Amended Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On or about November 8, 2010, Chastang filed a timely Petition for 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. 10- 10826. 6. On March 10, 2011, the Department issued a 2nd Amended Order of Penalty Assessment to Chastang in Case No. 10-216-D7. The 2nd Amended Order of Penalty Assessment assessed a total penalty of $1,000.00 against Chastang. The 2nd Amended Order of Penalty Assessment was served on Chastang on March 14, 2011 through the Division of Administrative Hearings. A copy of the 2nd Amended Order of Penalty Assessment is attached hereto as “Exhibit C” and is incorporated herein by reference. 7. On March 28, 2011, the Department filed a Notice of Settlement in DOAH Case No. 10-10826. A copy of the Notice of Settlement filed by the Department is attached hereto as “Exhibit D.” 8. On March 28, 2011, Administrative Law Judge W. David Watkins entered an Order Closing File, relinquishing jurisdiction to the Department. A copy of the March 28, 2011 Order Closing File is attached hereto as “Exhibit E.”
The Issue Whether Respondent violated the provisions of chapter 440, Florida Statutes (2016), by failing to secure the payment of workers' compensation coverage, as alleged in the Stop-work Order.1/
Findings Of Fact The Department is the state agency responsible for enforcing the requirement of chapter 440 that employers in Florida secure the payment of workers' compensation coverage for their employees and corporate officers. § 440.107, Fla. Stat. Respondent, M.C. Jennings Jr. Construction Corp., is an active Florida for-profit corporation with its principal office located at 3125 Mundy Street, Miami, Florida 33133. Miles Jennings, Jr., is Respondent's president and registered agent. Respondent admits that during the time period of January 8, 2014, to January 7, 2016, Respondent was a business engaged in the construction industry. The Investigation On January 6, 2016, the Department's compliance investigator, Humberto Rivero, conducted a compliance check at Respondent's business address in response to a public referral. Prior to visiting the business, Mr. Rivero checked the Division of Corporations' website to obtain the federal employee identification number and information on the corporate officers. After this, Mr. Rivero searched the Coverage and Compliance Automated System ("CCAS") to verify whether or not Respondent is covered with workers' compensation insurance and whether there is an exemption for the corporate officers. Mr. Rivero also searched the National Council on Compensation Insurance ("NCCI"). Mr. Rivero routinely checks for coverage before going out for a site visit in response to public referrals. Upon searching the NCCI database and the CCAS database, Mr. Rivero learned that Respondent had no workers' compensation coverage and so the referral appeared to be accurate. Mr. Rivero also determined there were no exemptions. Next, Mr. Rivero arrived at the business address for Respondent, went into a fenced yard, up the steps to a trailer, and identified himself and the reason he was there. Mr. Rivero described the office trailer as the type he goes into on construction projects. There was a desk, manuals, schedules, and drawings or blueprints on a rack. Mr. Rivero did not personally observe any construction activity at the site. Mr. Rivero spoke with Shawn Denise Welch-Perryman. Ms. Welch-Perryman indicated she did not have access to information on workers' compensation and could not get Mr. Jennings because he was in a meeting and could not to be disturbed. Ms. Welch-Perryman said Ms. Hallman, the property manager for Respondent, may be able to help. Mr. Rivero contacted Darlene Hallman by telephone. Ms. Hallman indicated she did not have access to information on workers' compensation. Ms. Hallman admitted she is an employee of Respondent and has been there for several years. Ms. Hallman said she gets paid by company check, but did not want to disclose how much. After this, Mr. Rivero interviewed Ms. Welch-Perryman, as he had with Ms. Hallman, and Ms. Welch-Perryman admitted to being an employee of Respondent. Ms. Welch-Perryman also gets paid by company check. Mr. Rivero was provided with the name Ed Fowler, Respondent's insurance agent. Mr. Rivero talked to Mr. Fowler to check on whether Respondent was covered. Mr. Fowler said the company did not have coverage, but it was working on it. This information was consistent with the searches Mr. Rivero performed prior to his visit at Respondent's business location. Mr. Rivero told Ms. Welch-Perryman to have Mr. Jennings call him by the end of that day, January 6th. Mr. Jennings did not call Mr. Rivero on the 6th. On January 7, 2016, Mr. Rivero spoke with Mr. Jennings by phone. During this conversation, Mr. Jennings confirmed that the two women were his employees and he did not have insurance, but was working on securing it. Mr. Jennings agreed to meet with Mr. Rivero at the office trailer at 1 p.m. When Mr. Rivero returned that afternoon, the site was locked with the fence closed by padlock. Mr. Rivero called Ms. Welch-Perryman and Ms. Hallman to see why the site was locked and left messages, but received no response. Mr. Rivero called his supervisor, Scarlet Aldana, to inform her of what he found. She advised Mr. Rivero to call Mr. Jennings and tell him of the consequences of not being there and not having insurance. Mr. Rivero called Mr. Jennings and left a message. After waiting about 15 minutes, Mr. Rivero called his supervisor again to explain the situation. Ms. Aldana authorized a Stop- work Order to be issued and posted in a prominent place. Mr. Rivero posted the Stop-work Order on Respondent's mailbox and photographed it. While at the business location, Mr. Rivero was with senior investigator Julio Cabrera. Mr. Rivero was directed by Mr. Cabrera to photograph a dump truck on site with a general contractor's number on it. According to Mr. Rivero, there were many more pieces of equipment, but he focused on photographing the posting of the Stop-work Order and the dump truck. According to the records of the Department of Business and Professional Regulation, an active general contractor license number belongs to Mr. Jennings and Respondent. On January 15, 2016, Mr. Jennings contacted Mr. Rivero to say he had come into compliance by purchasing coverage for nine employees. Mr. Rivero asked for the broker's name and phone number so he could verify coverage. Mr. Rivero spoke by phone with Stan Shelton at Madison Insurance Company. Mr. Shelton verified the company had coverage for nine employees, paid a down payment of $500, and the premium was $31,763. On January 19, 2016, Mr. Rivero met with Mr. Jennings and went over the business records request, informing Mr. Jennings that in order to calculate a penalty, the Department needed certain records. Mr. Jennings was informed of the ten business days he had to submit the records. Penalty Calculation Penalty Auditor Sarah Beal was assigned to calculate the penalty in this case. Ms. Beal did not receive any records from Respondent in response to the business records request. Without any records, Ms. Beal had to impute the gross payroll which is equal to two times the average weekly wage that was in effect when the Stop-work Order was issued. Ms. Beal determined the period of noncompliance to be the full two years of January 8, 2014, to January 7, 2016. Ms. Beal identified the employees on the penalty worksheet from the investigator's on- site observations and narrative. Based on Mr. Rivero's observations on January 6, 2016, and the information he had gathered, Ms. Beal initially used the classification code 8810 listed in the Scopes® Manual, which has been adopted by the Department through Florida Administrative Code Rule 69L-6.021(1). Classification codes are four-digit codes assigned to various occupations by the NCCI to assist in the calculation of workers' compensation insurance premiums. Classification code 8810 applies to clerical workers and Ms. Beal preliminarily used this code for Ms. Hallman, Ms. Welch-Perryman, and Mr. Jennings. Ms. Beal then utilized the corresponding approved manual rates for those class codes and the period of noncompliance to determine a penalty, which she submitted to her supervisor for review. Ms. Beal was subsequently directed to change the class code for Mr. Jennings to Scopes Code 5606, a construction class code for construction foreman/project manager. On April 8, 2016, based on Ms. Beal's re-calculation, using class code 5606 for Mr. Jennings, the Department issued an Amended Order of Penalty Assessment to Respondent. The Amended Order of Penalty Assessment assessed a penalty of $8,753.66.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order upholding the Stop-work Order and the Amended Order of Penalty Assessment and assess a penalty against Respondent in the amount of $8,753.66. DONE AND ENTERED this 27th day of June, 2016, in Tallahassee, Leon County, Florida. S MARY LI CREASY 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 June, 2016.
The Issue The issues in this case are: (1) whether Petitioner, Nu Way Drywall, LLC, was in violation of the workers' compensation requirements of Sections 440.107 and 440.38, Florida Statutes (2007),1 by failing to secure workers' compensation coverage for its subcontractors and/or employees of its subcontractors; and (2) if yes, what penalty should be assessed against Petitioner.
Findings Of Fact On April 15, 2008, Germaine Green, a compliance investigator for the Department, conducted a random compliance check of a work site where an office building was under construction. The work site was located at 698 South Tamiami Trail in Osprey, Florida. During the compliance check, Ms. Green observed three men hanging metal framing for the interior walls. One of the men at the work site identified himself as Ted Webb and told Ms. Green that he was in charge of the framing work being done and that the other two men working with him were his sons. Mr. Webb told Ms. Green that his company, Ted Webb, Inc., had workers' compensation coverage through an employee leasing company, Howard Leasing. Ms. Green telephoned the leasing company and was told that the contract with Ted Webb, Inc., had been terminated or had lapsed in December 2007. Ms. Green then checked the Department's computerized database known as Coverage and Compliance Automated System (CCAS). The information maintained in CCAS allowed Ms. Green to determine whether Mr. Webb or his sons had workers' compensation coverage or exemptions from such coverage. After checking CCAS, Ms. Green determined that Mr. Webb and his company did not have workers' compensation coverage and that Mr. Webb and his employees had no exemption from such coverage. Upon making this determination, Ms. Green issued a Stop-Work Order. Mr. Webb advised Ms. Green that Nu Way Drywall, LLC ("Nu Way"), had subcontracted with him or Ted Webb, Inc., to perform the framing services at the work site. Under Florida law, a subcontractor that does not have workers' compensation coverage becomes the "statutory employee" of the contractor that hired the subcontractor. Upon being told that Mr. Webb was working for Nu Way, Ms. Green checked CCAS to determine if that company had active workers' compensation exemptions for any of its employees. Ms. Green's review of CCAS revealed that Nu Way had an exemption for only one person, Alex Rivera, the managing member of the company. Ms. Green contacted Mr. Rivera to determine whether he had received documentation that Mr. Webb had workers' compensation coverage prior to Mr. Webb's beginning work on the Osprey project. Mr. Rivera reported that he had received information in the past that indicated that Mr. Webb had workers' compensation coverage. However, Mr. Rivera told Ms. Green that he had obtained information regarding Mr. Webb's workers' compensation coverage before Mr. Webb began work on the subject work site. At all times relevant to this proceeding, Nu Way had workers' compensation coverage through an employee leasing company, Employee Leasing Solutions. However, when Ms. Green called the leasing company, she was advised by someone with the company that Mr. Webb and his two sons were not listed on the employee roster for Nu Way. Therefore, they were not covered by Nu Way's workers' compensation coverage. Employee leasing companies provide workers' compensation coverage for their clients, but coverage is provided only to employees that the client company specifically identifies. Because Mr. Rivera could not provide proof that Mr. Webb and his sons had workers' compensation coverage pursuant to Chapter 440, Ms. Green issued a Stop-Work Order for Specific Worksite Only ("Stop-Work Order") to Nu Way on April 15, 2008. The Stop-Work Order was posted at the work site and served on Mr. Rivera on April 16, 2008. On the day that Ms. Green served the Stop-Work Order on Mr. Rivera, she also served on him a Request for Production of Business Records for Penalty Assessment Calculation ("Request for Business Records"). The Request for Business Records requested that Mr. Rivera provide the business records of Nu Way to the Department so that it could determine the employer's payroll for the period of April 17, 2005, through April 16, 2008, for the calculation of the penalty provided in Subsection 440.107(7). In response to the Department's Request for Business Records Documents, Mr. Rivera provided Nu Way's business records, which included Nu Way's canceled checks. In auditing the business records, Ms. Green discovered that in addition to making payments made to Ted Webb, Inc., in 2006 and 2008, Nu Way had also made payments to two other companies that did not have valid workers' compensation coverage for their employees when they worked for Nu Way. According to its business records, Nu Way paid Santis Drywall and Construction (Santis) $36,890.00 between July 28 and August 11, 2006, and paid Hernandez Chico Drywall (Hernandez) $260,972.50 between March 17 and April 28, 2006. During the time period Nu Way made those payments to Santis and Hernandez, neither of those companies had valid workers' compensation coverage. After auditing Nu Way's business records, Ms. Green prepared a spreadsheet that included the payments made to uninsured subcontractors or companies during the relevant time period of April 17, 2005, through April 16, 2008. Ms. Green calculated the penalty by dividing the payroll for each uninsured subcontractor by 100 and then multiplied that number (the dividend) by the "approved manual rate" for drywall work for the year in question. Each product of 1/100 of the payroll and the approved manual yielded the "evaded premium" that Nu Way should have paid for each uninsured subcontractor in the years in question. The amount of the "evaded premiums" were then multiplied by 1.5 and then added together to determine the total penalty amount. Applying the formula prescribed in Subsection 440.107(7)(d), Ms. Green determined that the total penalty assessment against Nu Way was $76,215.95. On April 17, 2008, Mr. Rivera was served with the Amended Order of Penalty Assessment, which showed that the total penalty assessment against Nu Way was $76,215.95. That same day, Mr. Rivera, on behalf of Nu Way, entered into an agreement with the Department to pay ten percent of the penalty assessment in one lump sum payment and to make 60 interest-free payments for the balance. After Mr. Rivera signed the agreement, the Department issued an Order of Conditional Release from the Stop- Work Order ("Order of Conditional Release"). The Order of Conditional Release allowed Nu Way to resume work at the work site, subject to his complying with the terms of the agreement. When Ms. Green served the Amended Order of Penalty Assessment on Mr. Rivera, she discussed the penalty assessment with him and also allowed him to review the spreadsheet for accuracy. Mr. Rivera reviewed the spreadsheet, but did not find any errors. In preparing for this hearing, Ms. Green reviewed the spreadsheet and discovered that she had mistakenly included some payments made by Nu Way. By mistakenly including certain payments on the spreadsheet, the payroll amount used to calculate the penalty assessment was higher than it should have been. After discovering the mistake discussed in paragraph 20, Ms. Green prepared a new spreadsheet, which did not include the payments that had been mistakenly included in the initial spreadsheet. Ms. Green then recalculated the penalty assessment and properly determined the corrected penalty assessment to be $72,963.77. The Department prepared a Proposed Second Amended Order of Penalty Assessment showing that the correct penalty assessment for Nu Way is $72,963.77. As of the date of this proceeding, the Department had not served the Proposed Second Amended Order of Penalty Assessment on Mr. Rivera. However, at hearing, Mr. Rivera indicated that he did not object to this amendment as it reduced the penalty assessment.
Recommendation Based on the foregoing 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 Petitioner, Nu Way Drywall, LLC, failed to secure the payment of workers' compensation for its employees in violation of Subsections 440.10(1)(a) and 440.38(1), Florida Statutes; and Assessing a penalty of $72,963.77 against Nu Way Drywall, LLC. DONE AND ENTERED this 28th day of October, 2008, 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 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of October, 2008.
The Issue The issue is whether Petitioner properly issued a Stop Work Order (SWO) and Second Amended Penalty Assessment against Respondent for failing to obtain workers' compensation insurance that meets the requirements of Chapter 440, Florida Statutes.
Findings Of Fact The Division is a component of the Department of Financial Services. It is responsible for enforcing the workers' compensation coverage requirements pursuant to Section 440.107, Florida Statutes. Nobel is a corporation operating as a moving business in Florida. Nobel was incorporated in 2004 and has been operating with an active status since its inception. Yaniv Dalei is the sole owner and president of Nobel. On June 9, 2009, Petitioner's investigator, Cesar Tolentino, visited 18255 Northeast 4th Court, North Miami, Florida ("business site"), after being referred to the location to investigate Respondent for compliance with the Florida Workers' Compensation Law. At the business site, Petitioner's investigator spoke to the manager, and saw the bookkeeper and the receptionist during the visit. Respondent was not at the business site, but was out of the country in Panama when Tolentino visited. Respondent spoke to Tolentino by telephone. Respondent informed Tolentino that he had five employees and that he "was in the process of obtaining workers' compensation insurance." While at the business site, Tolentino, used the Department of Financial Services' Coverage and Compliance Automated System (CCAS), and confirmed Respondent lacked insurance for the payment of workers' compensation coverage. Additionally, Petitioner's investigator verified through the CCAS that Nobel had not secured an employee leasing company to secure workers' compensation insurance for its employees as well as found that no exemptions from workers' compensation had been issued in connection with Nobel. Petitioner's investigator also performed a National Council on Compensation Insurance search on Nobel while at the business site. The search revealed that Nobel's employees had not had workers' compensation insurance in the past. On June 9, 2009, Petitioner's investigator issued a SWO and posted it at the business site. The SWO required Respondent to cease all business operations. On June 10, 2009, Respondent obtained a certificate of insurance for workers' compensation coverage with the effective date being the same. The policy was issued by One-Stop Insurance Agency. Respondent provided the certificate to Tolentino upon receipt. On June 12, 2009, Petitioner's investigator issued to Respondent a Division of Workers' Compensation Request for Production of Business Records for Penalty Assessment Calculation ("Request"). Soon thereafter, Respondent responded to the Request and provided Petitioner's investigator with the requested records. Petitioner's investigator forwarded the documents to Jorge Pinera, Petitioner's penalty calculator, for review. On or about July 17, 2009, Petitioner issued an Amended Order of Penalty Assessment assessing a penalty of $74,794.38 against Respondent. On August 10, 2009, Respondent entered into a payment agreement with the Division. Respondent provided the Division a $7,480.00 cashier's check and agreed to pay the remainder of the assessed penalty in monthly installments. As a result, Petitioner issued an Order of Conditional Release for Nobel to operate. On March 3, 2010, Respondent supplied an employee list with position descriptions to Petitioner. After reviewing the document, Petitioner changed some employee class codes to indicate a lower rate for some occupations and recalculated the penalty amount owed with the new class codes. For the recalculation, Petitioner's penalty calculator, Russell Gray, used the following calculation from the penalty worksheet: (a) Respondent's total gross payroll from June 10, 2006, through June 9, 2009, was $1,010,001.32; (b) the total workers' compensation premium that Respondent should have paid for its employees during the relevant time period was $45,483.96; and (c) the premium was multiplied by the statutory factor of 1.5 resulting in a penalty assessment in the amount of $68,224.81. The new calculation superseded the Amended Order and a Second Amended Order of Penalty Assessment was issued March 3, 2010, reducing Respondent's penalty to $68,224.81.1 During the hearing, Respondent admitted not having workers' compensation coverage for his employees. He said, "Yes, you're right I needed to have workers' compensation but as I said . . . I never knew that I needed to have workers' compensation . . . I'm here to ask for forgiveness."
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, issue a final order affirming the Stop Work Order and Second Amended Order of Penalty Assessment in the amount of $68,224.81. DONE AND ENTERED this 20th day of April, 2010, in Tallahassee, Leon County, Florida. S JUNE C. McKINNEY 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 20th day of April, 2010.
The Issue The issue is whether Respondent’s request for an administrative hearing was timely filed by virtue of the doctrine of equitable tolling.
Findings Of Fact The Division is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees and corporate officers. § 440.107, Fla. Stat. Respondent is a Florida limited liability company engaged in the construction business. Its offices are located at 2474 Ambassador Avenue, Spring Hill, Florida. To enforce this requirement, the Division performs random inspections of job sites and investigates complaints concerning potential violations of workers’ compensation rules. On June 6, 2018, James Acaba, a Division compliance inspector, conducted a compliance investigation at a job site in Lutz, Florida. Mr. Acaba observed two individuals working at the job site: Respondent’s owner, Mr. Smith; and Mr. Smith’s step- son. Mr. Smith claimed he had an exemption for himself. Mr. Acaba ascertained that Mr. Smith’s exemption expired on January 19, 2017. Mr. Acaba determined that: Mr. Smith’s step-son was working for $12.00 an hour; had been working for Respondent for about a week; and did not have workers compensation coverage. On June 6, 2018, a Stop-Work Order and a Request for Production of Business Records for Penalty Assessment Calculation purposes were hand-served on Mr. Smith at the job site. The Stop-Work Order contained an Order of Penalty Assessment, which explained how a penalty is calculated, but gave no specific amount pending a review of Respondent’s financial records. Mr. Smith was advised to provide the requested business records within 10 business days or by June 16, 2019. Mr. Smith requested information on how to have the Stop- Work Order removed. Mr. Acaba explained to Mr. Smith several options available to him to have the Stop-Work Order released: obtain a workers’ compensation policy; engage an employee leasing company; or terminate the step-son’s employment. On June 14, 2018, Mr. Smith provided Mr. Acaba a letter reflecting Respondent’s “reduction in (its) workforce.” On June 15, 2018, Mr. Smith secured the reinstatement of his exemption to work for Respondent. However, Mr. Smith did not provide the requested business records. On November 10, 2018, the Division served an Amended Order of Penalty Assessment (Amended Order) at the address Mr. Smith provided during the June 6, 2018, job site encounter. This Amended Order provided the total penalty amount of $35,769.16. According to Mr. Smith, his girlfriend, Samantha Nigh, signed for the Amended Order on November 10, 2018, saw the large amount of the penalty assessment, and “decided not to show” it to Mr. Smith. Ms. Nigh did not testify during the hearing. The Amended Order contained a Notice of Rights, which stated that, if Respondent wished to contest the penalty, a petition seeking a hearing had to be filed with the Division within twenty-one calendar days of the Amended Order. It also stated that the petition “must be filed with Julie Jones, DFS Agency Clerk, Department of Financial Services, 612 Larson Building, 200 East Gaines Street, Tallahassee, Florida 32399- 0300.” The Amended Order included the following: FAILURE TO FILE A PETITION WIHTIN TWENTY-ONE(21) CALENDAR DAYS OF RECEIPT OF THIS AGENCY ACTION CONSTITUTES A WAIVER OF YOUR RIGHT TO ADMINISTRATIVE REVIEW OF THIS AGENCY ACTION. This meant that a petition had to be filed, and in the hands of the Agency Clerk no later than December 3, 2018. Although the actual due date was Saturday, December 1, 2018, Respondent could have filed the petition by the close of business on Monday, December 3, 2018. Florida Administrative Code Rule 18.106.103. Mr. Smith did not provide the date on which he became aware of the Amended Order. However, once he was aware of it, Mr. Smith knew the 21-day period to file a petition had expired, and admitted at hearing “it was already too late.” On December 14, 2018, 33 days after the Division served the Amended Order, and 11 days after the actual due date, the Division received Respondent’s hearing request. As a result of the late filing, the Division issued an Order to Show Cause (OTSC) on January 10, 2019. The OTSC required Respondent to show cause why the December 14, 2018, hearing request should not be dismissed as untimely. In the written response to the OTSC, Mr. Smith asserted that his brother, Edward Unger, “was only on the job site for the one day,” and Mr. Unger could “provide proof of employment elsewhere further (sic) showing he was not of our employment at the time.” Additionally, the response provided that “due to [an] emergency family situation where Byron Smith, owner, had to take a minor leave of absence to be with a close family member who had emergency open heart coronary bypass surgery. . ., the days and dates got scrambled with emotions clouding what needed to be done promptly.” The Division construed this conversation as possibly excusing the late filing and forwarded the matter to DOAH to resolve that narrow issue. During the hearing, Mr. Smith testified that his girlfriend, Ms. Nigh, prepared the OTSC response, but that his signature was on the document. Mr. Smith never clarified or corrected that Mr. Unger was his brother or step-son, and he merely reiterated the family problem and personal issues, without further detail or explanations, as his excuse. Lastly, Mr. Smith admitted that at the time Mr. Acaba observed the two working on June 6, 2018, he was breaking the rules, but “it was a huge penalty.” There is no credible evidence that Mr. Acaba gave Respondent’s owner, Mr. Smith any information that would cause him to miss the deadline for filing the petition.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that that the Department of Financial Services, Division of Workers’ Compensation, enter a final order dismissing Respondent’s request for a hearing as untimely. DONE AND ENTERED this 31st day of May, 2019, in Tallahassee, Leon County, Florida. S LYNNE A. QUIMBY-PENNOCK 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 31st day of May, 2019. COPIES FURNISHED: Mattie Birster, Esquire Department of Financial Services Office of the General Counsel 200 East Gaines Street Tallahassee, Florida 32399 (eServed) Byron K. Smith, Jr. Smith's Interior Finishes, LLC 17829 Laura Lee Drive Shadyhills, Florida 34610 Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 (eServed)
