The Issue Whether Respondents violated the provisions of chapter 440, Florida Statutes, by failing to secure the payment of workers' compensation coverage, as alleged in the Stop-Work Orders, and, if so, what penalty is appropriate.
Findings Of Fact The Department is the state agency charged with enforcing the requirement of chapter 440, Florida Statutes, that employers in Florida secure workers' compensation coverage for their employees. § 440.107(3), Fla. Stat. Respondents are gas station/convenience stores located in South Florida. Northlake was created by Nazma Akter on May 6, 2014. MB was created by Ms. Akter on March 23, 2010. Congress Valero was created by Muhammad Saadat on July 21, 2011. Hena was created by Ms. Akter and Abu Ahsan on December 14, 2011. Hayma was created by Ms. Akter on December 14, 2011. Blue Heron was created by Ms. Akter on August 4, 2009. At all times relevant hereto, Respondents were duly-licensed to conduct business in the state of Florida. On February 2, 2015, the Department's Compliance Investigator Robert Feehrer, began a workers' compensation compliance investigation of Gardenia, LLC. Investigator Feehrer called the number listed for Gardenia, LLC, and was provided with a corporate office address. On February 10, 2015, upon arrival at Gardenia, LLC's, corporate office located at 165 US Highway 1, North Palm Beach, Florida, 33408, Investigator Feehrer spoke with Operations Manager Mohammad Hossain. Mr. Hossain stated that Gardenia, LLC, was a paper corporation and existed only for the purpose of paying unemployment taxes on the "six stores." Mr. Hossain went on to provide Investigator Feehrer with a list of Respondents and names of the employees that worked at each store. As an employee of Gardenia, LLC, and Respondents, Mr. Hossain's statements are party opponent admissions and bind Respondents. Lee v. Dep't of Health & Rehab. Servs., 698 So. 2d 1194, 1200 (Fla. 1997). With Mr. Hossain's statements and the list of Respondents' employees, Investigator Feehrer then consulted the Division of Corporations website, www.sunbiz.org, and confirmed that Respondents were current, active Florida companies. Investigator Feehrer then consulted the Department's Coverage and Compliance Automated System ("CCAS") for proof of workers' compensation coverage and exemptions associated with Respondents. Investigator Feehrer's CCAS search revealed that Respondents had no workers' compensation policies and no exemptions. On February 24, 2015, Investigator Feehrer conducted site visits at each of the six stores. Ms. Akter and Mr. Hossain accompanied Investigator Feehrer during these site visits. At all times material hereto, Ms. Akter was a corporate officer or managing member of each of the six Respondents. Muhammed Saadat and Abu Ahsan were corporate officers or managing members of Congress Valero, Hena, and Blue Heron. Kazi Ahamed was a corporate officer or managing member of Congress Valero and Hayma. Kazi Haider and Mohammed Haque were managing members of Hayma. All received compensation from the companies with which they were involved. Although Investigator Feehrer only personally observed one employee working at each location during his site visits, the payroll records revealed that at least four employees (including corporate officers or managing members without exemptions) received compensation for work at each location during the relevant period. Investigator Feehrer required additional information to determine compliance, and with Respondents' permission, contacted Respondents' accountant. Investigator Feehrer met with the accountant at least two times to obtain relevant information prior to March 30, 2015. Upon Ms. Akter's authorization, the accountant provided tax returns and payroll information for Respondents' employees. Information from Ms. Akter and Mr. Hossain also confirmed the specific employees at each of the six stores during the period of March 30, 2013, through March 30, 2015. On March 30, 2015, based on his findings, Investigator Feehrer served six Stop-Work Orders and Orders of Penalty Assessment. The Stop-Work Orders were personally served on Ms. Akter. Mr. Hossain was present as well and confirmed the lists of employees for each of the six stores were accurate. In April 2015, the Department assigned Penalty Auditor Christopher Richardson to calculate the six penalties assessed against Respondents. Respondent provided tax returns for the audit period and payroll transaction details were provided, as well as general ledgers/breakdowns, noting the employees for each Respondent company. Based on Investigator Feehrer's observations of the six stores on February 24, 2015, Auditor Richardson used the classification code 8061 listed in the Scopes® Manual, which has been adopted by the Department through Florida Administrative Code Rule 69L-6.021(1). Classification code 8061 applies to employees of gasoline stations with convenience stores. Classification codes are four-digit codes assigned to various occupations by the National Council on Compensation Insurance to assist in the calculation of workers' compensation insurance premiums. In the penalty assessment, Auditor Richardson applied the corresponding approved manual rate for classification code 8061 for the related periods of non-compliance. The corresponding approved manual rate was correctly utilized using the methodology specified in section 440.107(7)(d)1. and rule 69L-6.027 to determine the final penalties. The Department correctly determined Respondents' gross payroll pursuant to the procedures required by section 440.107(7)(d) and rule 69L-6.027. On January 14, 2016, the Department served the six Amended Orders of Penalty Assessment on Respondents, assessing penalties of $1,367.06 for Northlake, $9,687.00 for MB, $12,651.42 for Congress Valero, $18,508.88 for Hena, $7,257.48 for Hayma, and $4,031.60 for Blue Heron. The Department has demonstrated by clear and convincing evidence that Respondents were engaged in the gasoline station, self-service/convenience store industry in Florida during the periods of noncompliance; that Respondents failed to secure the payment of workers' compensation for their employees, as required by Florida's Workers' Compensation Law; and that the Department correctly utilized the methodology specified in section 440.107(7)(d)1. to determine the appropriate penalties.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a consolidated final order upholding the Stop-Work Orders and the Amended Orders of Penalty Assessment in the amounts of $1,367.06 for Northlake Mobile Enterprises, Inc.; $9,687.00 for MB Food and Beverage, Inc.; $12,651.42 for Congress Valero, Inc.; $18,508.88 for Hena Enterprises, Inc.; $7,257.48 for Hayma Enterprises, Inc.; and $4,031.60 for Blue Heron BP, Inc. DONE AND ENTERED this 16th day of June, 2016, in Tallahassee, Leon County, Florida. S MARY LI CREASY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of June, 2016.
The Issue The issue is whether the Stop-Work Order and the Third Amended Order of Penalty Assessment entered by Petitioner on July 25, 2013, and August 13, 2013, respectively, should be upheld.
Findings Of Fact The Department is the state agency tasked with the responsibility of enforcing the requirement of section 440.107(3), Florida Statutes, that employers in Florida secure the payment of workers' compensation for their employees. Respondent, Mad Dog Marketing Group, Inc., is a corporation organized under chapter 607, Florida Statutes, and was registered with the Florida Department of State, Division of Corporations, throughout the period of July 26, 2010, to July 25, 2013. At all times relevant to this proceeding, Respondent was engaged in the operation of a hardware store business with three locations in Florida. On July 25, 2013, based upon an anonymous referral, Tracey Gilbert, the Department's compliance investigator, commenced a workers' compensation compliance investigation of Respondent by visiting the job site, an appliance parts store at 730 West Brandon Boulevard, Brandon, Florida, and interviewing Sharon Belcher. According to Ms. Gilbert, Ms. Belcher informed her that she had 11 employees at the time of the site visit and that she did not have workers' compensation coverage for them. Ms. Belcher showed Ms. Gilbert an application for workers' compensation insurance and said she had not taken action with it since the company wanted a $10,000 premium. She also showed Ms. Gilbert some OSHA and workplace posters, but not the typical "broken arm poster" that describes workers' compensation coverage for a place of business. Ms. Belcher then gave Ms. Gilbert a list of Respondent's 11 current employees. On her laptop computer, Ms. Gilbert consulted the Department's Coverage and Compliance Automated System (CCAS) database to determine whether Respondent had secured workers' compensation coverage or an exemption from the requirements for coverage for its employees. CCAS is the database Ms. Gilbert routinely consults during the course of her investigations. She determined from CCAS that Respondent neither had workers' compensation coverage for her employees nor had received an exemption from such coverage from the Department. Ms. Belcher's recollection of her meeting with Ms. Gilbert differs from Ms. Gilbert's. Ms. Belcher recalled that she had applied for insurance with ADP on July 11, 2013, received the "broken arm poster," and believed she was covered at the time Ms. Belcher conducted her investigation. She offered an exhibit showing photographs of posters (but not the "broken arm poster") on the office bulletin board. She also offered an exhibit she testified was the UPS label from the tube containing the "broken arm poster." No photograph of the "broken arm poster" was produced as an exhibit. Ms. Gilbert did not contact ADP to verify whether Respondent had coverage on the date of her site visit to the Brandon store. Ms. Gilbert issued a Stop-Work Order to Respondent and a concurrent Request for Production of Business Records for Penalty Assessment Calculation at 11:20 a.m. on July 25, 2013. Ms. Belcher first submitted an application for workers' compensation coverage on July 11, 2013, but coverage was not bound on that date. Ms. Belcher submitted the paperwork to bind her insurance coverage on the afternoon of July 25, 2013, according to Mark Cristillo, an employee of ADP Insurance. Mr. Cristillo testified that he had made several attempts during the month of July 2013 to obtain the signed documents from Ms. Belcher, including an attempt as late as July 23, 2013, at 11:45 a.m. Ms. Belcher told Mr. Cristillo at that time that she had not reviewed the quote package. At 11:20 a.m., the time Ms. Gilbert's issued the Stop-Work Order on July 25, 2013, Ms. Belcher had not bound her insurance coverage. When she submitted the payment with the signed documents to ADP later that afternoon, the coverage was bound effective 12:01 a.m. on July 25, 2013. The records produced by Ms. Belcher were given to Chad Mason, one of the Department's penalty auditors, to calculate the penalty. He reviewed the records and determined the amount of gross payroll paid to Respondent's employees during the three- year penalty period preceding the investigation during which Respondent was not in compliance with the workers' compensation coverage requirements. Using Respondent's bi-weekly payroll chart, Respondent's Florida Department of Revenue UCT-6 reports, and the classification codes for each employee, Mr. Mason calculated a Third Amended Order of Penalty Assessment of $42,251.43, based upon what Respondent would have paid in workers' compensation premiums had it been in compliance with Florida's Workers' Compensation Law. The order was issued on October 24, 2013. Mr. Mason determined that the appropriate codes for Respondent's employees were 8010 and 8810, which are hardware store employees and general clerical employees, respectively. These codes were derived from the Scopes Manual, which lists all of the various jobs that may be performed in the context of workers' compensation. The manual is produced by NCCI, the National Council on Compensation Insurance, Inc., the nation's most authoritative data collecting and disseminating organization for workers' compensation. The parties stipulated prior to hearing that all of the individuals listed on the penalty worksheet of the Amended Order of Penalty Assessment were "employees" in the state of Florida of Respondent during the periods of non-compliance listed on the penalty worksheets. However, Respondent claimed that some of the employees were out-of-state and not subject to Florida law. Ms. Belcher testified that, as of July 25, 2013, three of its employees, Fred Hasselman, Douglas Strickland, and Josh Hyers, were employees of the Tennessee store and not subject to a Florida penalty. Mr. Hyers was a Florida employee prior to July 1, according to Ms. Belcher. However, all three of the employees were listed on the Florida Department of Revenue's UCT-6 form for the time period of the non-compliance. The UCT-6 form lists those employees who are subject to Florida's Unemployment Compensation Law. Mr. Mason reasonably relied upon the UCT-6 filings for the relevant time period to calculate Respondent's gross payroll in Florida. No evidence was produced to show them listed as Tennessee employees on that state's comparable tax form or any official document from outside Florida. The logical assumption is that they are Florida employees under the law. Accepting all the employees disclosed by Respondent as Florida employees led Mr. Mason to make his calculations of the penalty assessment using the appropriate codes from the Scopes Manual for hardware store and general clerical workers, 8010 and 8810. All the named employees on the Third Amended Order of Penalty Assessment were paid by Respondent in the amounts indicated on the penalty worksheet that accompanies that assessment during the penalty period of July 26, 2010, through July 25, 2013. Even though small discrepancies came up at the hearing regarding the classifications of some of Respondent's employees, the parties had stipulated to the accuracy of the classifications of those employees so those numbers will be accepted for purposes of this decision. Based upon the testimony at the hearing and the pre-hearing stipulations of the parties, the penalty assessment in the amount of $42,251.43 is accurate. Mr. Mason correctly applied the methodology for determining the amount of coverage required, determining that the appropriate premium for the three- year period would have been $28,167.50. When multiplied by the factor used to calculate the penalty, 1.5 times the premium, the total amount due is $42,251.43. The Department has proven by clear and convincing evidence that at the time the Stop-Work Order was issued and served on Respondent on the morning of July 25, 2013, Respondent had not secured workers' compensation coverage for its employees as required by chapter 440. On two occasions, August 2 and August 21, 2013, Ms. Gilbert returned to Respondent's Brandon location after the Stop-Work Order had been issued. The first was to serve the Amended Order of Penalty Assessment and the second was to serve the Second Amended Order of Penalty Assessment. On both occasions, the business was open in violation of the Stop-Work Order. A business under a Stop-Work Order may elect to enter into a payment plan after a ten percent down payment to keep the business open while a challenge to DOAH is under way. Respondent had not entered into such a plan. Therefore, the Department seeks $1,000 penalty for each of the days Ms. Gilbert visited the Brandon store and saw it open for business. This total additional penalty of $2,000 could have been greater had the Department further investigated whether the business remained open on other days after the Stop-Work Order had been imposed.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department issue a final order upholding the Stop-Work Order and Third Amended Order of Penalty Assessment, and assess a penalty in the amount of $42,251.43. It is further RECOMMENDED that the Department fine Respondent an additional $1,000 per day for the two days Respondent did not comply with the Stop-Work Order, resulting in a total penalty of $44,251.43. DONE AND ENTERED this 20th day of December, 2013, in Tallahassee, Leon County, Florida. S ROBERT S. COHEN 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 20th day of December, 2013. COPIES FURNISHED: Trevor S. Suter, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399 Kristian Eiler Dunn, Esquire Dickens and Dunn, P.L. 517 East College Avenue Tallahassee, Florida 32301 Julie Jones, CP, FRP, Agency Clerk Division of Legal Services Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390
The Issue The issue is whether The Department of Financial Services properly imposed a Stop Work Order and Amended Order of Penalty Assessment pursuant to the requirements of Chapter 440, Florida Statutes.
Findings Of Fact The Division is charged with the regulation of workers' compensation insurance in the State of Florida. Respondent AFS, LLC. (AFS), is a corporation located in Jacksonville, Florida, and is involved in the construction industry, primarily framing houses. Braman Avery is the owner and manager of AFS. Lee Arsenault is a general contractor whose business is located in Jacksonville, Florida. Mr. Arsenault contracted with AFS to perform framing services at a construction site located at 1944 Copperstone Drive in Orange Park, Florida. At all times material to this proceeding, AFS maintained workers' compensation coverage for its employees through a licensed employee leasing company. AFS contracted with Greenleads Carpentry, Inc. (Greenleads) to perform work at the job site in question. Prior to subcontracting with Greenleads, Mr. Avery requested from Greenleads, among other things, a certificate of insurance showing that Greenleads had general liability coverage and workers' compensation insurance. Greenleads provided a certificate of insurance to Mr. Avery showing that Greenleads had workers' compensation coverage. The certificate of insurance contains a policy number, dollar limits, and effective and expiration dates of June 1, 2004 through June 1, 2005. Debra Cochran is office manager of Labor Finders, an employee leasing company. According to Ms. Cochran, Labor Finders' corporate office issued the certificate of insurance to Greenleads. At the time of issuance, the certificate of insurance was valid. Greenleads did not follow through on its obligations to Labor Finders in that Green Leads did not "run its workers through" Labor Finders. Consequently, Greenleads' workers were not covered by workers' compensation as indicated on the certificate of insurance. Labor Finders did not issue any document showing cancellation or voiding of the certificate of insurance previously issued. Mr. Avery relied upon the face of the certificate of insurance believing AFS to be in total compliance with statutory requirements regarding workers' compensation for subcontractors. That is, he believed that the Greenleads' workers were covered for workers' compensation as indicated on the face of the certificate of insurance. Mr. Avery was not informed by Labor Finders or Greenleads that Greenleads did not, after all, have workers' compensation coverage in place on the workers performing work under the contract between AFS and Greenleads on the worksite in question. Bobby Walton is president of Insure America and has been in the insurance business for 35 years. His company provides general liability insurance to AFS. According to Mr. Walton, Mr. Avery's reliance on Greenleads' presentation to him of a purportedly valid certificate of insurance is the industry standard. Further, Mr. Walton is of the opinion that there was no obligation on behalf of Mr. Avery to confirm coverage beyond receipt of the certificate of insurance provided by the subcontractor. That is, there is no duty on behalf of the contractor to confirm coverage beyond receipt of the certificate of insurance. Allen DiMaria is an investigator employed by the Division. His duties include investigating businesses to ensure that the employers in the state are in compliance with the requirements of the workers' compensation law and related rules. On January 5, 2005, Mr. DiMaria visited the job site in question and observed 13 workers engaged in construction activities. This visit was a random site check. Mr. DiMaria interviewed the owner of Greenleads and checked the Division's database. Mr. DiMaria determined that Greenleads did not have workers' compensation coverage. After conferring with his supervisor, Mr. DiMaria issued a stop-work order to Greenleads, along with a request for business records for the purpose of calculating a penalty for Greenleads. In response to the business records request, Greenleads submitted its check ledger along with an employee cash payment ledger, both of which were utilized in calculating a penalty for Greenleads. On January 11, 2005, Mr. DiMaria issued an Amended Order of Penalty Assessment to Greenleads for $45,623.34. Attached to the Amended Order of Penalty Assessment issued to Greenleads is a penalty worksheet with a list of names under the heading, "Employee Name", listing the names of the employees and amounts paid to each employee. During the investigation of Greenleads, Mr. DiMaria determined that Greenleads was performing subcontracting work for Respondent. This led to the Division's investigation of AFS. Mr. DiMaria spoke to Mr. Avery and determined that AFS paid remuneration to Greenleads for work performed at the worksite. He checked the Division's data base system and found no workers' compensation coverage for AFS. He determined that AFS had secured workers' compensation coverage through Southeast Personnel Services, Inc. (SPLI), also a licensed employee leasing company. However, the policy with SPLI did not cover the employees of Greenleads performing work at the job site. Mr. DiMaria requested business records from Mr. Avery. Mr. Avery fully complied with this request. He examined AFS' check registry and certificates of insurance from AFS. Other than the situation involving Greenleads on this worksite, Mr. DiMaria found AFS to be in complete compliance. On January 10, 2005, after consulting with his supervisor, Robert Lambert, Mr. DiMaria issued a Stop Work Order to AFS. A Stop Work Order issued by the Division requires the recipient to cease operations on a job site because the recipient is believed to be not in compliance with the workers' compensation law. The Stop Work Order issued by Mr. DiMaria was site specific to the work site in question. Based upon the records provided by Mr. Avery, Mr. DiMaria calculated a fine. Penalties are calculated by determining the premium amount the employer would have paid based on his or her Florida payroll and multiplying by a factor of 1.5. Mr. DiMaria's calculation of the fine imposed on AFS was based solely on the Greenleads' employees not having workers' compensation coverage. On February 16, 2005, Mr. DiMaria issued an Amended Order of Penalty in the amount of $45,643.87, the identical amount imposed upon Greenleads. A penalty worksheet was attached to the Amended Order of Penalty Assessment. The penalty worksheet is identical to the penalty worksheet attached to Greenleads' penalty assessment, with the exception of the business name at the top of the worksheet and the Division's case number. Greenleads partially paid the penalty by entering into a penalty payment agreement with the Division. Greenleads then received an Order of Conditional Release. Similarly, AFS entered into a penalty payment agreement with the Division and received an Order of Conditional Release on February 16, 2005. Moreover, AFS terminated its contract with Greenleads. Lee Arsenault is the general contractor involved in the work site in question. AFS was the sole framing contractor on this project, which Mr. Arsenault described as a "pretty significant project." He has hired AFS to perform framing services over the years. However, because the Stop Work Order was issued to AFS, Mr. Arsenault had to hire another company to complete the framing work on the project. Mr. Avery estimates economic losses to AFS as a result of losing this job to be approximately $150,000, in addition to the fine. Mr. Arsenault, Ms. Cochran, as well as the Division's investigator, Mr. DiMaria, all agree with Mr. Walton's opinion, that it is customary practice in the construction industry for a contractor who is subcontracting work to rely on the face of an insurance certificate provided by a subcontractor. Robert Lambert is a workers' compensation district supervisor for the Division. When asked under what authority the Division may impose a penalty on both Greenleads and AFS for the same infraction, he replied that it was based on the Division's policy and its interpretation of Sections 440.02, 440.10, and 440.107, Florida Statutes.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Division of Workers' Compensation rescind the Amended Order of Penalty Assessment issued February 16, 2005, and the Stop Work Order issued to Petitioner on January 10, 2005. DONE AND ENTERED this 26th day of August, 2005, in Tallahassee, Leon County, Florida. S BARBARA J. STAROS 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 26th day of August, 2005. Endnote 1/ While this Recommended Order does not rely upon the case cited by Respondent in its Notice of Supplemental Authority, Respondent was entitled to file it. COPIES FURNISHED: Colin M. Roopnarine, Esquire Douglas D. Dolin, Esquire Department of Financial Services Division of Workers' Compensation East Gaines Street Tallahassee, Florida 32399 Mark K. Eckels, ESquire Boyd & Jenerette, P.A. North Hogan Street, Suite 400 Jacksonville, Florida 32202 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Carlos G. Muniz, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issue in the case is whether Moonlight General Contractors, Inc. (Respondent), should be assessed a penalty for an alleged failure to comply with the workers' compensation requirements referenced herein, and, if so, in what amount.
Findings Of Fact Pursuant to section 440.107, Florida Statutes (2015),1/ the Petitioner is the state agency charged with enforcing compliance with Florida’s workers’ compensation requirements. At all times material to this case, the Respondent was a business providing services in the construction industry with a main office located at 1900 18th Avenue South, St. Petersburg, Florida. On April 1, 2015, Kent Howe, employed by the Petitioner as a Compliance Investigator, observed two men working on a roof of a residential structure located at 2513 Anastasia Drive South, Daytona, Florida (the “subject property”.) Mr. Howe specifically observed that a portion of the roof structure was exposed and that the individuals were working on the roof trusses. Mr. Howe testified that the men identified themselves as “Milan Kreal” and “Svatopluk Vavra” and that they identified the Respondent as their employer. Mr. Howe accessed corporate records maintained online by the Department of State, Division of Corporations, and identified Abbey Khdair as the sole corporate officer for the Respondent. Mr. Howe accessed the Petitioner’s Coverage and Compliance Automated System (CCAS) to determine whether the Respondent was in compliance with applicable workers’ compensation requirements. CCAS is a database maintained by the Petitioner that contains workers’ compensation coverage information provided to the Petitioner by insurance providers. Pursuant to section 440.05, corporate officers can be exempted from workers’ compensation coverage requirements. Mr. Howe determined through CCAS that Mr. Khdair had an active exemption for himself as the corporate officer, but the two individuals working on the subject property had no workers’ compensation coverage. Mr. Howe contacted Mr. Khdair, who told Mr. Howe that the two men were employed through an employee leasing company identified as “Skilled Resources.” Personnel employed through licensed employee leasing companies can have workers’ compensation coverage arranged through the leasing companies. Mr. Howe contacted Skilled Resources and determined that, although on occasion the Respondent had obtained employees from Skilled Resources, the individuals working on the subject property had not been supplied to the Respondent by Skilled Resources. Mr. Howe thereafter issued a Stop-Work Order and posted it at the jobsite. On April 2, 2015, the Stop-Work Order was personally served on Mr. Khdair, along with a Request for Production of Business Records for Penalty Assessment Calculation for the period from April 2, 2013, through April 1, 2014 (the “audit period”). On that same date, Mr. Khdair paid a $1,000 penalty down payment towards the penalty assessment, in order to obtain a release from the Stop-Work Order and allow the subject property roof to be secured from potential inclement weather. By letter dated April 10, 2015, Mr. Khdair advised the Petitioner that, prior to April 1, 2015, the Respondent and the property owner had entered into a contract to perform work related to “a new gable roof, electrical, plumbing, and HVAC work.” Mr. Khdair wrote that he obtained the building permit for the project and that the property owner was to hire additional subcontractors to work under the permit Mr. Khdair had obtained. Mr. Khdair wrote that he “inadvertently” referred Mr. Howe to Skilled Resources when Mr. Howe contacted him on April 1, 2015, and that the property owner had hired the workers without Mr. Khdair’s knowledge or consent. Mr. Khdair wrote that, prior to Mr. Howe’s telephone call, Mr. Khdair was unaware that there were any people working at the subject location, other than those who were to have obtained their own sub-permits in relation to the project. On April 10, 2015, Mr. Khdair also submitted a letter purporting to be from the property owner stating that the owner had personally hired Mr. Vavra and “Guy Ackerly” to work on the roof. Neither of the two individuals observed by Mr. Howe working at subject property on April 1, 2015, identified himself as “Guy Ackerly.” The task of calculating the penalty assessment was assigned to Eunika Jackson, employed by the Petitioner as a Penalty Auditor. The Respondent failed to provide any business records to the Petitioner. Accordingly, Ms. Jackson calculated the penalty assessment pursuant to section 440.107(7)(e), which provides that in the absence of business records sufficient to determine payroll, the Petitioner is required to impute wages for the employees working without workers’ compensation coverage. As the corporate officer, Mr. Khdair had obtained an exemption from the coverage requirements. The National Council on Compensation Insurance (NCCI) assigns classification codes for various occupations related to levels of risk presented by the specific tasks performed by an employee. The codes are used to establish rates charged for workers’ compensation coverage and are relevant for determining the penalty assessed for violations of workers’ compensation requirements. For purposes of enforcing compliance with Florida’s workers’ compensation requirements, the Petitioner has adopted the NCCI codes through Florida Administrative Code Rules 69L- 6.021. Ms. Jackson correctly determined that NCCI Code 5551 is applicable in this case. NCCI Code 5551 (titled “Roofing-All Kinds & Drivers”) specifically applies to “the installation of new roofs and the repair of existing roofs” and includes “the installation and/or repair of joists, trusses, rafters, roof decks, sheathing, and all types of roofing materials.” In determining the penalty assessment, Ms. Jackson calculated the penalty based on the Respondent having three employees without workers’ compensation coverage. Ms. Jackson applied the procedures set forth in section 440.107(7)(d) and rules 69L-6.027 and 69L-6.028, and determined that the penalty assessment was $192,425.94, which reflects a penalty of $64,141.98 for each of the three individuals. Although Ms. Jackson’s calculation of the penalty was procedurally correct, the evidence establishes only that there were two individuals working on the roof of the subject property.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Financial Services, Division of Workers’ Compensation enter a Final Order against the Respondent imposing a penalty assessment in the amount of $128,283.96, as set forth herein. DONE AND ENTERED this 23rd day of October, 2015, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of October, 2015.
The Issue The issues are: (1) Whether Respondent, Bravo Construction, Inc. ("Respondent"), was in violation of the workers’ compensation requirements of Chapter 440.107, Florida Statutes (2003),1/ by failing to secure workers’ compensation coverage for its workers; (2) Whether such individuals possessed current valid workers’ compensation exemptions; and (3) Whether Respondent paid its workers remuneration outside of Respondent’s employee leasing company.
Findings Of Fact The Department is the state agency responsible for enforcing the requirement of Section 440.107, Florida Statutes, which requires that employers secure the payment of workers’ compensation coverage for their employees. Respondent is a company engaged in the construction industry. Specifically, Respondent's business is framing houses. At all time relevant to this proceeding, Elias Bravo was president of the company. On May 26, 2004, the Department’s investigators, Carol Porter and Kelley Dunning, conducted a random visit of a work site in Grassy Point, a gated community in Port Charlotte, Florida, and discovered Mr. Bravo and his workers on site as the house-framers. When the investigators arrived at the site, they spoke with Mr. Bravo, who advised the investigators that Respondent utilized a personnel leasing company, Time Management, which was actually a brokerage firm for Southeast Personnel Leasing, Inc. ("SEPL"), to secure workers’ compensation coverage. On May 26, 2005, Mr. Bravo was the only person in his crew who had coverage with SEPL. At the time of the site visit, the other men were not listed with SEPL because Mr. Bravo still had their applications in his car. After Respondent was unable to provide proof that the men had workers' compensation coverage pursuant to Subsections 440.107(3) and (7)(a), Florida Statutes, the investigators issued a Stop Work Order to Respondent while at the work site on May 26, 2004. On the same day that the Stop Work Order was issued, Investigator Dunning served Mr. Bravo with a Request for Production of Business Records for Penalty Assessment Calculation ("Request for Production of Business Records"). The Department requested copies of Respondent's business records in order to determine whether Respondent had secured workers' compensation coverage; whether Mr. Bravo or Respondent's employees had workers' compensation exemptions; and, if not, to determine the penalty assessment. In response to the Request for Production of Business Records, Mr. Bravo provided certificates of insurance, Respondent's check stubs written to various entities or individuals on behalf of Respondent, payroll records, and Form 1099s for the year ending 2003. Many of the documents provided by Mr. Bravo indicated that Respondent made payments directly to the entities and individuals. The Department maintains records regarding the workers' compensation coverage of individuals and entities in a statewide database called Compliance and Coverage Automated System ("CCAS"). The CCAS database is utilized by the Department to verify if an individual or entity has workers' compensation coverage or a valid exemption from coverage. As part of the Department's investigation, Investigator Porter conducted a CCAS search for Respondent's workers’ compensation insurance coverage records. This search verified that Mr. Bravo had workers' compensation coverage. However, many of the workers or entities to whom Respondent made direct payments did not have workers’ compensation coverage or current valid workers’ compensation exemptions. Based on a review of the payroll records, check stubs, and the Form 1099s that Respondent provided to the Department, Investigator Porter determined that Respondent was an "employer" as that term is defined in Subsection 440.02(16), Florida Statutes. Subsequently, the Department reassessed the original penalty and issued the Amended Order with the attached penalty worksheet which detailed the basis of the penalty assessment. In determining the amended penalty assessment, Investigator Porter disregarded and did not include Respondent's payments to any individual or entity that had workers’ compensation coverage or an exemption from such coverage. The Amended Order, which reflected a penalty assessment of $97,416.68, was issued to Respondent on May 28, 2004.2/ Respondent paid remuneration to the individuals listed on the penalty worksheet of the Amended Order for work they performed. Nonetheless, during the period covered by the penalty assessment, Respondent did not secure workers' compensation coverage for the individuals listed on the penalty worksheet, and none of them had workers' compensation coverage or exemptions from such coverage. The individuals listed on the penalty worksheet of the Amended Order were Respondent's employees during the relevant period, in that they were paid by Respondent, a construction contractor, and did not have workers’ compensation coverage or an exemption from such coverage. Mr. Bravo had workers' compensation coverage through SEPL. However, none of the employees listed on the Amended Order had workers' compensation coverage through SEPL, because they were paid directly by Respondent. A personnel leasing company provides workers' compensation coverage and payroll services to its clients, then leases those employees back to the clients for a fee. Respondent was a client of SEPL, and based on that relationship, Mr. Bravo believed that he and his workers received workers' compensation coverage through that personnel leasing company. However, the workers' compensation coverage provided by SEPL applied only to those employees SEPL leased to Respondent. In the case of leased employees, Respondent would have to make payments to the leasing company and not directly to his workers. The leasing company would then, in turn, pay the leased employees. When, as in this case, the construction company makes direct payments to individuals performing construction work, those workers are not leased employees and, thus, are not secured by the workers’ compensation coverage provided by the personnel leasing company. See § 468.520, Fla. Stat. Some of the individuals listed on the penalty worksheet may have been "dually employed"; that is, sometimes they were employed by Respondent and at other times, they were employees of SEPL and were leased to Respondent. However, during the periods in which individuals worked for Respondent and were paid by Respondent, and were not paid by SEPL, they were without workers’ compensation coverage unless Respondent provided such coverage. With regard to the individuals listed on the penalty worksheet, Respondent provided no such coverage. Respondent, through Mr. Bravo, paid its employees directly, thus, circumventing SEPL and losing the coverage that the employees may have had through it. The Department assessed the penalty against Respondent based on the remuneration Respondent gave directly to the employees outside of SEPL, the class code assigned to each employee utilizing the SCOPES Manual adopted by the Department in Florida Administrative Code Rule 69L-6.021, and the guidelines in Subsection 440.107(7)(d), Florida Statutes.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, enter a final order that affirms the Stop Work Order and the Amended Order of Penalty Assessment, which imposes a penalty of $97,416.68. DONE AND ENTERED this 10th day of May, 2005, in Tallahassee, Leon County, Florida. S CAROLYN S. HOLIFIELD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 10th day of May, 2005.
The Issue The issue is whether Petitioner properly issued a Stop-Work Order and 3rd Amended Order of Penalty Assessment against Respondent for failing to obtain workers' compensation insurance that meets the requirements of chapter 440, Florida Statutes.
Findings Of Fact The Division is a component of the Department of Financial Services. It is responsible for enforcing the workers' compensation coverage requirements pursuant to section 440.107. At all times relevant to this proceeding, USA was a corporation registered to do business in Florida. Respondent is a company engaged in the construction industry and was active during the two-year audit period from August 27, 2013, through August 26, 2015. On August 26, 2015, Julio Cabrera ("investigator" or Cabrera"), compliance investigator for the Division, conducted a random construction compliance check at the residential job site, 741 Harbor Drive in Key Biscayne ("residential home"). Cabrera observed two men on Respondent's scaffold plastering the exterior wall of the residential home. Cabrera interviewed the two men working on the scaffold. The workers told the investigator that they were employed by Respondent. They also identified Garcia as the Respondent's owner and provided Garcia's contact information to Cabrera. After interviewing the two workers, Cabrera checked the Department's Coverage and Compliance Automated System for proof of workers' compensation coverage and for exemptions associated with USA. Cabrera's search revealed Garcia had an active exemption, but Respondent did not have a workers' compensation insurance policy or an employee leasing policy for its employees. Cabrera also confirmed that Respondent did not have any type of workers' compensation coverage for its employees by examining the National Council on Compensation Insurance database. Next, Cabrera placed a telephone call to Garcia and interviewed him. Garcia informed Cabrera that the two workers were USA's employees and that Respondent did not have workers' compensation insurance coverage for the workers.1/ After interviewing Garcia, the investigator returned to the two USA employees and requested their identification. Silvano Antonio Delgado Reyes provided his identification and the other USA male employee fled from the job site. That same day Cabrera issued Respondent a Stop-Work Order on behalf of the Division for Respondent's failure to secure the required workers' compensation insurance coverage. Petitioner also served Respondent a Request of Business Records for Penalty Assessment Calculation ("Request") asking for documentation to enable the Division to determine payroll for the audit period of August 27, 2013, through August 26, 2015. USA responded to the Request for records and provided the Division with verification of its business records on several different occasions. Ultimately, Respondent provided bank statements and corresponding check images for most of the two- year audit period. Christopher Richardson ("auditor" or "Richardson"), penalty auditor for the Division, was assigned to USA's investigation. Richardson reviewed the business records produced by Respondent and determined those persons employed by USA during the audit period without workers' compensation insurance. Richardson properly recalculated the penalty amount each time new records were provided by Respondent. USA did not provide sufficient records to determine payroll for February 1, 2014, through December 31, 2014, and August 1, 2015, through 25, 2015, and Richardson properly utilized the computation formula to determine the payroll for the aforementioned audit period without adequate records. Richardson concluded his audit by properly calculating the workers' compensation amount USA owed in workers' compensation insurance for the audit period using the Class Code 5022 for masonry work. Richardson applied the approved manual rates and methodology specified in section 440.107(7)(d) and concluded USA owed a penalty amount of $52,489.24. On March 28, 2016, the Division served Respondent the 3rd Amended Order of Penalty Assessment in the amount of $52,489.24 naming those persons employed by USA during the audit period. On June 30, 2015, Respondent challenged the Stop-Work Order and penalty assessment and requested a formal hearing.
Recommendation Based on the forgoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, issue a final order affirming the Stop-Work Order and 3rd Amended Order of Penalty Assessment in the amount of $52,489.24. DONE AND ENTERED this 15th day of July, 2016, in Tallahassee, Leon County, Florida. S JUNE C. MCKINNEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of July, 2016.
The Issue The issues are whether Respondent was required to obtain workers' compensation coverage for himself pursuant to Section 440.107, Florida Statutes (2002), during the penalty period designated in the Amended Order of Penalty Assessment; and, if so, whether Petitioner should impose a penalty against Respondent in the amount of $120,467.88.
Findings Of Fact The Department is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers' compensation for the benefit of their employees. § 440.107, Fla. Stat. (2002). On February 9, 2004, while conducting a random site inspection, Department investigator, Eric Duncan, observed three men performing construction work in the form of carpentry and house-framing at 720 Southwest 10th Street, Cape Coral, Florida. One of the workers on the site was Respondent, Jeremy Butzler, a sole proprietor who had employed the other two workers. Mr. Duncan interviewed Mr. Butzler at the site and requested proof of workers' compensation coverage, which Mr. Butzler was unable to provide. Mr. Duncan then issued the first Stop Work and Penalty Assessment Order, directing Mr. Butzler to cease work and pay a civil penalty of $1000.00. Also on February 9, 2004, Mr. Duncan served Mr. Butzler with a "Request for Production of Business Records," seeking copies of business records to determine whether Mr. Butzler had secured workers' compensation coverage, whether he had a current valid workers' compensation exemption, and to determine any civil penalties that may be owed for failing to secure workers' compensation coverage. Mr. Butzler complied in a very limited way. Mr. Duncan testified that most of the documents provided by Mr. Butzler were records of electronic transfer of funds that did not identify their recipients. No company checkbook or ledger was produced. After the penalty was calculated, the Department issued the First Amended Stop Work and Penalty Assessment Order, which increased the assessed penalty to $132,027.64. This assessment was later reduced to $120,467.88 after the Department corrected the workers' compensation premium rate it employed to calculate the penalty. At the time the Stop Work Order was issued and pursuant to Subsection 440.107(5), Florida Statutes (2002), the Department had adopted Florida Administrative Code Rule 4L-6.015,1/ which stated, 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: All workers’ compensation insurance policies of the business entity, and all endorsements, notices of cancellation, nonrenewal, or reinstatement of such policies. * * * 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 entered into with a professional employer organization (PEO) or employee leasing company, temporary labor company, payroll or business record keeping company. If such services are not pursuant to a written contract, written documentation including the name, business address, telephone number, and FEIN or social security number of all principals if an FEIN is not held, of each such PEO, temporary labor company, payroll or business record keeping company; and For every contract with a PEO: a payroll ledger for each pay period during the contract period identifying each worker by name, address, home telephone number, and social security number or documentation showing that the worker was eligible for employment in the United States during the contract for his/her services, and a description of work performed during each pay period by each worker, and the amount paid each pay period to each worker. A business entity may maintain such records or contract for their maintenance by the PEO to which the records pertain. * * * 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; and All federal income tax forms prepared by or on behalf of the business and all State of Florida, Division of Unemployment Compensation UCT-6 forms and any other forms or reports prepared by the business or on its behalf for filing with the Florida Division of Unemployment Compensation. During the period in question, Respondent was a "sole proprietor," as that term was defined in Subsection 440.02(25), Florida Statutes (2002): "Sole proprietor" means a natural person who owns a form of business in which that person owns all the assets of the business and is solely liable for all the debts of the business. Subsection 440.02(15)(c)1., Florida Statutes (2002), in effect during the penalty assessment period, stated, in relevant part: "Employee" includes a sole proprietor . . . Partners or sole proprietors actively engaged in the construction industry are considered employees unless they elect to be excluded from the definition of employee by filing written notice of the election with the department as provided in s. 440.05 . . . A sole proprietor or partner who is actively engaged in the construction industry and who elects to be exempt from this chapter by filing a written notice of the election with the department as provided in s. 440.05 is not an employee. (Emphasis added). Section 440.05, Florida Statutes (2002), allowed an individual to apply for election to be exempt from workers' compensation benefits. Only the named individual on the application was exempt from carrying workers' compensation insurance coverage. The Department maintains a database of all workers' compensation exemptions in the State of Florida. Mr. Duncan's review of this database revealed that, although Respondent had a valid workers' compensation exemption from November 18, 1999, to November 15, 2001, there were no exemptions for Respondent for 2002, the year constituting the penalty period in this case. At the hearing, Respondent admitted that he did not obtain an exemption for the year 2002. Mr. Duncan's investigation also revealed that Respondent did not have workers compensation insurance coverage during the year 2002. During the investigation, Respondent informed Mr. Duncan that he had contracted with an employee leasing company, Southeast Personnel Services, Inc., that was responsible for paying the salaries of and providing workers' compensation insurance coverage for Respondent and his workers. Pursuant to Subsection 468.520(5), Florida Statutes (2002),2/ an employee leasing company is a business entity engaged in employee leasing. "Employee leasing" is an arrangement whereby a leasing company assigns its employees to a client and allocates the direction of, and control over, the leased employees between the leasing company and the client. § 68.520(4), Fla. Stat. (2002). When the employee leasing company accepts a client, the client becomes an employee of the leasing company. An employee leasing company is the employer of the leased employees and is responsible for providing workers' compensation pursuant to Chapter 440, Florida Statutes (2002). § 468.529(1), Fla. Stat. (2002). Additionally, an employee leasing company assumes responsibility for the payment of wages to the leased employees without regard to payments by the client and for the payment of payroll taxes and collection of taxes from the payroll of leased employees. § 468.525(4)(b) and (c), Fla. Stat. (2002). At the hearing, Respondent demonstrated that he had workers' compensation coverage as an employee of the employee leasing company. However, the Department did not utilize any payments made through the leasing company in its penalty calculation. The evidence demonstrated that Respondent received compensation directly from Holiday Builders, Inc., in the amount of $185,006.50, and Gatco Construction, in the amount of $10,590.00. These amounts, totaling $195,596.50, were utilized by the Department to calculate Respondent's penalty. Mr. Duncan explained that in order for workers' compensation coverage to apply through the employee leasing company, companies such as Gatco Construction would have to make payments to the leasing company, not directly to Respondent. The leasing company would then pay a salary to Respondent, as its employee, and Respondent would be covered by the employee leasing company's workers' compensation insurance. Payments made directly to Respondent would not be secured by the workers' compensation coverage obtained through the employee leasing company. Respondent claimed that the Division utilized the incorrect gross income amount in calculating the penalty. To support this claim, Respondent attempted to introduce what he claimed was his personal income tax return for the year 2002. Respondent claimed this return had been prepared and filed by his bookkeeper some time in February 2004, subsequent to the Department's investigation. However, the return produced at hearing was unsigned and indicated that it had been self- prepared by Respondent. Respondent could not recall the bookkeeper's name without prodding from his counsel. Respondent offered no proof that this return had ever been completed or filed with the Internal Revenue Service. The purported 2002 tax return was not admitted into evidence, and Respondent's testimony as to the information contained on the return is not reliable. The Department correctly calculated the penalty assessment based on the money paid to Respondent as a sole proprietor "employee" who failed to file for a workers' compensation exemption for the year 2002. The Department calculated the total penalty based on Respondent's gross payroll, the class code assigned to Respondent utilizing the SCOPES Manual (a standard classification tool published by the National Council on Compensation Insurance), and the statutory guidelines in Subsection 440.107(7), Florida Statutes (2002). Based on that calculation, the correct penalty assessment in this case is $120,467.88.
Recommendation Based on the foregoing Findings of Facts and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers' Compensation, enter a final order confirming the Amended Stop Work Order and imposing a penalty in the amount of $120,467.88. DONE AND ENTERED this 5th day of May, 2005, 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 5th day of May, 2005.
The Issue The issue in this case is whether Respondent had a sufficient amount of workers’ compensation coverage during the time period in question; and, if not, what penalty should be imposed.
Findings Of Fact The Division is the state agency responsible for enforcing the requirement in chapter 440, Florida Statutes (2015),1/ that employers in Florida secure workers’ compensation coverage for their employees. While an exemption can be obtained for up to three corporate officers, any employer in the construction industry with at least one employee must have workers’ compensation coverage. § 440.02(15), Fla. Stat. Kent Howe works for the Division as a compliance investigator based in Orlando, Florida. As part of his job responsibilities, Mr. Howe visits construction sites in order to verify that employers in the construction industry have obtained workers’ compensation coverage for their employees. Mr. Kehr was the owner and sole corporate officer of JNK. Mr. Howe visited a construction site in Port Orange, Florida, on the morning of December 10, 2015, and saw Mr. Kehr and two other men building the interior walls/frames of a house. Mr. Howe talked to the two men (James Hicks and James Garthwait) working with Mr. Kehr, and they reported that Mr. Kehr was paying them approximately $8.00 an hour. Mr. Kehr told Mr. Howe that Messrs. Hicks and Garthwait had been working for him for approximately two hours that morning. Mr. Kehr also stated that he had not obtained workers’ compensation coverage for Messrs. Hicks and Garthwait. Following those conversations, Mr. Howe returned to his car and accessed the Division’s Coverage and Compliance Automated System (“CCAS”) and learned that JNK had no workers’ compensation coverage. Mr. Howe also determined from CCAS that Mr. Kehr had obtained an exemption from workers’ compensation coverage that had been in effect from November 18, 2014, through November of 2016.2/ After relaying that information to his supervisor, Mr. Howe received authorization to serve Mr. Kehr with a Stop- Work Order, and he did so on December 10, 2015. That Stop-Work Order required JNK to “cease all business operations for all worksites in the State” based on the Division’s determination that JNK had failed to obtain workers’ compensation coverage. In addition, the Stop-Work Order stated that JNK would be penalized an amount “[e]qual to 2 times the amount [JNK] would have paid in premium when applying approved manual rates to the employer’s payroll during periods for which it [had] failed to secure the payment of compensation within the preceding 2-year period.” Along with the Stop-Work Order, Mr. Howe also served a “Request for Production of Business Records for Penalty Assessment Calculation” (“the BRR”) on Mr. Kehr. In order to ascertain JNK’s payroll disbursements during the relevant time period and the resulting penalty for JNK’s failure to obtain workers’ compensation coverage, the BRR requested that JNK remit several different types of business records covering the period from November 10, 2014, through December 10, 2015. Mr. Howe explained during the final hearing that the Division usually reviews business records pertaining to the two years preceding the Stop Work Order.3/ Because JNK came into existence on November 10, 2014, the Division’s review was limited to examining the period between November 10, 2014, and December 10, 2015. The business records sought by the Division included items such as time sheets, payroll summaries, check journals, certificates of exemption, and evidence that any JNK subcontractors had obtained workers’ compensation coverage. Section 440.107(7)(e) provides that if an employer fails to provide business records sufficient to enable the Department to ascertain the employer’s actual payroll for the time period in question, then the Division will estimate the employer’s actual payroll for that time period by imputing the employer’s payroll based on the statewide average weekly wage. The Division then multiplies that amount by two. JNK did not provide business records typically sought by the Division. Instead, JNK responded to the BRR by producing a written statement from Mr. Kehr indicating that he founded JNK in November of 2014, but did no work until July of 2015. That initial job involved fixing a set of stairs for $200. Afterwards, Mr. Kehr performed three separate small jobs between July and November of 2015, earning approximately $550. Because the Division could not ascertain JNK’s actual payroll from the documentation provided by JNK, the Division imputed JNK’s payroll for the time period in question and issued an Amended Order of Penalty Assessment on January 19, 2016, seeking to impose a penalty of $61,424.04. Phillip Sley calculated the aforementioned penalty amount by filling out a worksheet that has been adopted by the Division through Florida Administrative Code Rule 69L-6.027. The first step in completing the worksheet required Mr. Sley to assign a classification code to the type of work that Mr. Howe witnessed Messrs. Kehr, Hicks and Garthwait performing at the Port Orange worksite on December 10, 2015. Classification codes come from the Scopes® Manual, which has been adopted by the Department through rule 69L-6.021. Each code within the Scopes® Manual pertains to an occupation or type of work, and each code has an approved manual rate used by insurance companies to assist in the calculation of workers’ compensation insurance premiums. The imputed weekly payroll for each employee and corporate officer “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.” See Fla. Admin. Code. R. 69L-6.028(3)(d). In the instant case, Mr. Sley determined “5645” was the appropriate classification code. According to the Scopes Manual, [w]hen all of the carpentry work in connection with the construction of residential dwellings not exceeding three stories in height is performed by employees of the same carpentry contractor or general contractor responsible for the entire dwelling construction project, the work is assigned to Code 5645. This includes the construction of the sill, rough framework, rough floor, wood or light-gauge steel studs, wood or lighted-gauge steel joists, rafters, roof deck, all types of roofing materials, sidewall sheathing, siding, doors, wallboard installation, lathing, windows, stairs, finished flooring, cabinet installation, fencing, detached structures, and all interior wood trim. Mr. Sley’s next step in calculating the penalty amount was to determine the period of non-compliance. With regard to Mr. Kehr, the Department asserted that JNK failed to have workers’ compensation coverage between the date of JNK’s inception (November 10, 2014) and the date that Mr. Kehr received an exemption from the workers’ compensation coverage requirement (November 18, 2014). Despite having no evidence that Messrs. Hicks and Garthwait worked for JNK on any day other than December 10, 2015, the Division’s penalty calculation was based on an assumption that Messrs. Hicks and Garthwait worked for JNK from November 10, 2014, through December 10, 2015. Mr. Sley’s next step was to calculate JNK’s gross payroll for the time period in question. Because JNK did not provide the Division with business records that would have enabled the Division to calculate JNK’s actual payroll, Mr. Sley based JNK’s payroll on the statewide average weekly wage determined by the Department of Economic Opportunity for the time period in question.4/ Mr. Sley then multiplied that amount by two.5/ After converting the payroll numbers into a percentage, Mr. Sley multiplied the payroll amounts by the approved manual rate. As noted above, every classification code is associated with a particular manual rate determined by the Office of Insurance Regulation, and a manual rate corresponds to the risk associated with a particular occupation or type of work. Manual rates associated with potentially dangerous activities will have higher manual rates than activities with little or no potential danger. Mr. Sley’s next step was to calculate a premium for obtaining workers compensation coverage for Messrs. Kehr, Hicks, and Garthwait. Mr. Sley then multiplied that premium by two in order to calculate the individual penalties resulting from JNK not having workers’ compensation coverage for Messrs. Kehr, Hicks, and Garthwait. The sum of those amounts was $61,424.04. The evidence produced at the final hearing established that Mr. Sley utilized the correct class code, average weekly wage, and manual rates in his calculation of the penalty set forth in the Amended Order of Penalty Assessment. The Division has demonstrated by clear and convincing evidence that JNK was in violation of the workers’ compensation coverage requirements of chapter 440. In particular, the Division proved by clear and convincing evidence that Mr. Kehr had no workers’ compensation coverage for himself and no exemption from November 10, 2014, through November 17, 2014. However, the Division did not demonstrate by clear and convincing evidence that Messrs. Hicks and Garthwait were employees of JNK on any day other than December 10, 2015. Mr. Kehr testified during the final hearing that Messrs. Hicks and Garthwait were working for him on December 10, 2015. He also testified that he was paying them at a rate of $8.00 an hour. However, Mr. Kehr persuasively testified that Messrs. Hicks and Garthwait had not worked for him at any other time between November 10, 2014, and December 10, 2015. The undersigned finds Mr. Kehr’s testimony on this point to be credible. Messrs. Hicks and Garthwait did not testify during the final hearing in this matter. There is no evidence that Messrs. Hicks and Garthwait worked for JNK at any time other than December 10, 2015. Because there is no evidence indicating that Messrs. Hicks and Garthwait were employees of JNK at any time other than December 10, 2015, during the time period in question, the undersigned finds that the Department failed to carry its burden of proving that $61,424.04 is the appropriate penalty. Based on the above findings, the undersigned finds that the correct penalty resulting from Mr. Kehr’s lack of coverage is $627.48. The worksheet completed by Mr. Sley indicates that is the amount of the $61,424.04 penalty associated with Mr. Kehr’s lack of coverage. As for the penalties associated with the lack of coverage for Messrs. Hicks and Garthwait on December 10, 2015, the undersigned multiplied the average weekly wage utilized by the Division ($841.57) by two. That results in a weekly gross payroll amount of $1,683.14. Dividing $1,683.14 by five results in a daily gross payroll amount of $336.63. Dividing $336.63 by 100 and then multiplying the result by 15.91 (the approved manual rate utilized by the Division for the period from January 1, 2015, through December 10, 2015) yields a daily premium of $53.62. Multiplying $53.62 by two results in a penalty of $107.23. Multiplying $107.23 by two yields $214.46, JNK’s penalty for not having workers’ compensation coverage for Messrs. Hicks and Garthwait on December 10, 2015. JNK’s total penalty is $841.94. Because section 440.107(7)(d)1. mandates a minimum penalty of $1,000, the undersigned finds that $1,000 is the correct penalty for the instant case.
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 imposing impose a $1,000 penalty on Donald Kehr, d/b/a JNK Framing Inc., a Dissolved Florida Corporation. DONE AND ENTERED this 10th day of August, 2016, in Tallahassee, Leon County, Florida. S G. W. CHISENHALL 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 10th day of August, 2016.
The Issue The issues are whether Respondent was substantially justified in issuing an initial Stop Work Order and Order of Penalty Assessment against Petitioner for failing to comply with a Business Records Request, followed by an Amended Stop-Work Order and an Amended Order of Penalty Assessment to Petitioner for alleged noncompliance with workers’ compensation coverage requirements, and if so, is an award of attorneys’ fees and costs appropriate.
Findings Of Fact Respondent is the state agency charged with enforcing the requirements of Section 440.107, Florida Statutes, requiring that employers in Florida secure the payment of workers’ compensation insurance coverage for their employees. Petitioner is a Florida corporation that conducts business in Florida, with headquarters in Pensacola, Florida. Petitioner’s business involves the transportation of vehicles, utilizing a fleet of approximately 61 tractor-trailers and accompanying auto transport trailers. Michelle Newcomer is a compliance investigator for Respondent. Her duties focus on conducting inspections/investigations of Florida businesses to ensure compliance with Florida’s workers’ compensation coverage requirements. She also issues Stop Work Orders (SWOs) and Orders of Penalty Assessment (OPAs) when Respondent believes a business is non-compliant with Florida’s workers’ compensation law. Ms. Newcomer and her supervisors are familiar with the definition of "independent contractor" set forth in Sections 440.02(15)(d)1a and 440.02(15)(d)1b, Florida Statutes. However, they never tested Petitioner’s claim that its truck drivers were independent contractors and not employees against the criteria in that definition. On March 16, 2009, Ms. Newcomer received information from an anonymous source that Petitioner was not in compliance with the workers’ compensation laws in Florida. The anonymous source asserted that Petitioner’s drivers were being misclassified as independent contractors. Ms. Newcomer performed a search of Respondent’s database. She learned that Tracie Hedges and George Hedges, as corporate officers, were exempt from having workers’ compensation insurance. She found that Petitioner had no workers’ compensation coverage for any employees. On March 18, 2009, Ms. Newcomer visited Petitioner’s office. Upon arrival, she met Ms. Hedges. During the meeting, Ms. Newcomer inquired about the company, its operations, and its truck drivers. Ms. Hedges told Ms. Newcomer that Petitioner had about 50 to 60 truck drivers who were independent contractors. Seeing only one other employee, Ms. Newcomer left and terminated her investigation. On April 8, 2009, Ms. Newcomer received a referral from Respondent’s Employee Assistance Office. The referral indicated that one of Petitioner’s former drivers, Mike Borders, had suffered an injury while working for Petitioner, but was not receiving workers’ compensation benefits. The referral included a copy of one of Mr. Borders’ pay stubs. Upon reviewing Mr. Borders’ pay stub, Ms. Newcomer noticed that federal income tax withholding was deducted along with various deductions for Social Security and Medicare. The federal payroll deductions were identical to those any employer would deduct from an employee’s wages. Ms. Newcomer performed another search of Respondent’s database, finding that Petitioner had workers’ compensation insurance through Allstates Employer Services, effective March 17, 2009. Ms. Newcomer then contacted Allstates Employer Services and requested a copy of Petitioner’s employee roster. When she received the roster, Mr. Borders’ name was not on the roster. Ms. Newcomer next interviewed Mr. Borders, inquiring about Mr. Borders’ relationship with Petitioner. She wanted to know the following: (a) whether he drove Petitioner’s vehicle; (b) whether he signed any employment contracts; and (b) whether he considered himself Petitioner’s employee. Mr. Borders responded as follows: (a) he considered himself an employee of Petitioner; (b) he had signed an employment application; (c) he drove Petitioner’s truck; and (d) he took orders from Petitioner as to when and where to pick up the cars that needed to be transported. After speaking with Mr. Borders, Ms. Newcomer conducted further review via various state databases. She researched the database maintained by the Florida Department of State, Division of Corporations, to determine the relationship of Petitioner to Transport TK 131, LLC, another company listed on Mr. Borders’ pay stub. This search revealed 21 limited- liability companies using the Transport TK name. Ms. Newcomer learned that Transport TK 131’s managing member was Gary Hedge. Ms. Newcomer believed that Mr. Hedge also was a principal of Petitioner. Ms. Newcomer also reviewed the database maintained by the Florida Department of Revenue to determine who was paying the unemployment compensation tax for Petitioner’s drivers. She learned that Transport TK 131, LLC, listed two to three employees for purposes of unemployment withholdings. The same was true for all of the other Transport TK companies. Ms. Newcomer believed her investigation presented numerous inconsistencies with statements made by Ms. Hedge. Ms. Newcomer presented her findings to her supervisors. They gave her approval to investigate Petitioner. Ms. Newcomer prepared a Business Records Request Form 1 (BRR#1) for Petitioner and Transport TK 131, LLC. Both BRRs requested the companies to provide payroll information for employees and any forms of workers’ compensation coverage for its employees for the period January 21, 2009, through April 21, 2009. The BRRs also made the following request: Record Category #12--For each independent contractor who performs any service with regard to the completion of a contractual obligation of the employer listed above, at any time during the period specified above: all contracts for work, licenses, invoices, ledgers, payments made pursuant to that contract, and any other documents that support the status of an independent contractor under section 440.02(15)(d), F.S. The request for records did not give the companies the option of creating and providing affidavits or other documents to support the status of independent contractors if no written contracts for work existed. The BRRs were sent to Petitioner and Transport TK 131, LLC, by certified mail on April 22, 2009. Petitioner failed to provide all of the requested records within the required five-day time period. Accordingly, Respondent issued a SWO and an OPA to Petitioner. Ms. Newcomer posted the SWO and OPA at the worksite on May 5, 2009. While Ms. Newcomer was at Petitioner’s headquarters, Ms. Hedges provided her with some records, including Petitioner’s QuickBooks registry, showing all checks written for a three-month period. Ms. Hedges also answered Ms. Newcomer’s questions about the records, including questions about DTS, LLC, a company described by Ms. Hedges as a payroll account. Ms. Hedges explained that before August 2008, Petitioner paid DTS, LLC, for work performed by “employees” of the Transport TK companies. DTS, LLC, would then pay the truck drivers. However, when DTS, LLC, ran out of checks in August 2008, Petitioner began paying the Transport TK employees directly. The documentation and information provided by Ms. Hedges, resulted in the SWO being revoked for Transport TK 131, LLC. The revocation was based on a showing that Transport TK 131, LLC, and other Transport TK companies did not have bank accounts. The SWO against Petitioner, for failing to produce sufficient records, remained in place, pending further review. Ms. Newcomer continued to have discussions with Ms. Hedges relative to Petitioner’s business. Ms. Newcomer discussed the case again with one of her supervisors. She explained that Petitioner was paying individuals that were reported as employees of the Transport TK companies. She also stated that Petitioner pays its corporate officers, Bradley Hedges, Gregory Hedges and Teri Forret, who did not have workers’ compensation exemptions and were not covered by Allstates Employer Services workers’ compensation coverage. Ms. Newcomer and her supervisor decided to amend the SWO to add the charge of failure to provide workers’ compensation coverage for employees. On May 6, 2009, Respondent sent the SWO, the Amended Stop Work Order (ASWO,) and a Business Records Request Form 2 (BBR#2) to Petitioner by certified mail. Petitioner received the documents the next day. Ms. Newcomer had a meeting with Ms. Hedges on May 8, 2009. During the meeting, Ms. Hedges explained that DTS, LLC, is just a bank account, used to pay the employees of the Transport TK companies. Ms. Hedges also stated that Petitioner has full control of its customer contracts and directs the drivers where to go for work. On May 11, 2009, Ms. Newcomer received Petitioner’s Quickbook report for the period of the BBR#2 records request. On May 13, 2009, Ms. Newcomer staffed the case with Respondent’s legal counsel. On May 14, 2009, Ms. Newcomer received some contracts between Petitioner and truck drivers who owned and operated their own trucks. Respondent calculated Petitioner’s penalty using the Quickbooks report, in conjunction with W-2 documents provided for tax years 2007 and 2008. As of May 18, 2009, Petitioner’s penalty was $1,496,680.40. Ms. Newcomer requested and received approval to issue an Amended Order of Penalty Assessment (AOPA) for that amount. The AOPA was served on Petitioner by hand delivery on May 19, 2009. Ms. Newcomer did not include Petitioner’s office staff/dispatchers, including Ms. Hedges, in calculating Petitioner’s penalty. Ms. Newcomer was able to confirm that those individuals had workers’ compensation coverage through the employee leasing company. Ms. Newcomer did not include the owner/operator truck drivers in calculating Petitioner’s penalty. Ms. Newcomer had copies of contracts indicating that they were independent contractors. Ms. Newcomer did include the 50 to 60 truck drivers who drove Petitioner’s trucks in calculating the penalty. Ms. Newcomer knew that Petitioner was paying those individuals by check and that their pay-stubs showed various deductions, including withholdings for federal income taxes, Social Security, Medicare, and even deduction options for various forms of Individual Retirement Accounts, both standard and “Roth” versions. For some of the drivers, Petitioner deducted child support payments. If Ms. Newcomer had asked more questions or talked to more drivers, she would have learned that Petitioner made the deductions from the checks of drivers who drove Petitioner’s trucks at their request and in exchange for a smaller commission. Petitioner did not make the deductions as an employer. Ms. Newcomer also learned that all individuals driving Petitioner’s trucks signed employment applications. Apparently, Ms. Newcomer did not believe Ms. Hedges when she explained that the employment applications were used as forms to comply with the Federal Motor Vehicle Carrier Safety Act for drivers of trucks with Petitioner’s name. Ms. Newcomer never attempted to find out whether the drivers of Petitioner’s trucks were independent contractors pursuant to oral contracts. She did not ask Ms. Hedges questions that track the definition of “independent contractor” status in Sections 440.02(15)(d)1a and 440.02(15)(d)1b, Florida Statutes. In other words, Ms. Newcomer did not try to ascertain whether and/or to what extent Petitioner or the truck drivers controlled or directed the manner in which the work was done. Ms. Hedges told Ms. Newcomer that Petitioner’s corporate officers had filed for workers’ compensation exempt status by delivering exemption application forms to one of Respondent’s offices in 2005. Ms. Hedges did not have a receipt showing delivery of the forms. Ms. Newcomer could not find the names of two of these officers in the state’s database of corporate officers electing exempt status. Therefore, Ms. Newcomer included the two corporate officers in the penalty calculation. Apparently, Ms. Newcomer never considered that Ms. Hedges was telling the truth about the exemption forms and that, pursuant to statute, the exemptions became effective 30 days after Ms. Hedges delivered them to Respondent even though Respondent never processed them. Ms. Newcomer also did not go back to Mr. Borders to question him about his claim of being Petitioner’s employee as opposed to an independent contractor, using the definition of independent contractor set forth in Sections 440.02(15)(d)1a and 440.02(15)(d)1b, Florida Statutes. Additionally, Ms. Newcomer did not attempt to interview any other individuals that drove Petitioner’s vehicles to determine whether they considered themselves employees or independent contractors. On or about June 5, 2009, Petitioner requested an administrative hearing to challenge the ASWO and AOPA. The hearing was held on November 3, 2009. On January 29, 2010, Administrative Law Judge P. Michael Ruff issued a Recommended Order, finding that Petitioner was compliant with Florida’s workers’ compensation coverage and recommending that a final order be entered dismissing the ASWO and AOPA. On April 28, 2010, Respondent entered a Final Order adopting Judge Ruff’s legal and factual findings. The parties stipulate as follows: (a) Petitioner is the prevailing party in the underlying case; (b) Petitioner was a small business at the time the ASWO and AOPA were served; and (c) The reasonableness of the amount of attorney’s fees and costs claimed by Petitioner, namely $50,000, is not in dispute.
The Issue At issue in this proceeding is whether 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 Petitioner properly assessed a penalty against Respondent pursuant to Section 440.107, Florida Statutes (2002).
Findings Of Fact Based upon observation of the witnesses and their demeanor while testifying; documentary materials received in evidence; stipulations by the parties; evidentiary rulings made pursuant to Section 120.57, Florida Statutes (2003); and the record evidence submitted, the following relevant and material finding of facts 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 August 8, 2003, Respondent was a sole proprietor in the construction industry by framing single-family homes. On that day, Respondent was the sub-contractor under contract with Marco Raffaele, general contractor, providing workers on a single-family home(s) located on Navigation Drive in the Panther Trace subdivision, Riverview, Florida. It is the responsibility of the Respondent/employer to secure and maintain workers' compensation coverage for each employee. During the early morning hours of August 8, 2003, Donald Lott, the Department's workers' compensation compliance investigator, was in the Panther Trace subdivision checking on site workers for potential violations of the workers' compensation statute. While driving down Navigation Drive in the Panther Trace subdivision, Mr. Lott approached two houses under construction. There he checked the construction workers on site and found them in compliance with the workers' compensation statute. Mr. Lott recognized several of the six men working on the third house under construction next door and went over to investigate workers' compensation coverage for the workers.2 At the third house Mr. Lott interviewed Darren McCarty, Henry Keithler, and Mike Sabin, all of whom acknowledged that they worked for Respondent, d/b/a Riopelle Construction. Mr. Lott ascertained through Southeast Leasing Company (Southeast Leasing) that three of the six workers, Messrs. Keithler, Sabin, and McCarthy were listed on Southeast Leasing Company's payroll through a valid employee lease agreement with Respondent as of August 8, 2003. The completed employee lease agreement provided for Southeast Leasing Company to provide workers' compensation coverage for only those employees whose names, dates of birth, and social security numbers are contained in the contractual agreement by which Southeast Leasing leased those named employees to the employing entity, Respondent, d/b/a Riopelle Construction. Mr. Lott talked with the other three workers on site, Ramos Artistes, Ryan Willis, and Robert Stinchcomb. Each worker acknowledged working for (as an employee) Respondent on August 8, 2003, in the Panther Trace subdivision. In reply to his faxed inquiry to Southeast Leasing regarding the workers' compensation coverage status for Messrs. Artistes, Willis, and Stinchcomb, Southeast Leasing confirmed to Mr. Lott that on August 8, 2003, Southeast Leasing did not have a completed employee leasing contractual agreement with Respondent for Messrs. Artistes, Willis or Stinchcomb. Southeast Leasing did not provide workers' compensation coverage for Messrs. Artistes, Willis or Stinchcomb on August 8, 2003.3 Southeast Leasing is an "employee" leasing company and is the "employer" of "leased employees." As such, Southeast Leasing is responsible for providing workers' compensation coverage for its "leased employees" only. Southeast Leasing, through its account representative, Dianne Dunphy, input employment applications into their system on the day such application(s) are received from employers seeking to lease employees. Southeast Leasing did not have employment applications in their system nor did they have a completed contractual employment leasing agreement and, therefore, did not have workers' compensation coverage for Messrs. Artistes and Willis at or before 12:08 p.m. on August 8, 2003. After obtaining his supervisor's authorization, Mr. Lott served a Stop Work and Penalty Assessment Order against Respondent on August 8, 2003, at 12:08 p.m., requiring the cessation of all business activities and assessing a penalty of $100, required by Subsection 440.107(5), Florida Statutes, and a penalty of $1,000, as required by Subsection 440.107(7), Florida Statutes, the minimum penalty under the statute. On August 12, 2003, the Department served a Corrected Stop Work and Penalty Assessment Order containing one change, corrected federal identification number for Respondent's business, Riopelle Construction. Mr. Stinchcomb, the third worker on the construction job site when Mr. Lott made his initial inquiry, was cutting wood. On August 8, 2003, at or before 12:00 p.m., Mr. Stinchcomb was not on the Southeast Leasing payroll as a leased employee covered for workers' compensation; he did not have individual workers' compensation coverage; and he did not have a workers' compensation exemption. On that day and at that time, Mr. Stinchcomb worked as an employee of Riopelle Construction and was paid hourly by Riopelle Construction payroll check(s). Respondent's contention that Mr. Stinchcomb, when he was working on the construction job site between the hours of 8:00 a.m. and 1:00 p.m. on August 8, 2003, was an independent contractor fails for the lack of substantial and competent evidence in support thereof. On August 8, 2003, the Department, through Mr. Lott, served an administrative request for business records on Respondent. Respondent failed and refused to respond to the business record request. An Order requiring Respondent to respond to Petitioner's discovery demands was entered on December 1, 2003, and Respondent failed to comply with the order. On December 8, 2003, Respondent responded that "every effort would be made to provide the requested documents by the end of the day" to Petitioner. Respondent provided no reliable evidence and Mr. Stinchcomb was not called to testify in support of Respondent's contention that Mr. Stinchcomb was an independent contractor as he worked on the site on August 8, 2003. Respondent's evidence, both testamentary and documentary, offered to prove that Mr. Stinchcomb was an independent contractor on the date in question failed to satisfy the elements required in Subsection 440.02(15)(d)1, Florida Statutes. Subsection 440.02(15)(c), Florida Statutes, in pertinent part provides that: "[f]or 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)." Subsection 440.02(15)(d)(1) provides that an "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. The testimony of Respondent and the testimony of her husband, Edward Riopelle, was riddled with inconsistencies, contradictions, and incorrect dates and was so confusing as to render such testimony unreliable. Based upon this finding, Respondent failed to present evidence sufficient to satisfy the requirement of Subsection 440.02(15)(d)1, Florida Statutes, and failed to demonstrate that on August 8, 2003, Mr. Stinchcomb was an independent contractor. Petitioner proved by a preponderance of the evidence that on August 8, 2003, Mr. Stinchcomb, while working on the single-family construction site on Navigation Drive in the Panther Trace subdivision was an employee of Respondent and was not an independent contractor. Petitioner proved by a preponderance of the evidence that Mr. Stinchcomb did not have workers' compensation coverage on August 8, 2003. On August 8, 2003, Mr. Willis was a laborer on the single-family construction site on Navigation Drive in the Panther Trace subdivision as an employee of Respondent, who paid him $7.00 per hour. Mr. Willis was not listed on the employee list maintained by Southeast Leasing, recording those employees leased to Respondent. Mr. Willis did not have independent workers' compensation coverage on August 8, 2003. Mr. Willis had neither workers' compensation coverage nor a workers' compensation exemption on August 8, 2003. Petitioner proved by a preponderance of the evidence that Mr. Willis did not have workers' compensation coverage on August 8, 2003. On August 8, 2003, Mr. Artises was a laborer on the single-family construction site on Navigation Drive in the Panther Trace subdivision and was an employee of Respondent. Mr. Artises had been in the employment of Respondent for approximately one week before the stop work order. Mr. Artises did not have independent workers' compensation coverage on August 8, 2003. Mr. Artises did not have a workers' compensation coverage exemption on August 8, 2003. Petitioner proved by a preponderance of the evidence that Mr. Aristes did not have workers' compensation coverage on August 8, 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 pleading 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, affirming and adopting the Corrected Stop Work and Penalty Assessment Order dated August 12, 2003. DONE AND ENTERED this 29th day of March, 2004, in Tallahassee, Leon County, Florida. S FRED L. BUCKINE 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 29th day of March, 2004.
