The Issue The issues to be resolved in this proceeding concern whether the Petitioner was operating its restaurant business in violation of Chapter 440, Florida Statutes, the Florida Workers' Compensation Law, by failing to have required workers' compensation coverage. The related issues are whether the Department should therefore issue a Stop Work Order, whether a penalty should be imposed for so operating and what the correct penalty should be.
Findings Of Fact The Department is an Agency of the State of Florida charged with enforcing the statutory requirement, specifically Section 440.107, Florida Statutes, which mandates that employers in Florida secure the payment of workers' compensation insurance coverage for the benefit of employees. The Petitioner is a restaurant operating in the vicinity of Crystal River, Florida, which opened for business sometime in the year 2005. At certain times during its operation, which are those times relevant to this proceeding, the restaurant had four or more employees, and was thus subject to the requirement to secure payment of workers' compensation for those employees. Wanda Rivera is an investigator for the Division's Bureau of Compliance. On January 12, 2007, she was referred to investigate a restaurant in Crystal River, Florida. There was another restaurant nearby, the La Paz Mexican Grill, the Petitioner's business. Because she was in the area she made a routine visit to that restaurant as well. When Ms. Rivera entered the restaurant she saw two waitresses as well as another employee and the owner of the restaurant. She made a report of her visit as well as other events and observed facts from her investigation and included them as part of a narrative in her initial investigative report. Ms. Rivera checked the Department's Coverage and Compliance Automated System (CCAS) data base by first looking up the name La Paz Mexican Grill. She spoke to the restaurant's owner, Aswaldo Vazquez, and learned that the actual corporate name was 2 Friends, Inc. She researched that name in the Division's data base and found no indication of workers' compensation coverage for that corporation. She also interviewed workers present at the restaurant. Mr. Vazquez told Ms. Rivera that there were five employees and that the restaurant did not have workers' compensation coverage. Ms. Rivera also checked the CCAS data base, as well as the Department of State, Division of Corporation's data base. She thereby discovered that Mr. Vazquez was an officer of the corporation, but that he did not have an exemption from workers' compensation coverage which corporate officers may apply for and obtain. Ms. Rivera presented her investigative findings to her supervisor and after having done so issued a Stop Work Order, Number 07-012-D3, and served it upon Mr. Vazquez. She hand wrote the Stop Work Order Number on that form, having received that number from her supervisor. She served it on Mr. Vazquez personally on that same day, January 12, 2007. Part of her training as an investigator had emphasized serving documents personally on employers. The Stop Work Order was a three part form; she gave the yellow carbon copy of the Stop Work Order to Mr. Vazquez by hand delivery and, in checking her official file in the case in preparation for hearing, she found that her file contained no yellow copy of the Stop Work Order Form, corroborating her testimony that she had personally served the yellow copy of the Stop Work Order on Mr. Vazquez on January 12, 2007. The Stop Work Order specifically stated that all business operations had to cease immediately and could not resume until the Department issued an order releasing the Stop Work Order. The Order also stated that a penalty of $1,000.00 a day would be assessed the employer who conducted business operations in violation of the Stop Work Order. Ms. Rivera and Mr. Vazquez are fluent Spanish speakers. Ms. Rivera therefore conducted her interview with Mr. Vazquez in Spanish to assure that he understood all facets of the Division's position in his situation. She answered his questions and explained to him that the Stop Work Order was to take effect immediately and that there would be a $1,000.00 dollar per day fine for working in violation of the Stop Work Order. She also issued and served a Request for Production of Business Records for Penalty Assessment Calculation. The records were to be produced within five business days. Two types of records were requested: those that would show how much payroll the establishment had paid over the previous three years and those that would show exemptions. The request for records allows the employer five days to provide the documents; if no records were received within 15 days of the request, the Department could impute the gross payroll. Three weeks after serving the request on Mr. Vazquez, Ms. Rivera received some records by mail on February 2, 2007. They were insufficient for her investigation. Thus, not having received records from which she could calculate payroll and determine when the restaurant had four or more employees, Ms. Rivera, in accordance with statute, imputed the payroll and thereupon calculated a penalty of $34,240.30 based upon the imputed amount. She issued an Amended Order of Penalty Assessment to that effect on February 5, 2007, and it was served by certified mail on Mr. Vazquez on February 7, 2007. It was also served by a process server on February 13, 2007. That Amended Order of Penalty Assessment did not reference the Stop Work Order Number nor did it reflect the date it was issued. Ms. Rivera forgot to include this information when she filled out the Order. The Amended Order of Penalty Assessment did, however, have the following language: The Stop Work Order issued in this case shall remain in effect until either (a) the Division issues an order releasing the Stop Work Order upon finding that the employer has come into compliance with the coverage requirements of the workers' compensation law and pays the total penalty in full, or (b) the Division issues an Order of Conditional Release from Stop Work Order pursuant to the employer coming into compliance with the coverage requirements of the workers' compensation law and entering into a payment agreement schedule for periodic payment of penalty. On February 7, 2007, Mr. Vazquez phoned Ms. Rivera asking why his penalty was that high, stating that his accountant could provide additional records. Ms. Rivera had telephone contact at least twice with Mr. Vazquez between February 7, and March 29, 2007. When she contacted him at the restaurant, a voice would answer, "La Paz Mexican Restaurant, how may I help you?" She asked Mr. Vazquez if the restaurant was actually operating, and told him that he could not open for business while a Stop Work Order was in effect. She was assured that the restaurant was not working. Mr. Vazquez also told her that more records would be produced. On March 29, 2007, however, Ms. Rivera had not received any new records, so she visited the restaurant and found that it was open for business in violation of the Stop Work Order. Because the restaurant is open seven days a week, Ms. Rivera assessed an additional penalty of $1,000.00 per day since the Stop Work Order had been issued. She thus issued a Second Amended Order of Penalty Assessment for the sum of $110,240.30. The Second Amended Order of Penalty Assessment referred to Stop Work Order Number 07-012-D3, stating that the Stop Work Order had been filed on January 12, 2007, and noting that the Amended Order of Penalty Assessment was dated February 5, 2007, and the Order showed an issuance date of March 29, 2007. On the next day, March 30, 2007, Ms. Rivera received more business records, from which she could calculate a penalty without imputing the payroll. Ms. Rivera calculated the new penalty at $79,690.36. Before she could issue a new penalty order, however, Mr. Vazquez contacted her and said that his restaurant had been closed for several days while he was traveling. He subsequently provided documents to Ms. Rivera that showed that he was out of the country for nine days. While 76 days had elapsed between the date the Stop Work Order was issued and the date Ms. Rivera found the restaurant had been open, Ms. Rivera determined that she would assess the penalty for only 67 days of that period. This decision was based upon Mr. Vazquez's documentation and her giving him the benefit of the doubt in accepting his representation that he had been out of the country for nine days and not operating. She then re-calculated the penalty as being $70,060.36 and issued a Third Amended Order of Penalty Assessment to that effect. The Third Amended Order of Penalty Assessment made reference to Stop Work Order Number 07-012-D3, and notes that the Stop Work Order was issued on January 12, 2007. The Third Amended Order has "February 5, 2007," in the line on the order for "issuance date." The entry for "issuance date" on the Third Amended Order of Penalty Assessment is incorrect and it should have been April 3, 2007, the date the Amended Order of Penalty Assessment was issued. The penalty worksheet for the Third Amended Order of Penalty Assessment shows that there was $25,793.55 in payroll for the relevant portions of 2005; $8,635.30 for relevant portions of 2006 during which times the restaurant had four employees. There was $1,370.21 in payroll for the relevant first 12 days of 2007, which was up until the time the Stop Work Order was issued. Ms. Rivera did not include the payroll for periods of time when the record showed the restaurant did not have four employees and her work papers so reflect. The payroll was calculated from 2005 forward because the business opened that year. On April 4, 2007, Mr. Vazquez brought his restaurant into compliance by reducing his staff to less than four employees and he entered into an agreement with the Department whereby he would pay down 10 percent of the penalty and agree to pay the remainder in 60 interest free monthly payments. Mr. Vazquez, in effect, does not contest the Division's position that he was required to carry workers' compensation coverage during the pertinent time periods and that he did not have such coverage. In actuality he disputes the amount of the penalty because he maintains that he did not receive the Stop Work Order until March 29, 2007. Mr. Vazquez is the president of the 2 Friends, Inc., Corporation. He speaks English and opined during his testimony that he reads 60 to 70 percent of English text. He knows people who are fluent in English and has people to whom he can show documents written in English if he does not understand any part of such.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Department of Financial Services finding that the Petitioner, 2 Friends Inc., d/b/a/ La Paz Mexican Grill, has failed to secure required workers' compensation coverage for its employees in violation of Sections 440.10(1)(a) and 440.38(1), Florida Statutes (2007), and that a penalty against that entity be accessed in the amount of $70,060.36, and that said final order provide for an acceptable installment payment arrangement whereby the amount may be paid over a period of at least 60 months at no interest. DONE AND ENTERED this 30th day of July, 2008, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF 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 Clerk of the Division of Administrative Hearings this 30th day of July, 2008. COPIES FURNISHED: Leon M. Boyajan, II, Esquire Leon M. Boyajan, II, P.A. 2303 West Highway 44 Inverness, Florida 34453-3809 Thomas H. Duffy, Esquire Department of Financial Services 200 East Gaines Street, 6th Floor Tallahassee, Florida 32399 Honorable Alex Sinks Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Daniel Sumner, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issue is whether Petitioner is liable for a penalty for failure to maintain workers’ compensation insurance in violation of relevant provisions in Chapter 440, Florida Statutes (2007).1
Findings Of Fact Respondent is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees. § 440.107. Petitioner is a limited liability company domiciled in Florida and engaged in the sale of stone countertops. The disputed issues of fact arise from a single, integrated transaction involving “one and the same business” within the meaning of Subsection 440.10(1)(b). The “business” includes a contractor, a wholesaler, and two subcontractors, one of which is Petitioner. The integrated transaction is between the business and a homeowner. The contractor is identified in the record as Manasota Land Development (Manasota). The homeowner owns a residence on Agate Road in Port Charlotte, Florida (the homeowner). The contractor referred the homeowner to Petitioner for the purpose of selecting granite countertops. Petitioner’s representative visited the residence, took measurements, and received the order for granite from the homeowner. Petitioner placed the order with the wholesaler, the name of which is not material to this proceeding. The wholesaler delivered granite to a fabricator and installer designated by Petitioner and identified in the record as Granite Exclusive (the installer). The installer fabricated the countertops and installed them at the residence. Petitioner visited the residence to ensure customer satisfaction, and Petitioner paid the wholesaler and installer from funds provided by Manasota. Petitioner did not collect payment from the homeowner. Rather, Petitioner agreed with Manasota to a total price of $7,141.00. Petitioner billed Manasota for $3,570.00, an amount equal to approximately one-half of the total agreed price, on May 21, 2008, inferentially when the homeowner placed the order with Petitioner. Manasota paid Petitioner the 50 percent deposit. Petitioner billed Manasota for the balance due, in the amount of $3,571.00, on July 22, 2008, when the work was completed to the satisfaction of the homeowner, and Manasota paid the balance due. Petitioner was a sales agent, order processor, and a collection and payment processor for Manasota. Petitioner paid the wholesaler and installer from funds provided by Manasota. The fact-finder draws a reasonable inference from the evidence that Manasota collected a sum from the homeowner that was equal to or greater than the price Manasota paid to Petitioner. Petitioner and the installer are subcontractors of Manasota. Petitioner had no supervisory control over the installer. Respondent’s claim that a written or oral contract existed between Petitioner and the wholesaler and installer is not supported by clear and convincing evidence. It is undisputed that neither the installer nor Petitioner have workers’ compensation insurance, and the two subcontractors are, by operation of Subsection 440.10(1)(b), the employees of Manasota in “one and the same business.” Manasota is responsible for providing workers’ compensation coverage by operation of the statute. Petitioner mistakenly believed, in goof faith, that it was exempt from the requirements of Chapter 440. A company officer of Petitioner obtained an exemption certificate and, reasonably, concluded that the exemption was for Petitioner and both of Petitioner’s officers or employees. Such an exemption was the officer’s stated purpose when she entered the local state office responsible for issuing exemption certificates. The state employee represented that the exemption certificate actually issued achieved the officer’s stated purpose. The express terms of the exemption certificate provide that the exemption is for the person “and” company named in the certificate. However, Subsection 440.05 makes clear that an exemption covers only the company officer named in the certificate and that each of the two officers must be named in the certificate or that each officer must obtain a separate certificate. Petitioner did not engage in the business of fabricating or installing the stone countertop. Petitioner made a sale of the granite countertop and placed an order with a wholesaler. The wholesaler shipped the countertop to a the installer designated by Petitioner based on proximity to the project site. The fabricator installed the countertop. Petitioner did not supervise the fabrication or installation of the countertop. The fact-finder has considered and weighed conflicts in the evidence pertaining to the issue of whether Petitioner engaged in the business of fabricating and installing the stone countertop and has resolved any evidential conflicts in favor of Petitioner. The testimony of Petitioner’s witness, describing the nature and scope of Petitioner’s business, is consistent with Article 5 in Petitioner’s Articles of Incorporation which states: The general purpose for which the Company is organized is to engage in the business of natural stone countertop sales. . . . On June 3, 2008, Respondent’s investigator, conducted a compliance check at 8206 Agate, South Gulf Cove, Florida, to verify compliance with the workers’ compensation statutes. At the worksite, Respondent’s investigator observed three men installing a stone countertop for the installer. Installation of stone countertops is part of the construction industry and is assigned Class Code 5348 in the Scopes Manual, published by the National Council on Compensation Insurance and adopted in Florida Administrative Code Rule 69L-6.021. The investigator interviewed the three men and requested proof of compliance with the workers’ compensation law. One of the three men, neither furnished proof of an election to be exempt from workers’ compensation nor showed that he had secured workers’ compensation coverage. Utilizing the Department of Financial Services’ Coverage and Compliance Automated System (CCAS), the investigator was unable to determine that the employee of the installer was exempt from the requirements of the workers’ compensation law or that Petitioner had secured the payment of workers’ compensation. On June 4, 2008, the investigator issued a Stop-Work Order and Order of Penalty Assessment against Petitioner for failure to meet the requirements of Chapter 440. Respondent ordered Petitioner to cease all business operations and assessed a $1,000.00 penalty against Petitioner pursuant to Subsection 440.107(7)(d). On June 4, 2008, the investigator issued a Division of Workers’ Compensation Request for Production of Business Records for Penalty Assessment Calculation. Petitioner complied with the Request and provided the required records. Based on Petitioner’s business records, the investigator issued an Amended Order of Penalty Assessment on June 11, 2008, in the amount of $1,218.52. Mr. Thomas Harvey, a company officer of Petitioner, did not posses an election to be exempt from workers’ compensation. Ms. Leslie Lockett, the other company officer had applied for and obtained an exemption from workers’ compensation coverage. Ms. Lockett’s exemption from workers’ compensation lists the scope of business or trade as countertops, pursuant to instructions from the agency employee who issued the certificate. Ms. Lockett’s exemption from workers’ compensation is a construction industry exemption. Ms. Lockett applied for a Notice of Election to be Exempt as a member of a limited liability company in the construction industry pursuant to the instructions previously described. In the transaction at issue in this proceeding, Petitioner collected payment for materials and installation of a stone countertop from Manasota. Petitioner did not collect payment from the homeowner and had no control or authority over either the wholesaler or the installer.
Recommendation Based on the Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent issue a final order dismissing the Stop-Work Order and Amended Order of Penalty Assessment against Petitioner and Mr. Harvey. DONE AND ENTERED this 24th day of October, 2008, in Tallahassee, Leon County, Florida. S 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 24th day of October, 2008.
The Issue Whether Respondent, Tony Williams Drywall and Plastering, Inc., failed to comply with the coverage requirements of the Workers' Compensation Law, chapter 440, Florida Statutes, by not obtaining workers' compensation insurance for its employees and, if so, what penalty should be assessed against Respondent pursuant to section 440.107.
Findings Of Fact The Department is the state agency responsible for enforcing the requirement of the workers' compensation law that employers secure the payment of workers' compensation coverage for their employees and corporate officers. § 440.107, Fla. Stat. Tony Williams Drywall and Plastering, Inc., (Respondent or Williams Drywall) is a corporation based in Tallahassee, Florida, first incorporated on August 18, 1999. Williams Drywall is engaged in the construction industry, operating as a drywall installation and repair business with a principal office located at 8513 Raquel Lane in Tallahassee. Tony Williams is the sole owner, registered agent and president of Williams Drywall. On or about October 30, 2014, Williams Drywall was hired by Bill Davis, a general contractor, to make drywall repairs at 2069 North Monroe Street in Tallahassee (the job site). Williams Drywall hired Viper Enterprises, LLC, (Viper) for the job. Viper is a company owned and operated by Joseph Johnson, whom Mr. Williams described as a friend. Mr. Williams deemed the job as simple and expected to pay Viper about $200. On October 30, 2014, Department Investigator Betty Fuentes arrived at the job site and encountered Mr. Johnson. Ms. Fuentes inquired regarding Mr. Johnson’s workers’ compensation compliance.1/ Although Mr. Johnson, as corporate officer of Viper, had been exempt from the requirement to obtain workers’ compensation insurance, pursuant to section 440.05(3), Florida Statutes, the exemption expired after September 10, 2014. As of October 30, 2014, Mr. Johnson had not effectively renewed his exemption. Mr. Johnson called Mr. Williams from the job site on October 30, 2014, to inform Mr. Williams of the events that transpired at the job site. Through this telephone call, Mr. Williams learned that Ms. Fuentes had issued a stop-work order at the job site. Mr. Williams also spoke with Ms. Fuentes by phone from the job site on October 30, 2014, and Ms. Fuentes asked Mr. Williams for his corporate records as part of her investigation. Mr. Williams met directly with Ms. Fuentes in the late afternoon of October 30, 2014. During the meeting, Ms. Fuentes hand-delivered to Mr. Williams a Stop Work Order for Specific Worksite Only (Stop Work Order). The Stop Work Order required Williams Drywall to cease all business operations at the job site for failure to secure workers’ compensation insurance coverage for its employees. The Stop Work Order included an Order of Penalty Assessment in the amount of two times the amount Williams Drywall would have paid in premium when applying the approval manual wage rates to Williams Drywall’s employee payroll during periods for which it failed to secure payment of workers’ compensation insurance within the preceding two-year period. During the meeting, Mr. Williams provided to Ms. Fuentes corporate records and workers’ compensation information for Williams Drywall. Ms. Fuentes also requested from Mr. Williams payroll records for the preceding two-year period. Mr. Williams disputed that his payroll records for the preceding two-year period were relevant. Mr. Williams testified that he offered to provide his payroll records for the two-week time period during which Mr. Johnson’s exemption had lapsed. Mr. Williams insisted that the October 30, 2014, drywall job was the only job for which he hired Mr. Johnson between September 11, 2014, and October 30, 2014. Mr. Williams did not provide any payroll records for Williams Drywall to Ms. Fuentes or any other representative of the Department. Andrew Moskowitz was assigned to calculate the appropriate penalty to be assessed against Williams Drywall by the Department. Penalties for workers’ compensation insurance violations are based on doubling the amount of evaded insurance premiums for periods during which the employer failed to secure workers’ compensation coverage within the two-year period preceding the Stop Work Order. § 440.107(7)(d), Fla. Stat. The applicable period of noncompliance for Williams Drywall was September 11, 2014, the date Mr. Johnson’s exemption lapsed, through October 30, 2014, the date the Stop Work Order was issued. Section 440.107(7)(e) provides that where an employer fails to provide business records sufficient to enable the Department to determine the employer’s actual payroll for the penalty period, the Department will impute the weekly payroll at the statewide average weekly wage as defined in section 440.12(2), multiplied by two.2/ In the penalty assessment calculation, Mr. Moskowitz consulted the classification codes and definitions set forth in the SCOPES of Basic Manual Classifications (Scopes Manual) published by the National Council on Compensation Insurance (NCCI). The Scopes Manual has been adopted by reference in Florida Administrative Code Rule 69L-6.021. Classification codes are four-digit codes assigned to occupations by the NCCI to assist in the calculation of workers’ compensation insurance premiums. Rule 69L-6.028(3)(d) provides that “[t]he imputed weekly payroll for each employee . . . shall be assigned to the highest rated workers’ compensation classification code for an employee based upon records or the investigator’s physical observation of that employee’s activities.” Mr. Moskowitz applied NCCI Class Code 5480, titled “Plastering NOC [Not Otherwise Classified] and Drivers,” which applies to specialty contractors engaged in interior plastering. Mr. Moskowitz used the approved manual rates corresponding to Class Code 5840 for the period of non-compliance to calculate the penalty. On December 14, 2014, the Department issued an Amended Order of Penalty Assessment in the amount of $2,105.50, based upon an imputation of wages to Mr. Johnson, the only employee of Williams Drywall known to the Department for the period of noncompliance. The evidence produced at the hearing established that Mr. Moskowitz utilized the correct class codes, average weekly wages, and manual rates in his calculation of the Amended Order of Penalty Assessment. The Department has demonstrated by clear and convincing evidence that Williams Drywall was in violation of the workers' compensation coverage requirements of chapter 440. Joseph Johnson was an employee of Williams Drywall performing services in the construction industry without valid workers’ compensation insurance coverage. The Department has also demonstrated by clear and convincing evidence that the penalty was correctly calculated by Mr. Moskowitz, through the use of the approved manual rates and the penalty calculation worksheet adopted by the Department in Florida Administrative Code Rule 69L-6.027.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, it is, therefore, RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers' Compensation, assessing a penalty of $2,105.50 against Tony Williams Drywall and Plastering, Inc. DONE AND ENTERED this 3rd day of June, 2015, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK 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 3rd day of June, 2015.
The Issue The issue in this case is whether Respondents 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 Amended Order of Penalty Assessment, and if so, what penalty is appropriate.
Findings Of Fact Petitioner, Department of Financial Services, Division of Workers' Compensation (the Department), 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. Mr. Alfred Strange was a managing member of Respondent Al?s Painting Service, LLC (the LLC), which had been created at least as early as 2004. The LLC was administratively dissolved on September 24, 2010, for failure to file an Annual Report. After this date, no further Annual Reports were filed. As a managing member of the LLC, Mr. Strange had initially obtained an exemption from workers? compensation coverage beginning on October 21, 2004, which was renewed once for a two-year period and finally expired on October 20, 2008. Mr. Frederick Crutchfield, another managing member of the LLC, had an exemption which expired on November 20, 2008. After this date, no further Requests for Exemption were filed by the company or its officers. Mr. Strange and Mr. Crutchfield did not have exemptions in effect from January 8, 2010, until September 24, 2010, when the LLC was dissolved. Mr. Carl Woodall is a senior investigator with the Division of Workers? Compensation. Mr. Woodall was appointed as an investigator on July 2, 2007, and was appointed as a senior investigator, Position Number 43003044, on September 1, 2012. He has been involved with over 400 enforcement cases under chapter 440. The position description for Position Number 43003044, effective September 1, 2012, provides in relevant part: The incumbent in this position is responsible for conducting investigations for the purpose of ensuring employer compliance with the workers? compensation requirements; entering and inspecting any place of business at any reasonable time for purpose of investigating employer compliance; examining and copying business records; and issuing, serving, and enforcing stop-work orders, penalty assessment orders, and any other orders required under s. 440.107 F.S. On January 7, 2013, Investigator Woodall conducted a site visit to a commercial building at 20721 Central Avenue East, Blountstown, Florida. Outside this address, there was a van with advertising on its side showing a man painting with a paint roller, the words “Al?s Painting,” and a phone number. Inside, he encountered Mr. Strange painting the east wall of the building. Investigator Woodall was wearing a shirt displaying a seal with the words “State of Florida Workers? Compensation Investigator” emblazoned on it. Investigator Woodall showed Mr. Strange his identification, which contained his name and identification number 03044, and indicated that he was a senior compliance investigator with the Division of Workers? Compensation. In response to questions from Investigator Woodall, Mr. Strange provided identification in the form of his driver?s license and stated that he had been working at the Central Avenue address for a few days and was painting only part of the building. Mr. Strange stated that he was being paid $15.00 per hour and that he had been paid once by check. Mr. Strange provided a business card to Investigator Woodall. Investigator Woodall testified that Mr. Strange may have told him that he had an old card in the van and Investigator Woodall remembered that Mr. Strange did go to the van and look for something. The business card that was provided to Investigator Woodall was printed with “Al?s Painting Service, LLC.” It is not clear that Mr. Strange ever held himself out as doing business under the name “Al?s Painting Service, LLC” in obtaining the work at Central Avenue or at any time after the LLC was dissolved. Investigator Woodall checked workers? compensation information for Al?s Painting Service, LLC, by accessing the Coverage and Compliance Automated System (CCAS) maintained by the Department. The database indicated no workers? compensation coverage was in effect for the LLC. It indicated that Mr. Strange and Mr. Crutchfield were managing members of the LLC but that their exemptions had expired in 2008. Information in the CCAS is submitted by insurance companies and the National Council of Compensation Insurance (NCCI). Investigator Woodall also accessed the Department of State, Division of Corporations? website. That database indicated that Al?s Painting Service, LLC, had been dissolved on September 24, 2010. On January 7, 2013, at approximately 12:40 p.m., Investigator Woodall personally served a Stop-Work Order and Order of Penalty Assessment on Mr. Strange and the LLC, along with a Request for Production of Business Records for Penalty Assessment Calculation. Mr. Strange was actively involved in business operations in Florida during the period of January 8, 2010, through January 7, 2013, inclusively. Mr. Strange operated within the construction industry during the period of January 8, 2010, through January 7, 2013, inclusively. Mr. Strange was an "employer" during the time period of January 8, 2010, through January 7, 2013, inclusively, as that term is defined in section 440.02(16). Mr. Strange neither obtained workers' compensation insurance coverage under chapter 440 for any of the individuals listed on the Penalty Worksheet, nor verified that any of those individuals or corporations had workers' compensation coverage before contracting with them for construction services at any point in time during the period of January 8, 2010, through January 7, 2013, inclusively. Class Code 5474, used on the penalty worksheet attached to the Amended Order of Penalty Assessment, and as defined by the NCCI SCOPES Manual, is the correct occupational classification for Alfred Strange, d/b/a Al's Painting Service, LLC, a Dissolved Florida Limited Liability Company. None of the employees listed on the Penalty Worksheet of Exhibit C were covered by workers' compensation insurance obtained through an employee leasing company for the period of January 8, 2010, through January 7, 2013. Alfred Strange and Frederick Crutchfield were "employees" of Alfred Strange, d/b/a Al's Painting Service, LLC, a Dissolved Florida Limited Liability Company, as that term is defined in section 440.02(15), during the period of January 8, 2010, through January 7, 2013, whether continuously or not. Neither Alfred Strange nor Frederick Crutchfield was an independent contractor of Alfred Strange, d/b/a Al's Painting Service, LLC, a Dissolved Florida Limited Liability Company, as that term is defined in section 440.02(15), during the period of January 8, 2010, through January 7, 2013. Remuneration was paid to Alfred Strange and Frederick Crutchfield during January 8, 2010, through January 7, 2013. The Request for Admission that the approved manual rates applied on the Penalty Worksheet attached to the Amended Order of Penalty Assessment were correct was deemed admitted pursuant to Florida Rule of Civil Procedure 1.370.1/ The penalty shown in column „g? of the Penalty Worksheet attached to the Amended Order of Penalty Assessment is the correct penalty for the employees listed there. Mr. Strange did not provide the Department any of the records requested in the Request for Production of Business Records for Penalty Assessment Calculation. The imputed salary amounts for each employee listed on the penalty worksheet of the Amended Order of Penalty Assessment equal the statewide average weekly wage multiplied by 1.5.
Recommendation Upon consideration of the above 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 Mr. Alfred T. Strange violated the requirement in chapter 440, Florida Statutes, to secure workers' compensation coverage, and imposing upon him a total penalty assessment of $28,175.64. DONE AND ENTERED this 22nd day of August, 2013, in Tallahassee, Leon County, Florida. S F. SCOTT BOYD 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 22nd day of August, 2013.
The Issue The issues are whether Respondent violated Sections 440.10 and 440.38, Florida Statutes (1997), by not securing workers' compensation insurance for its Florida employees; and if so, whether Petitioner properly issued a Stop Work Order and assessed civil penalties pursuant to Sections 440.107(5) and 440.107(7), Florida Statutes (Supp. 1998).
Findings Of Fact Petitioner is the state agency that is charged with the responsibility of enforcing the statutory requirements for employers to provide their employees with workers' compensation coverage. Respondent is a business, located in Savannah, Georgia, that supplies workers on a temporary basis to client businesses. The services that Respondent provides to its client businesses include the payment of payroll, taxes, and workers' compensation insurance for the temporary employees. American Interstate Insurance Company (AIIC) provided Eastern Personnel Services II, Federal Employers Identification Number (FEIN) 58-2340211, with workers' compensation insurance from November 18, 1997, through November 18, 1998, in the state of Georgia. AIIC's policy number 97WAGA1109996 did not provide coverage for any of Respondent's workers in Florida. AIIC is not authorized in Florida to write insurance for an employer with Respondent's assigned risk classification. Safeco Insurance Company of America (SICA) provided Respondent, FEIN 58-2340211, with workers' compensation insurance from December 29, 1998, through December 29, 1999, in the states of Georgia and South Carolina only. SICA's policy number WC7260735 as originally drafted, and as it existed on March 2, 1999, did not provide coverage for any workers in Florida. Paul Day is Respondent's president and sole officer and shareholder. He is also the owner of Eastern Personnel Services II, a sole proprietorship. According to AIIC's and SICA's insurance policies, both entities have the same FEIN. The record here indicates that there is no substantive difference between Respondent and Eastern Personnel Services II. Respondent's testimony to the contrary is not persuasive. 1/ For all practical purposes, Respondent and Eastern Personnel Services II were under the exclusive management and control of Mr. Day at all relevant times. Beginning as early as August 28, 1997 and continuing through March 2, 1999, Respondent provided employees to Foley & Associates Construction Co., Inc. (Foley) at one or more work sites on Amelia Island, Florida. Respondent did not secure workers' compensation insurance for these workers. Stanley Benner was one of the first of Respondent's employees to begin working at Foley's Amelia Island job site. On November 9, 1998, Mr. Benner was injured while working for Respondent. Mr. Benner filed a workers' compensation claim against Respondent and AIIC seeking compensation for his injuries. He subsequently learned that AIIC did not provide workers' compensation insurance for Respondent in Florida. Mr. Benner has received no compensation from Respondent or any insurance carrier for his work-related injury. On March 2, 1999, Mr. Benner's attorney filed a complaint with Petitioner regarding Respondent's lack of workers' compensation coverage. Robert Lambert, Petitioner's investigator immediately went to Foley's job site to investigate the complaint. Upon his arrival at the construction site, Mr. Lambert learned that Respondent had 21 employees performing general contract labor for Foley that day. Foley's office manager informed Mr. Lambert that Respondent had provided Foley with between 15 and 20 laborers per day for one year. Next, Mr. Lambert called Mr. Day who provided a certificate of insurance from SICA by facsimile transmission. However, the certificate listed Saxon and Associates, a business located in Georgia, as the certificate holder. It did not reference coverage for employees provided to Foley in Florida. Mr. Lambert then called Linda Burtchett of HGI, Inc. She is an insurance agent and the authorized representative of SICA. HGI, Inc. is the producer of SICA's policy number WC7260735. Ms. Burtchett informed Mr. Lambert that SICA's policy number WC7260735 did not cover Respondent's employees in the state of Florida. To her knowledge, Respondent had never reported any wages on a Florida payroll. Mr. Lambert issued a Stop Work Order dated March 2, 1999. The Stop Work Order required Respondent to immediately cease all work at the Foley construction site. It advised Respondent that a civil penalty in the amount of $100 would be assessed for each day that it failed to provide the required workers' compensation coverage. Later on March 2, 1999, Respondent requested HGI, Inc. to provide coverage for its Florida employees working at the Foley job site under SICA's policy number WC7260735. HGI, Inc. complied with Respondent's request. Accordingly, Petitioner correctly assessed Respondent with a civil penalty in the amount of $100 in conjunction with the Stop Work Order. Mr. Day testified that the endorsement to the SICA policy provided coverage for Respondent's Florida employees retroactive to September 29, 1998. He also testified that another of Respondent's Florida employees was injured at the Foley construction site on January 18, 1999, and received compensation under the SICA policy. Mr. Day's testimony is not credited in light of Ms. Burtchett's testimony. On March 2, 1999, Petitioner informally requested Respondent to provide business records to establish the value of its Florida payroll during the three years before Petitioner issued the Stop Work Order. Respondent refused to provide Petitioner with any payroll records. Petitioner obtained records maintained by Foley regarding Respondent's employment activities at the Amelia Island job site. Foley's records showed the number of employees that Respondent employed, the number of hours worked by each employee, and their hourly rate of pay. Respondent admitted and Foley's records confirmed that Respondent's payroll at the Foley construction site was $209,249.86 between January 5, 1998 and March 1, 1999. The National Council of Compensation Insurance (NCCI) classifies Respondent as a temporary labor service. According to the NCCI, the employment activities conducted by Respondent's employees at the Foley construction site have an assigned insurance premium rate in the conservative amount of $22.34 for each $100 of payroll. Therefore, Respondent's evaded insurance premium on a payroll of $209,249.86 is $46,746. The administrative penalty is twice the evaded premium of $46,746 or $93,492. On March 31, Petitioner properly issued a Notice and Penalty Assessment Order requiring Respondent to pay an administrative penalty in the amount of $93,492. Respondent's untimely discovery responses indicated that its Florida payroll was $196,701.62 in 1998 and $65,165.36 in 1999. Petitioner could have assessed Respondent with an administrative penalty in the amount of $115,743.26.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That Petitioner enter a final order affirming the Stop Work Order and Notice and Penalty Assessment Order with their associated penalties, plus any lawful interest. DONE AND ENTERED this 12th day of October, 1999, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD 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 12th day of October, 1999.
The Issue At issue in this proceeding is whether the Respondent failed to abide by the coverage requirements of the Workers' Compensation Law, Chapter 440, Florida Statutes (2002), by not obtaining workers' compensation insurance for her employees; and whether the Petitioner properly assessed a penalty against the Respondent pursuant to Section 440.107, Florida Statutes (2002).
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, and the entire record in this proceeding, the following findings of fact are made: The Department is the state agency responsible for enforcing the requirement of the workers' compensation law that employers secure the payment of workers' compensation for their employees. § 440.107, Fla. Stat (2002).1 On March 27, 2003, the Department's district supervisor, Leo Canton, assembled a compliance team of three investigators: Donald Lott, Carol Cobb, and Tracey Gilbert. They met at the Gibsonton exit of I-75, south of Tampa at the Alafia River, and began riding around the area, where a good deal of new home construction was taking place. The group was looking for potential violations of the workers' compensation statute. From the main road, they could see some workers on a two-story house with exposed trusses, and Mr. Canton decided this would be a good place to investigate. The compliance team arrived at the job site, 9734 White Barn Road, Riverview, Florida. They observed five men conducting framing activities, which included cutting two-by- fours, climbing ladders to adjust trusses and hurricane ties, and laying plywood sheathing on the trusses. The five men were later identified as Darren McCarty, Robert Stinchcomb, James King, Jeffrey Judson, and James Conner. Parked in front of the partially constructed house was a utility trailer registered to Susie Riopelle. The trailer contained an air compressor, hoses, framing equipment, ladders, nail guns, and other tools. The main hose from the air compressor was split into six or seven separate hoses so that the workers could simultaneously use multiple nail guns. Mr. Canton asked the men to stop working and talk with him. Mr. Canton testified that each of the five men told the same basic story: he was employed by Yellow Jacket Construction, Inc. ("Yellow Jacket"); he was paid by the hour and in cash; and Yellow Jacket owned the tools in the utility trailer. The only variable was the length of employment for each man. Mr. Canton told the men they would need to contact their employer. They all stated that Edward Riopelle was their boss. Mr. Canton then asked the men if they would mind giving statements to members of the compliance team. All five workers agreed to give statements. Mr. Lott and Mr. Canton interviewed Darren McCarty, who told them he worked for Yellow Jacket as a framer and carpenter and that he was paid weekly in cash by Edward Riopelle at the rate of $12 to $15 per hour, depending on the job. Mr. McCarty signed a notarized Affidavit confirming this information. Mr. Canton interviewed Robert Stinchcomb, who said that he worked for Yellow Jacket as a framer. Mr. Stinchcomb identified Edward Riopelle as his boss and stated that he was paid $10 per hour, in cash. Mr. Stinchcomb signed a notarized Affidavit confirming this information. Jeffrey Judson signed an Affidavit stating that he worked as a framer for Yellow Jacket and that he was paid $12 per hour, in cash, by Edward Riopelle. After the interviews, Mr. Canton determined that the five workers were employees of either Yellow Jacket or Edward Riopelle. None of the five workers interviewed at the job site had workers' compensation insurance on March 27, 2003. Mr. Canton directed Mr. Lott to issue a stop work order. Mr. Lott issued the order to Edward Riopelle, who had arrived at the job site after being phoned by one of the workers. Edward Riopelle informed the Department personnel that Yellow Jacket had been dissolved and that his wife, Susie Riopelle, was the sole owner of the business. As of March 27, 2003, Respondent Susie Riopelle was a sole proprietor operating in the construction industry by framing single-family homes. Ms. Riopelle had been the sole owner of Yellow Jacket, a corporation which was also in the business of framing construction. Yellow Jacket had contracted with a payroll leasing company that was responsible for paying the salaries of and providing workers' compensation coverage for Yellow Jacket's employees, who were paid by the hour. In January 2003, Ms. Riopelle and her husband Edward (who had no formal involvement with Yellow Jacket, though he often assisted his wife with aspects of the business) began planning to leave the Tampa Bay area and move to Fort White in Columbia County. They consulted with their employees, who expressed a desire to stay together and obtain construction work on their own. The Riopelles advised their employees that they would have to establish their own businesses in order to obtain work as independent contractors. Ms. Riopelle advised the employees to obtain occupational licenses, commercial liability insurance, and apply for exemptions from workers' compensation insurance requirements. At some point in March 2003, Ms. Riopelle began treating these Yellow Jacket employees as independent contractors working on houses that Ms. Riopelle had contracted to build. Among these purported independent contractors were the five men interviewed by the compliance team on March 27, 2003: Jeffrey Judson, Darren McCarty, Robert Stinchcomb, James King, and James Conner.2 Messrs. King, McCarty, Judson, and Conner obtained their own Hillsborough County occupational licenses in mid- February 2003. The "business type" listed on each of their licenses was "perform services for construction contractor." Mr. Stinchcomb already had a Hillsborough County occupational license, dated June 8, 2001, as a "sub-contractor (can't bid; works under contractor)." Messrs. Judson, King, McCarty, and Conner obtained individual general liability insurance through Commercial Casualty Insurance Company of North Carolina. Mr. Judson's and Mr. McCarty's policies covered the period February 19 through May 19, 2003. Mr. King's and Mr. Conner's policies covered the period March 14 through June 14, 2003. On March 18, 2003, Ms. Riopelle and her sister-in-law, Tina Shew, appeared at the Department's Tampa office seeking to file applications for workers' compensation exemptions on behalf of four of the former Yellow Jacket employees, including some of those who were at the job site on March 27, 2003. Mr. McCarty testified that he paid Ms. Shew to handle the paperwork so that he would not have to miss work. Ms. Riopelle testified that Ms. Shew had the same arrangement with the other workers. Mr. Canton testified that Department rules prohibit anyone other than the applicant from submitting an application for exemption and that an investigation is usually commenced when someone comes in with multiple applications. He met with Ms. Riopelle and Ms. Shew and attempted to explain that there was more to attaining non-employee status than having the exemption and an occupational license. He gave Ms. Riopelle a "Non-Employee Worksheet," a document used by investigators in the field, in an effort to explain the nine statutory factors considered by the Department in determining whether a worker is an employee or an independent contractor. In speaking with Ms. Riopelle, Mr. Canton learned that she was a subcontractor for Badger Construction, a company that was building 300 houses in the Gibsonton area. Ms. Riopelle told Mr. Canton that her contact at Badger Construction was the person who told her how to qualify her employees as independent contractors. Mr. Canton testified that he had never heard of Badger Construction and was concerned that it was apparently giving bad information to its subcontractors. Mr. Canton instructed the Department's examiner not to process the applications submitted by Ms. Riopelle and Ms. Shew, pending an investigation of this matter. It is reasonable to infer that this conversation with Ms. Riopelle led Mr. Canton to choose the Gibsonton area for the compliance team's March 27, 2003, visit. On March 27, 2003, after the initial stop work order was issued, Mr. Lott served Ms. Riopelle with a "Request for Business Owner Affidavit and Production of Business Records," seeking copies of business records "to determine whether or not you or your business is required to provide Workers' Compensation insurance coverage for employees, or to determine the civil penalties you may owe for failing to carry Workers' Compensation insurance." At the time the stop work order was issued, Section 440.107(2), Florida Statutes, required each employer to keep business records that enable the Department to determine the employer's compliance with the coverage requirements of the workers' compensation law and empowered the Department to adopt rules describing the information that those business records must contain. Florida Administrative Code Rule 69L-6.015 provides, in relevant part: In order for the Division to determine that an employer is in compliance with the provisions of Chapter 440, F.S., every business entity conducting business within the state of Florida shall maintain for the immediately preceding three year period true and accurate records. Such business records shall include original documentation of the following, or copies, when originals are not in the possession of or under the control of the business entity: * * * (3) Records indicating for every pay period a description of work performed and amount of pay or description of other remuneration paid or owed to each person by the business entity, such as time sheets, time cards, attendance records, earnings records, payroll summaries, payroll journals, ledgers or registers, daily logs or schedules, time and materials listings. * * * All contracts to which the business was or is a party for services performed by an independent contractor, or in the event a written contract was not executed, written documentation including the name, business address, telephone number, and FEIN or social security number if an FEIN is not held, of each independent contractor; and proof of workers' compensation insurance held by each independent contractor during the life of the contract for his/her services or records sufficient to prove that the independent contractor was not required pursuant to Chapter 440, to have workers' compensation insurance coverage during that time period; All check ledgers and bank statements for checking, savings, credit union, or any other bank accounts established by the business entity or on its behalf. . . . On April 1, 2003, the Riopelles arrived at the Department's Tampa office and presented Mr. Lott with their business records. Mr. Lott testified that these records were not sufficient to establish that the five workers in question were independent contractors. None of the records produced by the Riopelles permitted the Department to determine receipts, the identity of entities with whom Ms. Riopelle was doing business, or the amount of money she was paid or owed as a result of business operations at the job site on March 27, 2003. Mr. Canton confirmed that the documents produced by the Riopelles did not establish the independent contractor relationship. He noted that the Riopelles produced some contracts between Susie Riopelle and the individual workers, but these contracts called for payment per linear foot, a method consistent with an employer/employee relationship. At the hearing, Ms. Riopelle introduced subcontractor agreements, general liability insurance applications, county occupational licenses, and a 28-page composite exhibit of financial records to support the claim that the five workers at the job site on March 27, 2003, were independent contractors. The subcontractor agreements are problematic for several reasons. The contract between Ms. Riopelle and Jeffrey Judson, dated March 24, 2003, specifies no contract price. It states that Mr. Judson is to perform "framing and sheathing exterrior [sic] walls," and names "Westfield Homes Plan #2350" as the specifications for construction. The contract does not specifically state that the referenced work is to be performed at 9734 White Barn Road in Riverview. Ms. Riopelle testified that the contract with Mr. Judson was for work on the house at 9734 White Barn Road. The contract between Ms. Riopelle and Mr. Stinchcomb, also dated March 24, 2003, specifies a price of $250 "to be paid on following Friday after signing this aggrement [sic]." It states that Mr. Stinchcomb is to "cut all studs, wrap garage doors and build arches," and names "Westfield Homes Plan #2350" as the specifications for construction. The contract does not specifically state that the referenced work is to be performed at 9734 White Barn Road in Riverview. Mr. Stinchcomb, a retiree who worked part-time for Ms. Riopelle, testified that he did not know how the contract price of $250 was arrived at by Ms. Riopelle. He stated that he was getting $10 per hour and surmised that $250 represented payment for a five-hour per day, five-day work week. The contract between Ms. Riopelle and James Conner, also dated March 24, 2003, specifies a price of $480 "to be paid on Friday following date of this signed agreement." It states that Mr. Conner is to "frame all interior walls to first & second floor to provide labor only," and names "Westfield Homes Plan #2350" as the specifications for construction. The contract does not specifically state that the referenced work is to be performed at 9734 White Barn Road in Riverview. The contract between Ms. Riopelle and James C. King is missing a signature page, though both Ms. Riopelle and Mr. King adopted the contract's terms in their testimony. The contract specifies a price of $400, "to be paid on the following Friday after the signing of this agreement." It states that Mr. King is "to set [trusses] on roof," and names "Westfield Homes Plan #2350" as the specifications for construction. The contract does not specifically state that the referenced work is to be performed at 9734 White Barn Road in Riverview. The contract between Ms. Riopelle and Darren McCarty, dated February 28, 2003, does not specify a contract price. It states the following terms of payment: "To pay sum of percentage of job completed by Monday each week and paid on following Friday upon receipt of purchase order at rate of $.60 per sq. ft. purchase order w/below." The items listed below the quoted statement were: "name; subdivision; lot & block; complete address; model #; total sq. footage; price; FEIN # or SSI; liability policy #; occupation license #." The contract states that Mr. McCarty is "to perform labor only framing residential." Ms. Riopelle testified that Mr. McCarty's contract was meant to establish that Mr. McCarty would be paid by the job, not by the hour. She stated that because roofs are different sizes, a set price cannot be set per roof; rather, the price must be set based on the square footage of the roof. Ms. Riopelle testified that this contract did not specify a location because it was a general contract meant to cover any roof that Mr. McCarty worked on. Testifying generally about these contractual agreements, Ms. Riopelle stated that the workers were paid 80 percent of the agreed amount upon completion of the work. The remaining 20 percent of the contract price would be paid when the work passed inspection by local authorities. At the hearing, Mr. McCarty agreed with Ms. Riopelle's explanation of the method of payment. At the hearing, Ms. Riopelle submitted documents signed by Mr. Stinchcomb and Mr. McCarty attesting that, as of February 24, 2003, these men were no longer employees of Yellow Jacket. However, the documents were notarized on April 3, 2003, after the stop work order was issued. These documents are unreliable as a basis for findings as to the relationship between the parties on March 27, 2003, given that they were apparently created after that relationship was called into question by the Department. Ms. Riopelle also submitted a similar document regarding Mr. Conner, but Mr. Conner's signature does not appear on the document. Mr. Conner did not appear at the hearing, and thus, there is no means in this record to ascertain his involvement in the creation of this document. Three of the former Yellow Jacket employees testified at the hearing. Mr. McCarty testified that he had been a carpenter for 15 years and that he owned and used his own tools, including nail gun and nails, on the job. He testified that he had worked on Yellow Jacket's payroll until two weeks before the March 27 site visit, which he offered as his explanation for why he told the compliance team that he worked for Yellow Jacket. Mr. McCarty recalled Ms. Riopelle telling him that she and her husband were planning to move. He testified that he and the other workers got together to plan how they could go into business for themselves. Ms. Riopelle advised them regarding qualification as independent contractors. Mr. McCarty testified that the group of former Yellow Jacket employees bid on the job they were working on March 27, 2003. They figured out the overall price of the house, then figured out which portion of the work each person would perform and for how much money. On this job, Mr. McCarty contracted to build the exterior part of the house, including the beam and the trusses. He would complete the skeleton part of the roof, then Mr. King would take over and complete the laying of the plywood. Mr. McCarty testified that he told the compliance team that he was paid "$12 to $15 per hour" because that is the way he computed his bid on the job. If he completed it quickly, his pay would equal $15 per hour. If he took more time, his pay would equal $12 per hour. Mr. Stinchcomb testified he was 73, retired, and working part-time for Ms. Riopelle. His function at the job site was to perform all the wood-cutting, including the fabrication of window arches. He used his own equipment. Mr. Stinchcomb recalled conversations with his fellow workers about dividing up the work "to keep everybody together but on an independent deal. That's why everybody was supposed to go get their occupation licenses and their workman's comp or whatever they were doing, but we were all going to stay together as independents." Mr. Stinchcomb maintained that he was paid $10 per hour at all times he worked for Yellow Jacket or Ms. Riopelle. James King testified he was 21 years old and had been decking roofs for eight years. He remembered being told by Ms. Riopelle that he was going to need to get a subcontractor's license but was not sure of the difference between working as an employee and as an independent contractor. Mr. King testified that he told the compliance team that he worked for Yellow Jacket because the paperwork on his workers' compensation exemption had not come back. He stated that when he worked for Yellow Jacket, he was paid by the hour; but when he worked for Ms. Riopelle, he was paid by the job. While the workers testified that they used their own tools on the job, it was undisputed that Ms. Riopelle owned the trailer containing an air compressor and that all of the workers except Mr. Stinchcomb, the wood cutter, used the air compressor at the job site. Ms. Riopelle testified that she leased the trailer and equipment to Mr. Conner at a rate of $20 per day. At the hearing, she produced a document purporting to be a contract between her and Mr. Conner, dated February 28, 2003, stating that Ms. Riopelle was leasing framing equipment and the trailer to Mr. Conner for $20 per day, payable weekly. However, the contract was notarized on April 3, 2003, raising the question whether it was created after the fact of the stop work order. Ms. Riopelle submitted no other documentation to substantiate the existence of a lease agreement for the trailer and equipment. Mr. McCarty agreed that the workers were leasing the air compressor from Ms. Riopelle, and stated that the cost came to about $20-per-week per person, which would roughly gibe with the $20-per-day figure given by Ms. Riopelle. However, Mr. King testified that he was paying Edward Riopelle $50 per week to lease the air tools. Edward Riopelle testified that once Yellow Jacket became defunct and Ms. Riopelle began to operate under her own name, the workers were paid in cash on receipt of their invoices for labor. At the hearing, no invoices were provided to indicate whether the workers were being paid by the hour or on a "commission," "per job," or "competitive bid" basis. Ms. Riopelle maintained that Messrs. McCarty, Stinchcomb, King, Judson, and Conner were independent contractors, rather than employees on March 27, 2003, and that she, therefore, was not required to secure the payment of workers' compensation for the five workers. As of March 27, 2003, Section 440.02(15)(d)1, Florida Statutes, provided, in relevant part, that the term "employee" does not include an "independent contractor" if: 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. . . . Section 440.02(15)(d)1, Florida Statutes, listed the nine elements of the independent contractor exemption in the conjunctive, meaning that all nine elements must be established for the exemption to apply. This interpretation is confirmed by Section 440.02(15)(c), Florida Statutes, which at the time provided: "For purposes of this chapter, an independent contractor is an employee unless he or she meets all of the conditions set forth in subparagraph (d)1." Based upon the testimony and all the documentation submitted at the hearing, it is found that Ms. Riopelle and the five workers had an understanding that the men would no longer be employees of Yellow Jacket because the Riopelles were leaving the area. As of March 27, 2003, the men had obtained occupational licenses, obtained individual general liability insurance, and applied for workers' compensation exemptions. However, despite these actions, the evidence does not demonstrate that the employer-employee relationship had been severed as of March 27, 2003. Because several of the documents submitted by Ms. Riopelle appear to have been back-dated, the reliability of all the documents is called into question. Even assuming that the subcontractor agreements were entered into prior to March 27, 2003, they do not establish that the men were independent contractors under the criteria set forth in Section 440.02(15)(d)1, Florida Statutes. Mr. Judson's contract does not state a price. Mr. McCarty's contract calls for him to be paid per square foot of work performed, not on a per-job basis. None of the contracts states a time or place of performance, making it unclear whether the contracts pertain to the work being performed on March 27, 2003. It is significant that when the men were first questioned at the job site on March 27, 2003, they told the Department's compliance team that they were employed by Yellow Jacket and were paid by the hour. Even at the hearing, Mr. Stinchcomb continued to maintain that he was paid on an hourly basis. Mr. McCarty tried to explain his answer to the compliance team by reference to how he arrived at his bid, but this testimony was unconvincing. The men were paid in cash, and Ms. Riopelle submitted no ledgers or other documentation to support her claim that she was paying the men on a per-job basis, despite a Department rule requiring her to maintain such records. The nature of the work being performed by the five men makes it highly unlikely that any one of them could be held responsible for the satisfactory completion of the work or could be held liable for a failure to complete the work or services. While the men made some effort to separate the tasks at the job site, Mr. McCarty conceded that they helped each other out when necessary. The men were using equipment belonging to Ms. Riopelle. It was claimed at the hearing that the men were leasing the equipment from Ms. Riopelle, but the testimony did not agree on the terms of the lease. Ms. Riopelle's statement that she rented the equipment to Mr. Conner for $20 per day roughly comported with Mr. McCarty's testimony that each man paid $20 per week for the equipment. However, Mr. King testified that he paid $50 per week to Edward Riopelle for use of the air tools. There was no evidence that any of the men incurred the principal expenses related to their work, could realize a profit or suffer a loss in connection with performing their work, had continuing or recurring business liabilities or obligations, or that the success or failure of their business depended on the relationship of business receipts to expenditures. The weight of the evidence leads to the finding that Messrs. McCarty, King, Stinchcomb, Judson, and Conner were performing salaried labor as employees of Ms. Riopelle on March 27, 2003.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers' Compensation, directing that the Respondent stop work and cease her operations until such time as she secures workers' compensation coverage for her employees and directing that the Respondent pay a penalty in the amount of $21,100. DONE AND ENTERED this 16th day of January, 2004, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON 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 16th day of January, 2004.
The Issue Did Respondent fail to comply with Sections 440.10 and 440.38, Florida Statutes, and if so, what penalty should be imposed.
Findings Of Fact Petitioner is the agency of the State of Florida government responsible for enforcing the statutory requirement, pursuant to Chapter 440, Florida Statutes, that employers secure the payment of workers' compensation for the benefit of their employees. Respondent works in the construction industry, specifically as it relates to drywall services. On February 25, 2004, Petitioner's investigator, David Kunz, visited Respondent's worksite at 400 West Bay Street in Jacksonville, Florida (also known as the Bennett Federal Building). Petitioner's investigator observed 12 workers engaged in drywall construction. Mr. Kunz spoke with Respondent's project foreman at the worksite, and with the assistance of a Spanish-speaking colleague, he interviewed all of Respondent's workers at the site. A representative of the general contractor, Skanska, U.S.A., furnished Petitioner's investigator with a certificate of workers' compensation insurance which had been provided to the general contractor by Respondent as a subcontractor on the Bennett Federal Building job. The address listed for Respondent was in North Carolina, and the producer of the policy also had a North Carolina address. The next day, Petitioner's investigator obtained a copy of Respondent's workers' compensation insurance policy. After reviewing the policy, the investigator concluded that Respondent had violated Florida's Workers' Compensation Law, because an endorsement applying Florida premium rates was not a part of the policy. Mr. Kunz then issued a Stop Work Order to Respondent on February 26, 2004. The Stop Work Order required Respondent to cease its business operations immediately, due to its lack of compliance with Chapter 440, Florida Statutes. By the Stop Work Order, Respondent was charged with failure to secure the payment of workers' compensation that met the requirements of Chapter 440, Florida Statutes, and the Florida Insurance Code, because North Carolina premium rates, rather than Florida premium rates, had been applied. The Stop Work Order indicated that the penalty amount assessed against Respondent would be subject to amendment based on further information provided by Respondent, including the provision of business records. St. Paul's Insurance Companies maintain a presence in Orlando, Florida, but the documents subsequently provided by Respondent to the investigator as purported proof of Respondent's compliance with Chapter 440, Florida Statutes, did not meet all necessary Florida requirements. The carrier on Respondent's policy is St. Paul Fire and Marine Insurance Company. The "producer" was "Insur A Car Commercial" in North Carolina. The "producer" is the agent responsible for processing the policy for the insurance carrier. Respondent's workers' compensation insurance policy lists U & M Contractors, Inc., 9036 Arborgate Dr., Apt. A, Charlotte, NC 28273 in the "Insured" column. The policy number is 6S16UB-0130B52-8-03. Respondent's insurance policy was "produced" outside Florida. Respondent had procured workers' compensation insurance from an insurance carrier which was appropriately licensed to do business in Florida, but Respondent did not maintain at all times a Florida endorsement to its policy indicating that the applicable premium rates were Florida premium rates. Respondent's workers' compensation insurance policy includes no Florida endorsement showing the application of Florida premium rates. Only North Carolina is listed in Item 3A of Respondent's workers' compensation policy. The endorsement (WC 00 03 26 (A)) for "Other States Insurance" in Respondent's policy specifically states that it "does not satisfy the requirements of that state's workers' compensation law" for any state not listed in Item 3A. Florida is not listed in Item 3A. The "Extension of Information" page of Respondent's workers' compensation insurance policy indicates the type of work that Respondent intends to perform, pursuant to the policy. The type of work is indicated by a class code, or number, assigned to the type or category of work. The Extension of Information page assigns class code 5445 (drywall installation) as to the work Respondent would be performing under the policy. The source for the class codes is the SCOPES Manual, published by the National Council on Compensation Insurance (NCCI). Petitioner's Agency's adoption of the SCOPES Manual was accomplished by Florida Administrative Code Rule 69L-6.021. Respondent's policy's Extension of Information page further indicates that a premium rate (rate per $100.00 of remuneration provided to Respondent's employees) of $10.20 had been applied by the insurer for class code 5445, and that the premium rate was for North Carolina, not Florida. By contrast, the approved Florida premium rate for class code 5445 is $20.88 per $100.00 of remuneration. The source for Florida premium rates is the NCCI Basic Manual. Mr. Kunz testified that the Basic Manual is used regularly by workers' compensation investigators. Mr. Kunz issued an Agency Request for Business Records on February 26, 2004, the same date as the Stop Work Order. He specifically sought Respondent's payroll records, because Chapter 440 requires Petitioner "to calculate the penalty of an employer who is in noncompliance based on the employer's payroll." Some payroll records were forwarded to Mr. Kunz by Respondent. Some payroll records were provided to one of Petitioner's fellow investigators by a general contractor for whom Respondent had subcontracted drywall installation at the Bennett Federal Building worksite. The latter records were part of a separate investigation, but were shared between the two investigators. However, several weeks of Respondent's payroll records were not initially provided from any source. Respondent's payroll records include, among other entries, the names of its workers and the dates and amounts of remuneration provided to those workers. The records indicate that Respondent provided remuneration to its workers in the years 2003 and 2004. The penalty period assigned by Petitioner against Respondent is from November 17, 2003, through February 25, 2004, because November 17, 2003, was the day that work on the Bennett Federal Building began, and February 25, 2004, was the date listed in the Stop Work Order. Mr. Kunz used the payroll records he had to calculate an initial penalty amount of $74,479.90. Payroll for weeks not accounted for in Respondent's first production of payroll records was imputed by Mr. Kunz in the initial penalty amount, pursuant to Chapter 440, by calculations based on the first records he had. He issued the First Amended Penalty Assessment Order (Amended Order) to Respondent on March 3, 2004, in the amount of $74,479.90. A subsequent production of records by Respondent caused Petitioner to recalculate the penalty for some weeks for which payroll previously had only been imputed. The recalculation caused the assessed penalty amount to decrease to $51,779.50, and on March 9, 2004, a second Amended Order in the amount of $51,779.50 was issued to Respondent. The second Amended Order included the imputation of payroll for Respondent's two owners, Juan Mitchell (Mitchell) and Hector Urbina (Urbina). Mr. Kunz had received no payroll records at any time for the two owners, though he had twice specifically requested those records. He determined that the owners were named on Respondent's insurance policy and had actually been present on the Florida worksite. Mitchell and Urbina are classified under code 5445 (drywall installation). Their respective average weekly wages for the entire penalty period was imputed according to Chapter 440, and the penalty amount for Mitchell and Urbina was calculated by first multiplying the evaded premium amount by the premium rate for class code 5445. The evaded premium amount was determined by taking the amount of wages for a penalty period, dividing it by one hundred (100), and multiplying it by the premium rate for the pertinent class code. The evaded premium amount was then multiplied by 1.5 to arrive at the penalty amount assessed for Mitchell ($4,434.72) and for Urbina ($4,434.72). The 1.5 multiplier is specifically required by Section 440.107(7)(d)1., Florida Statutes. Wages were similarly imputed for the following employees for February 23, 24, and 25, in 2004, because records did not exist for that partial work week: Alex Rosales; Jose Jimenez: Julio Betata; Orlin Betata; Erick Estrada; Melvin Landaverde; Neptale Lopez; and Jose Valentin. In calculating the penalty for the remainder of Respondent's workers for whom payroll records were provided, Petitioner's investigator similarly applied the foregoing methodology.
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 that affirms the Stop Work Order and assesses the $51,779.50 penalty cited in the Second Amended Order. DONE AND ENTERED this 7th day of April, 2005, in Tallahassee, Leon County, Florida. S ELLA JANE P. DAVIS 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 April, 2005. COPIES FURNISHED: Joe Thompson Assistant General Counsel Department of Financial Services Division of Workers' Compensation 200 East Gaines Street Tallahassee, Florida 32399 Juan Carlos Mitchell U & M Contractors 1912 Southwest 67th Avenue Fort Lauderdale, Florida 33068 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
The Issue The issue is whether a delay of 706 days between the date Respondent entered a stop work order against Petitioner's former business and the date Respondent referred Petitioner's request for hearing to a hearing officer to conduct an informal proceeding pursuant to Subsection 120.57(2), Florida Statutes (2005)(an informal hearing),1 is harmless error within the meaning of Section 120.68.
Findings Of Fact Respondent is the state agency responsible for enforcing the Florida Workers' Compensation Law enacted in Chapter 440. On May 7, 2004, Petitioner was a closely held Florida corporation wholly owned by Mr. Martin Valka. Petitioner was engaged in the construction business as a tile setter. The principal place of business was 5327 Mayfair Court, Cape Coral, Florida. On May 7, 2004, an investigator for Respondent determined that Petitioner was in violation of applicable law and issued a stop work order in accordance with the requirements of Subsection 440.107(1). The stop work order precluded Petitioner from conducting business until the matter was resolved. The stop work order also imposed a penalty equal to 1.5 times the premium Petitioner would have paid for workers' compensation insurance coverage. On May 10, 2004, Respondent issued an Amended Order of Penalty Assessment Number 04-166-D7-1 (Amended Order). The Amended Order assessed Petitioner with a penalty of $4,039.76. Respondent more recently amended the penalty assessment to $3,779.89, which is the assessment at issue in this proceeding. On May 27, 2004, Petitioner filed a written petition requesting an informal hearing. The next day, the investigator's supervisor reviewed the petition, determined it was procedurally deficient, and denied the petition. The investigator informed Petitioner by telephone of the supervisor's determination. However, Respondent did not inform Petitioner that the denial of the petition was without prejudice to file an amended petition correcting the procedural inadequacies, which, of course, were unknown to Petitioner because the denial did not state with particularity the reasons for the denial and did not state a deadline for filing an amended petition. Petitioner requested a written notice of Respondent's determination that the request for hearing was inadequate and the grounds for the determination. Respondent did not respond. Respondent took no further action for approximately 706 days. The stop work order remained in effect. On June 30, 2004, the investigator recorded a note in the investigative file that Petitioner had not paid the fine. The investigator referred the matter to "collections." On May 4, 2006, Respondent referred Petitioner's request for hearing to the director of the Division of Workers' Compensation for assignment of a hearing officer to conduct an informal hearing. Petitioner filed an amended petition in the informal hearing. Respondent moved to dismiss the amended petition, in relevant part, on the ground that the amended petition raised disputed issues of fact not raised in the original petition. The hearing officer conducted an informal hearing based on written submissions. He concluded he had no jurisdiction because of the presence of disputed issues of fact and recommended referral to DOAH. Respondent committed several procedural errors under Chapter 120 (the APA). Respondent failed to issue a written denial of the request for hearing, failed to issue a written denial within 15 days of the date of the request, failed to state with particularity the reasons for the denial, and failed to deny the request for hearing without prejudice, stating a deadline for filing an amended petition to correct any procedural deficiencies.2 The procedural violations were not harmless error. They prejudiced Petitioner and may have affected the fairness of the proceeding. The procedural violations prejudiced Petitioner in several ways. The resulting delays prevented Petitioner from conducting its business for approximately 706 days. Petitioner ceased to exist. The delays denied Petitioner the financial ability to pay the fine at issue in this proceeding. The 706- day stop work order deprived Petitioner of the financial means to retain counsel to represent Petitioner. Mr. Valka obtained employment in a different occupation, but that was inadequate and did not last. Mr. Valka became a "stay-home dad." The delays caused by procedural errors may have impaired the fairness of the proceeding. The delays operated to enforce a stop work order for 706 days with no recourse to Petitioner that complied with relevant due process requirements in the APA. Petitioner's request for hearing, unlike the normal penal proceeding under the APA, did not toll the imposition of an administrative penalty in the form of a stop work order. The request for hearing tolled only that part of the penalty proposed as an assessment of money. The procedural errors resulted in delays that may have impaired Petitioner's ability to cross examine witnesses for Respondent and Respondent's exhibits. The delays may have resulted in the unavailability of witnesses, or at least their ability to recall facts, as well as the unavailability of exhibits Petitioner needed to support a defense. The delay may have impaired discovery.
Recommendation Based on the Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a final order dismissing the stop work order and proposed assessment against Petitioner. DONE AND ENTERED this 23rd day of May, 2008, in Tallahassee, Leon County, Florida. S 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 23rd day of May, 2008.
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 (Department), 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, Po’ Boys, Inc. (Po’ Boys), is a Florida corporation engaged in business operations as a restaurant in the State of Florida from January 31, 2010, through January 30, 2013. Respondent employed more than four non-exempt employees during the periods January 31 through February 24, 2010; June 8 through September 3, 2010; and July 11, 2012, through January 30, 2013. Respondent was an "employer" as defined in chapter 440, Florida Statutes, throughout the penalty period. All of the individuals listed on the Penalty Worksheet of the 2nd Amended Order of Penalty Assessment were "employees" (as that term is defined in section 440.02(l5)(a), Florida Statutes) of Respondent during the periods of noncompliance listed on the penalty worksheets. None of the employees listed on the Penalty Worksheet can be classified as independent contractors, as defined in section 440.02, Florida Statutes. Mr. Jonas Hall is a workers’ compensation compliance officer who has worked for Petitioner for about four years. He has been involved with between 200 and 300 cases. On the morning of January 30, 2013, Mr. Hall received a “referral” report that Po’ Boys was not securing the payment of workers’ compensation for its employees. Po’ Boys operates three “traditional” restaurants in Tallahassee, which provide wait-service to their customers. Mr. Hall checked the Florida Department of State’s “Sunbiz” website, which gave him information on Po’ Boys’ legal structure, corporate officers, and principal location. He also checked workers’ compensation information for Po’ Boys, Inc., by accessing the Coverage and Compliance Automated System (CCAS) maintained by the Department. It indicated that Po’ Boys’ last coverage, which had become effective on February 6, 2012, had ended on July 11, 2012. He determined that active workers’ compensation exemptions were on file for four individuals, including Mr. Carmen Calabrese and Mr. Jon Sweede, co-owners of Po’ Boys. Information in the CCAS is submitted by insurance companies and the National Council on Compensation Insurance (NCCI). Mr. Hall drove to the College Avenue location of Po’ Boys to conduct a site visit, but it did not appear open because there were no vehicles present and the lights were off. Mr. Hall proceeded to the West Pensacola Street location. There were vehicles present and he saw an individual who appeared to be arranging chairs on the patio. Mr. Hall introduced himself and explained what he was doing there, and was then referred to Mr. Carmen Calabrese, the manager. It was about 10:00 a.m. Payroll records indicate that employees reported for work between 10:00 and 11:00 and that the restaurant was open to serve lunch and dinner. Mr. Calabrese took Mr. Hall to a “Broken Arm” poster which had a workers’ compensation sticker on the bottom. The sticker contained a workers’ compensation policy number and periods of coverage, as well as contact information for Zenith Insurance Company. Mr. Hall contacted Zenith Insurance Company, and they confirmed that coverage had not been in effect since July 11, 2012. In response to Mr. Hall’s questions, Mr. Calabrese indicated that Po’ Boys had between 50 and 60 employees working at its three locations. Mr. Calabrese told Mr. Hall that he had no knowledge that coverage was not in effect and that Mr. Hall would have to talk to Mr. Sweede, who handled the workers’ compensation for the business. Mr. Calabrese was a credible witness. Mr. Hall called Mr. Sweede, who in turn told Mr. Hall to contact Mr. Wade Shapiro, his insurance agent for providing workers’ compensation coverage. Mr. Sweede then called Mr. Shapiro as soon as he completed his telephone call with Mr. Hall. When Mr. Hall later telephoned Mr. Shapiro, Mr. Shapiro confirmed that Po’ Boys had no policy in effect, but said that he was in the process of obtaining coverage for them. Mr. Hall contacted his supervisor, Ms. Michelle Newcomer, who provided him with a Stop-Work Order Number. Mr. Hall served the Stop-Work Order and Order of Penalty Assessment on Mr. Calabrese, along with a Request for Production of Business Records for Penalty Assessment Calculation, at about 11:15 a.m. Although some records indicated that the Stop-Work Order was served at 10:30, other records and the testimony of the witnesses that it was served at 11:15 were more credible. Mr. Sweede testified that he was unaware until January 30, 2013, that his workers’ compensation coverage was not in effect. He testified that the Electronic Funds Transfer payment “came back” in July, but that he had been unaware of this. He testified, “I must not have found the paperwork, must not have looked at the envelopes, take all the heat for that in this business.” Mr. Sweede testified that he later learned Mr. Shapiro was not only aware that Po’ Boys’ coverage was not in effect, but that he had already been working to get Po’ Boys new coverage before Mr. Sweede telephoned him on January 30, 2013, all without the knowledge or authorization of Mr. Sweede. Mr. Sweede entered into an agreement to obtain workers’ compensation coverage for Po’ Boys sometime on January 30, 2013. Several documents were required, at least one with a notary’s signature. Mr. Sweede signed a letter stating that there had been no workers’ compensation claims since his previous coverage had been canceled on July 11, 2012, joined the Florida United Businesses Association (FUBA), filled out an application for coverage, and made a down payment from the Po’ Boys bank account to the (FUBA sponsored) Florida Citrus, Business, and Industries Fund. Under the terms of the agreement, coverage was made effective retroactively to 12:01 a.m. on January 30, 2013. Mr. Sweede testified that Mr. Shapiro notified him, although he could not remember exactly how, that workers’ compensation coverage was obtained for Po’ Boys at around 11:00 a.m. on January 30, 2013, about 15 minutes before the Stop-Work Order was served. Mr. Sweede’s testimony as to how he came to be satisfied that his coverage at Zenith was actually not in effect, determined how and why it had been canceled, decided to obtain insurance elsewhere, and arranged for people in at least three different locations to prepare and execute all of the required documents in approximately 45 minutes, from about 10:15 a.m. until 11:00 a.m., was unclear. The transcript reflects the following exchange: Q: Okay. So this is another –- this is something else. Obviously when Wade Shapiro came by you brought this check, right, and then he also had you sign these documents? A: I really couldn’t tell you. I couldn’t tell you which way, you know, I mean, obviously, you know, like I said, I was stressed. I got him the check. Whether he ran the check up, brought this stuff back, I probably couldn’t –- I can’t remember which chronology it was. It was, you know, a pretty stressful morning. But I know it was all fast, fortunately. Although it does not contain a jurat or notarial certificate,1/ the application for insurance does contain the signature and stamp of a notary public beneath the signatures of Mr. Sweede and Mr. Shapiro. All signatures on the document are followed by a handwritten notation of “1-30-13” in the space provided for a date. The signature and seal provide credible evidence that the document was signed sometime on January 30, 2013. Regardless of the time when coverage became effective, there is clear and convincing evidence in this case that Petitioner had no information reasonably available to it indicating that Respondent had obtained workers’ compensation coverage in the last minutes before the Stop-Work Order was issued. Respondent concedes it did not have coverage at the time of Mr. Hall’s site inspection, and does not claim that when coverage was obtained, it notified Petitioner, or even attempted to do so. Mr. Hall wrote a “Narrative” in a Department database on the afternoon of January 30, 2013, describing the events of the morning. Although Respondent demonstrated that the description was “modified” several days later on on February 5, 2013, the Department put on no evidence to explain what was modified, or why. The testimony of witnesses that Mr. Hall served the Stop-Work Order at 11:15 a.m. was deemed more credible under all of the circumstances than the notation in the Narrative that it was served at 10:30 a.m. Respondent executed a Payment Agreement Schedule for Periodic Payment of Penalty and was issued an Order of Conditional Release from the Stop-Work Order on February 6, 2013. Po’ Boys failed to secure the payment of workers’ compensation for its employees from January 31 through February 24, 2010; June 8 through September 3, 2010; and July 11, 2012, through January 29, 2013. It obtained coverage sometime on January 30, 2013. Respondent would have paid an amount less than $11,565.68 in premiums for those periods during which it failed to secure the payment of workers’ compensation, because that figure should be reduced by the premium paid for coverage on January 30, 2013. Payroll records submitted by Po’ Boys indicate several employees were paid for varying hours after 11:15 a.m. on January 30, 2013. The parties stipulated that the Department has assigned the appropriate class code and manual rates to Respondent's employees from the NCCI SCOPES Manual.
Recommendation Upon consideration of the above 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, Po’ Boys, Inc., violated the requirement in chapter 440, Florida Statutes, that it secure workers' compensation coverage for its employees, and imposing upon it a total penalty assessment of $17,349.70, reduced by the amount attributable to lack of coverage on January 30, 2013. DONE AND ENTERED this 23rd day of May, 2013, in Tallahassee, Leon County, Florida. S F. SCOTT BOYD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of May, 2013.
The Issue The Principal issues in this matter are whether the Department of Financial Services, Division of Workers’ Compensation acted appropriately and within its’ statutory authority when it entered the Second Amended Order of Penalty Assessment and Stop-Work Order against the Petitioner for failing to secure workers’ compensation insurance for their employees when 4 tequired by Florida law, and whether any provisions of the Florida Workers’ Compensation Law provide for the mitigation or rescission of penalties against the Petitioner. 1 PRELIMINARY STATEMENT. This proceeding arose out of the requirement in Florida workers’ compensation law that employers must secure the payment of workers’ compensation insurance for the protection of their employees. The Petitioner in this matter is a Florida corporation currently doing business as a neighborhood food and convenience store in Fort Walton Beach, Florida. On April 26, 2011, Larry Eaton, a Compliance Investigator for the Florida Department of Financial Services, Division of Workers’ Compensation conducted a random job site workers’ compensation compliance investigation at the Petitioner’s place of business. After concluding the Petitioner had four (4) employees and did not maintain workers’ compensation insurance, the Department issued a Stop-Work Order and delivered a request for the production of business records. The Petitioner and their accountant cooperated with the Department’s investigation and provided records that were used to determine the mandated statutory monetary penalty for failing to maintain workers’ compensation insurance. The Petitioner then executed a penalty payment plan with the Department and also came into compliance with Florida’s Workers’ Compensation Law. The Petitioner has consistently objected to the Departments mandated statutory penalty as excessive, in violation of both the Florida and Federal Constitution, and contrary to the “principle of proportionality”. The Department originally referred this matter to this Hearing Officer for a F.S. 120.57(2) informal hearing, but that matter was closed when the Parties agreed a disputed issue of fact existed. This matter was then forwarded to the Florida Division of Administrative Hearings to hold a formal hearing pursuant to F.S. 120.57(1), and after discovery, the Administrative Law Judge closed his file after a finding there were no disputed issues of material fact. This matter was again assigned to this Hearing Officer to hold a telephonic informal hearing pursuant to Section 120.57(2), Florida Statutes, which occurred on November 1, 2011. Both Parties timely submitted Proposed Recommended Orders. EXHIBITS AND WITNESSES The Department submitted Eleven (11) Exhibits that are admitted into evidence without objection and include the following: Respondents Exhibit |: A copy of the Petitioner’s corporate status as contained within the Florida Secretary of State Records, dated April 26, 2010, the same day as the Departments random workers’ compliance Investigation. Respondent’s Exhibit 2: A two (2) page April 26, 2010, printout from the Department’s Financial Services Coverage and Compliance Automated System (“CCAS”) database for Mubarak Trading Corporation, Inc. teflecting no evidence of workers’ compensation insurance coverage and no exemptions from coverage. Respondent’s Exhibit 3: A copy of the Department’s hand delivered April 26, 2010 Stop- Work Order. Respondents Exhibit 4: A copy of the Department’s hand delivered April 26, 2011, Request for Production of Business Records for Penalty Assessment Calculation. Respondents Exhibit 5: A twenty six (26) page composite exhibit of the Petitioner’s payroll and -business records provided to the Department’s workers’ compensation compliance investigator. Respondent’s Exhibit 6: A copy of the Department’s May 12, 2010 Amended Order of Penalty Assessment hand delivered to the Petitioner on May 13, 2010. Respondent’s Exhibit 7: A copy of the Department’s’ Payment Agreement Schedule for Periodic Payment of Penalty executed by the Petitioner on May 13, Respondent's Exhibit 8: Respondent’s Exhibit 9: Respondent’s Exhibit 10: Respondent’s Exhibit 11: 2010, wherein the Petitioner paid Eighteen Hundred ($1,800.00) dollars as a ten percent (10%) down-payment on the Department’s Administrative Penalty. A copy of the Department’s Order of Conditional Release From Stop-Work Order dated May 13, 2010, that was entered after the execution and payment reflected in Respondent's Exhibit 7. A copy of the Department’s Second Amended Order of Penalty Assessinent dated February 2, 2011. A five (5) page excerpt from the National Council on Compensation Insurance, Inc. (“NCCI”) Scopes Manual description of Classification Code 8017 (Retail Store). A forty-nine (49) page excerpt of NCCI approved Manual Rates for Classification Code 8017, used in the calculation of the Department’s May 12, 2010, Amended Order for Penalty Assessment and February 2, 2011, Second Amended Order of Penalty Assessment. The Petitioner submitted two (2) exhibits that were admitted into evidence and consist of the following: Petitioner’s Exhibit 1: Petitioner’s Exhibit 2. A two (2) page copy of the Petitioner’s timely filed request for an informal proceeding to contest his administrative penalty, pursuant to Section 120.57(2), Florida Statutes, A four (4) page May 5, 2011, letter of tax representation from Mr. Chris Marsh and Mr. James Marsh, who provide accounting and tax services for and on behalf of Mubarak ‘Trading Corporation, Inc. The Department called two (2) witnesses to testify at the telephonic informal hearing, including Mr. Larry Eaton, a workers’ compensation compliance investigator for the Department, and Mrs. Michelle Newcomer, a workers’ compensation penalty calculator for the Department. The Petitioner offered the testimony of its’ President Ziad (“Mike”) Mubarak, as well as their tax advisors, Mr. Christopher Marsh, and Mr. James Marsh. Both Parties submitted Proposed Recommended Orders. FINDINGS OF FACT. Pursuant to Section 440.107, Florida Statutes, the Respondent is the state agency tesponsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees. The Petitioner is a Florida corporation that first registered with the Florida Department of State on July 15, 1993, and was in good-standing on April 26, 2010, the date on which the Department conducted their random workers’ compensation compliance investigation. (Respondent’s Exhibit 1.) On April 26, 2011, the Respondents Workers’ Compensation Compliance Investigator, Mr. Larry Eaton, conducted a random compliance investigation at the Principal Business Address of Mubarak Trading Corporation, Inc., in Fort Walton Beach, Florida. (Respondent’s Exhibit’s 2, 3, and 4.) Upon entering the Petitioner’s work-place on April 26, 2011, the Department’s compliance investigator conducted a field interview, as well as a database search to confirm the existence of four (4) employees of Mubarak Trading Corporation, Inc., and the lack of either workers’ compensation insurance or exemptions from workers? compensation insurance coverage. (Respondent’s Exhibits 2, 3, and 4.) Upon finding four (4) employees and no workers’ compensation insurance coverage for those employees, the Department’s compliance investigator hand delivered an April 26, 2010, Stop Work Order, as well as a Request for Production of Business Records for Penalty Assessment Calculation seeking payroll information for the past three (3) years. (Respondent’s Exhibits 3 and 4.) The Petitioner provided business records to the Department in response to their Request, and based on those records, an Amended Order of Penalty Assessment was hand delivered to the Petitioner on May 13, 2010, in the amount of Seventeen Thousand Seven Hundred Ninety One and 76/100 Dollars ($17,791.76). (Respondent’s Exhibits 5 and 6.) Under protest, and in the effort to remove the Department’s April 26, 2010, Stop Work Order, the Petitioner executed a Payment Agreement Schedule for Periodic Payment of Penalty on May 13, 2010, paying Eighteen Hundred Dollars ($1,800.00) to the Department as a ten percent (10%) down-payment of the administrative penalty. (Respondent’s Exhibit 7.) The Petitioner did not purchase a policy of workers’ compensation insurance, but instead the Corporation’s President obtained an exemption from the requirement of being covered by workers’ compensation insurance. With only three (3) remaining non- exempt employees, Florida law does not require an underlying worker’s compensation insurance policy, and Mubarak Trading Corporation, Inc., was no longer in violation of Florida Workers’ Compensation Law. , Mrs. Michelle Newcomb, Penalty Calculator for the Florida Department of Financial Services, Division of Workers’ Compensation, Bureau of Compliance, was assigned the task of calculating the statutory penalty to be assessed against Mubarak Trading Corporation, Inc., for failing to secure workers’ compensation insurance. Utilizing NCCI Class Code 8017 for retail stores, the appropriate NCCI premium pages for Class Code 8017, and the documentation provided by the Petitioner, the Department calculated the mandated statutory penalty of Seventeen Thousand Seven Hundred Ninety One and 76/100 ($17,791.76) in their May 12, 2010, Amended Order for Penalty Assessment (Respondent’s Exhibit 6, 10 and 11.) The Department’s administrative penalty was ultimately adjusted downward to Sixteen Thousand, Four Hundred Twenty Nine and 44/100 Dollars ($16,429.76), as reflected in the Department’s February 2, 2011, Second Amended Order of Penalty Assessment. (Respondents Exhibit 9.) There are no disputed issues of material fact in this matter. The Petitioner’s Proposed Recommended Order acknowledges “[t]he calculation of the Section 440.107(7)(d) penalty is not in question...” The Petitioner has consistently objected to the “excessive” amount of the Department’s penalty, challenged the Department’s authority to assess unconstitutional penalties, and argues the penalty assessed violates the “principle of proportionality.”
Conclusions Christopher O. Marsh, Econotax 139 Beal Parkway SE, Ste. 102 ne Fort Walton Beach, Florida 32548 f Representative for Mubarak Trading Corp, Inc. Jamila Georgette Gooden, Esq. Florida Department of Financial Services Division of Legal Services Tallahassee, Florida 32399-4429 Attorney for the Florida Department of Financial Services, Division of Workers’ Compensation
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that a Final Order be entered affirming the Division of Workers’ Compensation Second Amended Order of Penalty Assessment in the amount of Sixteen Thousand Four Hundred Twenty Nine and 44/100 Dollars ($16, 429.44). Respectfully submitted this 19" day of December, 2011. Department of Financial Services 3700 Lifford Circle Tallahassee, Florida 32309 Phone: (850)668-9820 Fax: (850)668-9825 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the above and foregoing Recommended Order has been provided by US Mail to: Mr. Christopher Marsh, Econotax, on behalf of Mubarak Trading Corporation, Inc., 139 Deal Parkway, SE, Suite 102, Fort Walton Beach, Florida 32548 and via hand delivery in the interests of judicial economy to Alexander Brick, Esq. Department of Financial Services, Division of Legal Services, 200 East Gaines Street, Tallahassee, FL 32399-4429 this 19" day of December, 2011. Alan J. ~ 2h -13-
