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 Whether the Respondent committed the violations alleged in the Second Amended Order of Penalty Assessment filed May 11, 2009,1 and, if so, the penalty that should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Department is the state agency responsible for enforcing the requirement of Section 440.107, Florida Statutes, that employers in Florida secure workers' compensation insurance coverage for their employees. § 440.107(3), Fla. Stat. C.S.E Paving is a Florida corporation located in Delray Beach, Florida. Stephen Warden is the owner of C.S.E Paving, which engages in the business of paving. On November 24, 2008, Germaine Greer, a compliance investigator employed by the Department, observed two workers repairing and reinstalling concrete brick pavers at a Best Western Hotel. She learned that these workers were employed by C.S.E Paving. After her visit on November 24, 2008, the compliance investigator conducted research through the Coverage and Compliance Automated System database, which provides information on workers' compensation insurance coverage and exemptions. The investigator's research revealed that, during the three-year period from November 24, 2005, and November 24, 2008, C.S.E Paving had workers' compensation insurance coverage for its employees from July 25, 2006, through July 28, 2007; from July 16, 2007, through July 16, 2008; and from July 16, 2008, through August 6, 2008, when the policy was cancelled. Mr. Warden did not have an exemption from the requirement to have workers' compensation insurance coverage. Mr. Warden provided the compliance investigator with the payroll and other records requested in the business records request. Based on these records, the compliance investigator calculated the penalty to be imposed on C.S.E Paving for its failure to have workers' compensation insurance coverage during the approximately six-month period in 2005 and 2006 and the approximately four-month period in 2008. The penalty assessed in the Second Amended Order of Penalty Assessment was $13,487.64, which assessment superseded the $21,290.11 penalty assessed in the Amended Order of Penalty Assessment dated December 22, 2008. The compliance investigator looked to the NCCI SCOPES Basic Manual of Classifications ("SCOPES Manual") for classification codes attributable to the workplace operations of the persons working for C.S.E Paving. The classification code assigned by the compliance investigator to the workmen employed by C.S.E Paving between November 24, 2005, and November 24, 2006, who engaged in paving activities was Code 5221. According to the SCOPES Manual and to Florida Administrative Code Rule 69L-6.021(1)(w), Code 5221 is a code applicable to the construction industry and covers "Concrete or Cement Work Floors, Driveways, Yards, and Sidewalks & Drivers." The approved NCCI Manual rate in Florida effective January 1, 2006, for Code 5221 was $10.37 per $100.00 of payroll; and the approved NCCI Manual rate in Florida effective January 1, 2008, for Code 5221 was $6.97 per $100.00 of payroll. The classification code found in the SCOPES Manual assigned by the compliance investigators to the clerical workers employed by C.S.E Paving between November 24, 2005, and November 24, 2006, was Code 8810. According to the SCOPES Manual, Code 8810 covers "Clerical Office Employees." The approved NCCI Manual rate in Florida effective January 1, 2006, for Code 8810 was $.58 per $100.00 of payroll; and the approved NCCI Manual rate in Florida effective January 1, 2008, for Code 8810 was $.37 per $100.00 of payroll. The classification code assigned by the compliance investigator to Stephen Warden, the owner of C.S.E Paving, was Code 5606. According to the SCOPES Manual, Code 5606 covers "Contractor - Project Manager, Construction Executive, Construction Manager or Construction Superintendent." The approved NCCI Manual rate in Florida effective January 1, 2006, for Code 5606 was $3.84 per $100.00 of payroll; and the approved NCCI Manual rate in Florida effective January 1, 2008, for Code 5606 was $2.74 per $100.00 of payroll. The compliance investigator calculated the total penalty attributable to C.S.E Paving's failure to provide workers' compensation insurance coverage for its employees during the covered time periods. She obtained the names of each of the individuals included in her calculations and the amount of the gross payroll for each individual from the payroll information provided by Mr. Warden in response to the business records request. The compliance investigator calculated the penalty as follows: She listed C.S.E Paving's employees on the Penalty Worksheet; assigned each employee a classification code based on the definitions of workplace operations that most closely described the work they performed for C.S.E Paving; set out the dates during which C.S.E Paving did not provide workers' compensation insurance coverage; entered the annual or pro-rated gross payroll for each employee during the period of non- compliance; divided the gross payroll for each employee by 100; set out the approved manual rate for each employee during the period of non-compliance in accordance with his or her classification code; determined the premium that C.S.E Paving would have paid for workers' compensation insurance coverage for each employee during the period of non-compliance by multiplying the approved manual rate and one one-hundredth of the gross payroll for each employee; calculated the penalty attributable to each employee during the period of non-compliance by multiplying the premium for each employee by 1.5; and, finally, calculated the total penalty owed by C.S.E Paving attributable to its failure to secure workers' compensation insurance coverage for its employees during the time periods at issue.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order finding that C.S.E Paving of South Florida Inc., failed to secure workers' compensation insurance coverage for its employees in violation of Section 440.38(1), Florida Statutes, from January 1, 2006, through July 25, 2006, and from August 6, 2008, through November 24, 2008, and imposing a penalty in the amount of $13,487.64 for the failure to provide the required workers' compensation insurance coverage. DONE AND ENTERED this 28th day of September, 2009, in Tallahassee, Leon County, Florida. PATRICIA M. HART 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 28th day of September, 2009.
The Issue Whether Thompson Enterprises of Jacksonville, LLC (Respondent), violated the provisions of chapter 440, Florida Statutes,1/ by failing to secure the payment of workers' compensation, as alleged in the Stop-Work Order and 2nd Amended Order of Penalty Assessment; and, if so, what is the appropriate penalty.
Findings Of Fact The Department is the state agency responsible for enforcing workers' compensation coverage requirements applicable to employers under Florida law. Respondent is a Florida limited-liability company organized on October 25, 2011. The managing members listed on Respondent’s State of Florida Articles of Organization are Thomas Thompson, Michael Thompson, and Vicky Thompson. In May 2016, Department Compliance Investigator Ann Johnson was assigned to conduct a job site visit on Respondent’s business because its name appeared on the Department’s Bureau of Compliance’s “lead list.” The “lead list” is one of the Department’s databases listing employers that are potentially out of compliance with Florida's workers' compensation insurance requirements. Prior to the job site visit, Investigator Johnson reviewed the Division of Corporations website, www.sunbiz.org, and confirmed Respondent's address, managing members' names, and that Respondent was a current, active Florida company. Respondent’s website advertised towing, wrecker, mechanic, and body shop services. On May 6, 2016, Investigator Johnson visited Respondent's principal address located at 7600 Bailey Body Road, Jacksonville, Florida 32216. She noted a large commercial sign near Respondent’s address that advertised towing and wrecker services. During her visit, Investigator Johnson spoke with Vicky Thompson and Michael Thompson, both of whom advised that they were owners of Respondent. The Thompsons informed Investigator Johnson that Respondent had six employees, including the three listed as managers on Respondent’s Articles of Organization. When Investigator Johnson asked for proof of workers’ compensation coverage, Michael Thompson admitted that Respondent had no such coverage. Under Florida law, employers in the non-construction industry, such as Respondent, must secure workers' compensation insurance if "four or more employees are employed by the same employer." §§ 440.02(17)(b) and 440.107, Fla. Stat. On the same day as her site visit, Investigator Johnson confirmed Respondent’s lack of insurance with a search of the Department's internal database, Coverage and Compliance Automated System. At the time, Respondent had no active exemptions from the requirements of obtaining workers’ compensation for its three managing members. Based on her investigation, Investigator Johnson served Respondent with the Stop-Work Order and a Request for Production on May 6, 2016. Upon serving the documents, Investigator Johnson explained the effect and purpose of the documents and how Respondent could come into compliance. Respondent came into compliance that same day by paying a $1,000 down payment, reducing Respondent's workforce to three employees, applying for exemptions for its three managing members, and executing an agreed Order of conditional release with the Department. Respondent subsequently complied with the Department’s Request for Production. In June 2016, the Department assigned Penalty Auditor Eunika Jackson to review records obtained from Respondent and calculate the penalty to be assessed against Respondent. In accordance with applicable law, the Department's audit spanned the preceding two-year period, starting from the date of the Stop-Work Order. See § 440.107(7)(d)1., Fla. Stat. The audit period in this case was from May 7, 2014, through May 6, 2016. Based on information obtained during the investigation, Auditor Jackson assigned classification codes 7219, 8380, and 8810 to those identified as employees working for Respondent during the audit period. Classification codes are four-digit codes assigned to various occupations by the National Council on Compensation Insurance ("NCCI") to assist in the calculation of workers' compensation insurance premiums. Classification code 8810 applies to clerical office employees, code 7219 applies to trucking and "towing companies," and code 8380 applies to automobile service or repair centers. According to Respondent, it was out of compliance with the coverage requirements of chapter 440 for only "368 days" during the two-year audit period. Respondent's records, however, do not support this contention. Respondent provided a detailed "Employee Earnings Summary" for each employee stating the employee’s name, pay rate, and pay period. Respondent's payroll records reflect that Respondent employed "four or more employees" during the audit period. Throughout the two-year audit period, Respondent employed four or more employees with the following duties: Anna Lee, mechanic/bodywork; Cedric Blake, mechanic/bodywork; David Raynor, mechanic/bodywork; James Budner, mechanic/bodywork; Jason Leighty, mechanic; Kevin Croker, Jr., porter/detailer; Nicholas Conway, bodywork; Ralph Tenity, bodywork; Rebecca Thompson, secretary/office help; Stephen Collins, shop helper/porter; Todd Gatshore, tow truck driver/shop helper; and Williams Reeves, tow truck driver/shop helper. Evidence further demonstrated that, during the audit period, managing member Michael Thompson worked as a wrecker truckdriver, and worked with the Sheriff's Office to clear traffic accidents. He was assigned class code 7219 — tow truck driver. Managing member Vicky Thompson was given the clerical class code 8810 because she was observed working in the office during Investigator Johnson's site visit. Managing member Thomas Thompson was assigned the clerical class code 8810 based upon the fact that he occasionally does office work for the business. The corresponding approved manual rates for classification codes 8810, 7219, and 8380 were correctly applied to each employee for the related periods of non-compliance to determine the final penalty. In accordance with the Request for Production, Respondent provided the Department payroll summary reports, tax reports, and unemployment tax reports. The payroll summary reports and records provided by Respondent listed the payroll and duties for each employee. The gross payroll amounts for each employee reflected in the penalty in this case were derived from those documents. Upon receiving those reports and records, the Department correctly determined the gross payroll for Respondent's employees. On June 13, 2016, the Department served the Amended Order of Penalty Assessment on Respondent, assessing a penalty of $33,788.90. A portion of the first penalty was based on imputed payroll for Respondent’s three managing members. After service of the Amended Order of Penalty Assessment, Respondent provided additional records showing the payroll of its three managing members, and the 2nd Amended Order of Penalty Assessment was calculated after removing the imputed payroll. On August 22, 2016, the Department served the 2nd Amended Order of Penalty Assessment on Respondent, assessing a penalty of $33,112.44, which was correctly calculated in accordance with section 440.107(7)(d)1. and Florida Administrative Code Rule 69L-6.027(1). In sum, the clear and convincing evidence demonstrated that Respondent was a tow truck company engaged in the wrecker/tow truck and body shop mechanic industries in Florida during the periods of noncompliance; that Respondent failed to secure the payment of workers' compensation for its employees in violation of Florida's Workers' Compensation Law; and that the Department correctly utilized the methodology specified in section 440.107(7)(d)1. and rule 69L-6.027(1) to determine the appropriate penalty of $33,112.44.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order, consistent with this Recommended Order, upholding the Stop-Work Order and imposing the penalty set forth in the 2nd Amended Order of Penalty Assessment against Thompson Enterprises of Jacksonville, LLC. DONE AND ENTERED this 27th day of April, 2017, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of April, 2017.
The Issue Did Respondent, Fresenius Medical Care (Fresenius), discriminate against Petitioner, David E. McDonald, in employment on account of his disability? Did Fresenius discriminate against Mr. McDonald in employment on account of his age?
Findings Of Fact Mr. McDonald worked for Fresenius as a social worker in its Sebring, Florida, facility. Fresenius provided Mr. McDonald family and medical leave because of back and knee problems. After Mr. McDonald exhausted the available leave, Fresenius granted him non-FMLA medical leave. Because of his continuing health problems, Mr. McDonald obtained long-term disability benefits in 2013 under a plan provided by CIGNA and sponsored by Fresenius. Mr. McDonald was 79 years old. Mr. McDonald’s testimony established that he received one year of benefit payments under the plan. On August 29, 2013, Mr. McDonald wrote Fresenius a letter identified as regarding “L.T.D. approval.” The first three paragraphs stated: On Saturday 7/27/13, I received a copy of the letter dated 7/19/13 sent to you by Ryan Zech, of CIGNA, informing you that my “claim for Long Term Disability was approved, benefits starting on 8/07/13.” This means, barring the time it takes for me to reconcile my affairs with our H.R Dept. that my employment with F.M.C. has come to an end. I had hoped that my medical condition would have improved, such that I would have been able to perform effectively, the required percentage of my duties to qualify to return to F/T employment. This has not turned out to be the case. It is therefore with mixed sentiments that I accept the medical decision/s of CIGNA and my attending physicians including my “Eye specialists." This letter stated Mr. McDonald’s voluntary decision to end his employment with Fresenius. Mr. McDonald did not present evidence that the decision was coerced or even encouraged by any representative of Fresenius. Mr. McDonald voluntarily terminated his employment with Fresenius. Mr. McDonald does not maintain that Fresenius discriminated against him on account of age or disability. He testified repeatedly and clearly that he does not claim that Fresenius discriminated against him in any way on account of his age or physical condition. Mr. McDonald bases his complaint upon his assertion that CIGNA representative Mr. Zech did not properly advise him that the long-term disability policy provided only one year of payments. Mr. McDonald also did not present any evidence that could support an inference that Fresenius discriminated against him on account of his age or a disability. Mr. McDonald did not argue or present evidence that CIGNA employee Ryan Zech was an employee or agent of Fresenius.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations deny the Petition for Relief of David E. McDonald. DONE AND ENTERED this 13th day of May, 2015, in Tallahassee, Leon County, Florida. S JOHN D. C. NEWTON, II 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 13th day of May, 2015.
The Issue The issues presented are (1) whether Respondent properly secured the payment of workers’ compensation insurance coverage and, if not, what penalty is warranted for such failure; and (2) whether Respondent conducted business operations in violation of a stop-work order and, if so, what penalty is warranted for such violation.
Findings Of Fact Respondent is a corporation domiciled in Georgia and engaged in the business of electrical work, which is a construction activity. On July 2, 2004, Petitioner's investigator Katina Johnson visited 6347 Collins Road, Jacksonville, Florida, on a random job site visit. Investigator Johnson inquired of Respondent's superintendent at the job site whether Respondent had secured the payment of workers’ compensation coverage. She was informed that Respondent had done so and was subsequently provided with a Certificate of Liability Insurance from Respondent’s agent in Georgia, the Cowart Insurance Agency, Inc. Investigator Johnson also obtained a copy of Respondent’s workers’ compensation insurance policy which had a policy period of September 23, 2003, to September 23, 2004. The policy and the information contained in the Certificate of Liability Insurance were not consistent. Keith Cowart, Respondent’s insurance underwriter in Georgia, testified in deposition that the certificate of insurance is not correct because it conflicts with Respondent’s workers’ compensation policy, 01-WC-975384-20, which does not have a Florida endorsement. Subsequent to the site visit, Investigator Johnson continued the investigation of Respondent utilizing the Department’s Coverage and Compliance Automated System (“CCAS”) database that contains information to show proof of coverage. She determined that Respondent did not have a Florida workers' compensation insurance policy. Johnson also checked the National Council for Compensation Insurance (“NCCI”) database and further confirmed that Respondent did not have a workers’ compensation insurance policy for the State of Florida. Petitioner also maintains a database of all workers’ compensation exemptions in the State of Florida. In consulting that database, Johnson did not find any current, valid exemptions for Respondent. Florida law requires that an employer who has employees engaged in work in Florida must obtain a Florida workers’ compensation policy or endorsement for such employees utilizing Florida class codes, rates, rules, and manuals to be in compliance. Further, any policy or endorsement used by an employer to prove the fact of workers' compensation coverage for employees engaged in Florida work must be issued by an insurer that holds a valid certificate of authority in the State of Florida. The insurance policy held by Respondent did not satisfy these standards. First, Respondent's policy was written by Cowart Insurance Agency, a Georgia agency which was not authorized to write insurance in Florida. Second, the premium was based on a rate that was less than the Florida premium rate; the policy schedule of operations page shows that Safeco Business Insurance insured Respondent for operations under class codes utilizing Georgia premium rates. On July 6, 2004, Investigator Johnson received a copy of another insurance policy declaration page from the Cowart Insurance Agency for Respondent that still did not have Florida listed as a covered state under Section 3A. In fact, none of Respondent’s workers’ compensation policies had a Florida endorsement with Florida listed in Section 3A. On July 7, 2004, after consulting with her supervisor, Investigator Johnson issued and served on Respondent a stop-work order and order of penalty assessment for failure to comply with the requirements of Chapter 440, Florida Statutes, specifically for failure to secure the payment of workers’ compensation based on Florida class codes, rates, rules and manuals. After the issuance of the stop-work order, Respondent produced a certificate of insurance with a Florida endorsement that would allegedly confer workers’ compensation coverage retroactively for Respondent. Such retroactive coverage does not satisfy Respondent’s obligation. Employers on job sites in Florida are required to maintain business records that enable Petitioner to determine whether the employer is in compliance with the workers' compensation law. Investigator Johnson issued to Respondent a request for the production of business records on July 7, 2004. The request asked the employer to produce, for the preceding three years, documents that reflected payroll and proof of insurance. Respondent produced payroll records for a number of employees. On August 2, 2004, Investigator Johnson issued a second business records request to Respondent because she noticed that the names of the workers that she interviewed during her site visit were not the same as the list of employees submitted by Respondent. Respondent failed to produce the requested records. When an employer fails to provide requested business records which the statute requires it to maintain and to make available to the Department, effective October 1, 2003, the Department is authorized by Section 440.107(7)(e), Florida Statutes, to impute that employer's payroll using the statewide average weekly wage multiplied by l.5. Petitioner therefore imputed Respondent's payroll for the entire period for which the requested business records were not produced. From the payroll records provided by Respondent, and through imputation of payroll from October 1, 2003, the Department calculated a penalty for the time period of July 7, 2001, through July 7, 2004, by assigning a class code to the type of work utilizing the SCOPES Manual. The Amended Order of Penalty Assessment which assessed a penalty of $115,456.14 was served on Respondent through its attorney on September 27, 2004. The Department issued and served on Respondent a second Amended Order of Penalty Assessment on November 10, 2004, with the penalty imputed back three years to July 7, 2001. The Department assessed a penalty of $100 per day for each day prior to October 1, 2003, for a total of $216,794.50. On April 28, 2005, the Department issued to Respondent a third Amended Order of Penalty Assessment with an assessed penalty of $63,871.02. The reduction in the amount of penalty was due to the Department’s determination that it did not have the authority at the time to impute the $100 per day penalty prior to October 1, 2003. On July 7, 2005, Respondent entered into a Payment Agreement Schedule for Periodic Payment of Penalty and was issued an Order of Conditional Release from Stop-Work Order by the Department. Respondent made a down payment of ten percent of the assessed penalty; provided proof of compliance with Chapter 440, Florida Statutes, by obtaining a Florida endorsement on its workers’ compensation insurance policy; and agreed to pay the remaining penalty in sixty equal monthly payment installments. Respondent has since defaulted on those payments. Section 440.107(7)(c), Florida Statutes, requires the Department to assess a penalty of $1,000 per day for each day that the employer conducts business operations in violation of a stop-work order. Several months after issuing the stop-work order, Investigator Johnson was informed that Respondent was conducting business operations in Miami in violation thereof. She obtained documentation that showed Respondent was performing electrical work as part of a contract it entered into with KVC Constructors, Inc., on August 4, 2004. Investigator Johnson obtained the daily sign-in sheets of KVC Constructors, Inc., that indicated the names of each entity that performed work on the job site for each particular day. She determined from the records that Respondent had worked 187 days in violation of the stop-work order prior to entering into the Payment Agreement Schedule and obtaining the Order of Conditional Release from the Department. On October 7, 2005, the Department issued to Respondent a fourth Amended Order of Penalty Assessment which assessed a penalty of $250,871.02. That amount was comprised of the $63,871.02 from the third Amended Order plus $187,000 for the 187 days of violation of the stop-work order.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order imposing a penalty against Respondent in the amount of $250,871.02 minus the amount of payments previously made by Respondent to the Department. DONE AND ENTERED this 8th day of June, 2006, in Tallahassee, Leon County, Florida. S LINDA M. RIGOT 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 8th day of June, 2006. COPIES FURNISHED: Colin M. Roopnarine, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 H.R. Electric, Inc. c/o Mr. Jeremy Hershberger 5512 Main Street Flowery Branch, Georgia 30542 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Carlos Muñiz, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue At issue in this proceeding is whether the Respondent, Klenk Roofing, Inc. ("Klenk Roofing"), failed to abide by the coverage requirements of the Workers' Compensation Law, chapter 440, Florida Statutes, by not obtaining workers' compensation insurance for its employees and, if so, whether the Petitioner properly assessed a penalty against the Respondent pursuant to section 440.107.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, and the entire record in this proceeding, the following findings of fact are made: The Department is the state agency responsible for enforcing the requirement of the workers' compensation law that employers secure the payment of workers' compensation coverage for their employees and corporate officers. § 440.107, Fla. Stat. Klenk Roofing is a corporation based in Daytona Beach. The Division of Corporations’ “Sunbiz” website indicates that Klenk Roofing was first incorporated on February 23, 2005, and remained an active corporation up to the date of the hearing. Klenk Roofing’s principal office is at 829 Pinewood Street in Daytona Beach. As the name indicates, Klenk Roofing’s primary business is the installation of new roofs and the repair of existing roofs. Klenk Roofing was actively engaged in roofing operations during the two-year audit period from July 24, 2012, through July 23, 2014. Kent Howe is a Department compliance investigator assigned to Volusia County. Mr. Howe testified that his job includes driving around the county conducting random compliance investigations of any construction sites he happens to see. On July 23, 2014, Mr. Howe was driving through a residential neighborhood when he saw a house under construction at 2027 Peninsula Drive in Daytona Beach. He saw a dumpster in the driveway with the name “Klenk Roofing” written on its side. Mr. Howe also saw a gray van with the name “Klenk Roofing” on the door. Mr. Howe saw three men working on the house. He spoke first with Vincent Ashton, who was collecting debris and placing it in the dumpster. Mr. Howe later spoke with Jonny Wheeler and Craig Saimes, both of whom were laying down adhesive tarpaper on the roof when Mr. Howe approached the site. All three men told Mr. Howe that they worked for Klenk Roofing and that the owner was Ronald Klenk. Mr. Ashton and Mr. Wheeler told Mr. Howe that they were each being paid $10 per hour. Mr. Saimes would not say how much he was being paid. After speaking with the three Klenk Roofing employees, Mr. Howe returned to his vehicle to perform computer research on Klenk Roofing. He first consulted the Sunbiz website for information about the company and its officers. His search confirmed that Klenk Roofing was an active Florida corporation and that Ronald Klenk was its registered agent. Ronald Klenk was listed as the president of the corporation and Kyle Klenk was listed as the vice president. Mr. Howe next checked the Department's Coverage and Compliance Automated System ("CCAS") database to determine whether Klenk Roofing had secured the payment of workers' compensation insurance coverage or had obtained an exemption from the requirements of chapter 440. CCAS is a database that Department investigators routinely consult during their investigations to check for compliance, exemptions, and other workers' compensation related items. CCAS revealed that Klenk Roofing had no active workers' compensation insurance coverage for its employees and that Ronald and Kyle Klenk had elected exemptions as officers of the corporation pursuant to section 440.05 and Florida Administrative Code Rule 69L-6.012. Mr. Howe’s next step was to telephone Ronald Klenk to verify the employment of the three workers at the jobsite and to inquire as to the status of Klenk Roofing's workers' compensation insurance coverage. Mr. Klenk verified that Klenk Roofing employed Mr. Wheeler, Mr. Ashton, and Mr. Saimes. Mr. Klenk also informed Mr. Howe that Klenk Roofing did not have workers' compensation insurance coverage for the three employees. Based on his jobsite interviews with the employees, his interview with Mr. Klenk, and his Sunbiz and CCAS computer searches, Mr. Howe concluded that as of July 23, 2014, Klenk Roofing had three employees working in the construction industry and that the company had failed to procure workers’ compensation coverage for these employees in violation of chapter 440. Mr. Howe consequently issued a Stop-Work Order that he personally served on Mr. Klenk on July 23, 2014. Also on July 23, 2014, Mr. Howe served Klenk Roofing with a Request for Production of Business Records for Penalty Assessment Calculation, asking for documents pertaining to the identification of the employer, the employer's payroll, business accounts, disbursements, workers' compensation insurance coverage records, professional employer organization records, temporary labor service records, documentation of exemptions, documents relating to subcontractors, documents of subcontractors' workers compensation insurance coverage, and other business records to enable the Department to determine the appropriate penalty owed by Klenk Roofing. Anita Proano, penalty audit supervisor for the Department, was assigned to calculate the appropriate penalty to be assessed on Klenk Roofing. Penalties for workers' compensation insurance violations are based on doubling the amount of evaded insurance premiums over the two-year period preceding the Stop-Work Order, which, in this case was the period from July 24, 2012, through July 23, 2014. § 440.107(7)(d), Fla. Stat. At the time Ms. Proano was assigned, Klenk Roofing had not provided the Department with sufficient business records to enable Ms. Proano to determine the company’s actual gross payroll. Section 440.107(7)(e) provides that where an employer fails to provide business records sufficient to enable the Department to determine the employer’s actual payroll for the penalty period, the Department will impute the weekly payroll at the statewide average weekly wage as defined in section 440.12(2), multiplied by two.1/ In the penalty assessment calculation, the Department consulted the classification codes and definitions set forth in the SCOPES of Basic Manual Classifications (“Scopes Manual”) published by the National Council on Compensation Insurance (“NCCI”). The Scopes Manual has been adopted by reference in Florida Administrative Code Rule 69L-6.021. Classification codes are four-digit codes assigned to occupations by the NCCI to assist in the calculation of workers' compensation insurance premiums. Rule 69L-6.028(3)(d) provides that “[t]he imputed weekly payroll for each employee . . . shall be assigned to the highest rated workers’ compensation classification code for an employee based upon records or the investigator’s physical observation of that employee’s activities.” Ms. Proano applied NCCI Class Code 5551, titled “Roofing — All Kinds and Drivers,” which “applies to the installation of new roofs and the repair of existing roofs.” The corresponding rule provision is rule 69L-6.021(2)(uu). Ms. Proano used the approved manual rates corresponding to Class Code 5551 for the periods of non-compliance to calculate the penalty. On September 17, 2014, the Department issued an Amended Order of Penalty Assessment in the amount of $214,335.58, based upon an imputation of wages for the employees known to the Department at that time. After Klenk Roofing provided further business records, the Department on December 16, 2014, was able to issue a Second Amended Order of Penalty Assessment in the amount of $87,159.20, based on a mixture of actual payroll information and imputation. The Department eventually received records sufficient to determine Klenk Roofing's payroll for the time period of July 24, 2012, through July 23, 2014. The additional records enabled Ms. Proano to calculate a Third Amended Order of Penalty Assessment in the amount of $19.818.04. The evidence produced at the hearing established that Ms. Proano utilized the correct class codes, average weekly wages, and manual rates in her calculation of the Third Amended Order of Penalty Assessment. The Department has demonstrated by clear and convincing evidence that Klenk Roofing was in violation of the workers' compensation coverage requirements of chapter 440. Jonny Wheeler, Vincent Ashton, and Craig Saimes were employees of Klenk Roofing performing services in the construction industry without valid workers' compensation insurance coverage. The Department has also demonstrated by clear and convincing evidence that the penalty was correctly calculated by Ms. Proano, through the use of the approved manual rates, business records provided by Klenk Roofing, and the penalty calculation worksheet adopted by the Department in Florida Administrative Code Rule 69L-6.027. Klenk Roofing could point to no exemption, insurance policy, or employee leasing arrangement that would operate to lessen or extinguish the assessed penalty. At the hearing, Ronald Klenk testified he was unable to obtain workers’ compensation coverage during the penalty period because it was prohibitively expensive to carry coverage for fewer than four employees. He stated that the insurers demanded a minimum of $1,500 per week in premiums, which wiped out his profits when the payroll was low. Mr. Klenk presented a sympathetic picture of a small business squeezed by high premiums, but such equitable considerations have no effect on the operation of chapter 440 or the imposition of the penalty assessed pursuant thereto.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers' Compensation, assessing a penalty of $19,818.04 against Klenk Roofing, Inc. DONE AND ENTERED this 28th day of April, 2015, 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 28th day of April, 2015.
The Issue Did Respondent, John McCary General Contractor, Inc. (McCary), fail to secure workers’ compensation insurance for employees as required by chapter 440, Florida Statutes (2016)?1/ If so, what is the appropriate penalty?
Findings Of Fact The Division is the state agency responsible for enforcing the statutory requirement that employers secure workers’ compensation insurance for the benefit of their employees. § 440.107(3), Fla. Stat. McCary is a roofing contractor owned and operated by John McCary. It is in the construction industry. On November 18, 2016, Mr. Howe, a compliance investigator for the Division, visited a house where McCary was tearing off the roof. Mr. Howe recorded the names of each employee. He conducted an investigation that included speaking to Mr. McCary, re-interviewing the employees, checking with the employee leasing company that McCary used, and checking the Davison database of insured individuals. Mr. Howe could not find a record of workers’ compensation coverage for at least one employee. This triggered further investigation that resulted in Mr. Howe issuing a Stop-Work Order to McCary on November 18, 2016, for failure to secure workers’ compensation insurance in violation of sections 440.10(1), 440.38(1) and 440.107(2). After that, the Division followed its usual practice of requesting documents, reviewing its databases, soliciting information and explanations from the employer, and analyzing the information and documents obtained. Division Exhibit 9 shows that the Division asked McCary for business records on November 21, 2016, and that McCary did not provide them until December 12, 2016. The Division’s investigation and analysis resulted in the evidence admitted in this proceeding. The evidence proved the allegations of the Division’s Third Amended Order of Penalty Assessment, including its attached Penalty Calculation Worksheet. McCary did not comply with workers’ compensation insurance coverage requirements for the period May 1 through November 18, 2016. During that period, McCary employed Arcenio Rosado, Domingo Esteves, Javier Restrepo, Jose Alfredo Fuentes, Carlos Toledo, Edwin Valle, Kelly Alvarez, Kyle Shiro, Claudia Florez, and Nelson Geovany Melgar Rodenzo and that they performed work for it. McCary would have paid $4,744.06 in insurance premiums to provide workers’ compensation coverage for these employees during that period. During that period, McCary also used the services of two subcontractors, Star Debris Removal and E C Roofing, LLC. These subcontractors did not have workers’ compensation insurance for their employees during the May 1 through November 18, 2016, period. Premiums to provide coverage to the employees of the two subcontractors who worked on McCary’s projects would have totaled $100,771.09. From May 1 to November 18, 2016, McCary made cash payments of $195,856.02 that its documents could not confirm to be for a valid business expense. Florida Administrative Code Rule 69L-6.035(1)(k) requires that 80 percent of that amount be deemed wages or salaries paid employees when calculating the premiums used to determine the ultimate penalty. Eighty percent of McCary’s unaccounted-for cash payments is $156,684.82. That amount is legally deemed to be a payroll expense. McCary would have paid $29,143.38 to provide coverage for the employees represented by the cash payments. Altogether, McCary would have paid $134,658.53 to provide workers’ compensation coverage to the uncovered employees represented by the actual and deemed payroll during the May 1 to November 18, 2016, period.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, enter a final order finding that John McCary General Contractor, Inc., failed to secure payment of required workers’ compensation insurance coverage from May 1 to November 18, 2016, in violation of section 440.107, Florida Statutes, and imposing a penalty of $269,317.06, reduced by $1,000.00. DONE AND ENTERED this 17th day of July, 2018, in Tallahassee, Leon County, Florida. S JOHN D. C. NEWTON, II 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 17th day of July, 2018.
The Issue The issue is whether Petitioner violated Chapter 440, Florida Statutes, by not having workers’ compensation insurance coverage, and if so, what penalty should be imposed.
Findings Of Fact Petitioner operates a gas station and convenience store in Winter Garden. Mohammad Sultan is Petitioner’s owner and president. On November 2, 2006, Margaret Cavazos conducted an unannounced inspection of Petitioner’s store. Ms. Cavazos is a workers’ compensation compliance investigator employed by the Department. Petitioner had nine employees, including Mr. Sultan and his wife, on the date of Ms. Cavazos' inspection. Petitioner had more than four employees at all times over the three-year period preceding Ms. Cavazos' inspection. Petitioner did not have workers’ compensation insurance coverage at the time of Ms. Cavazos’ inspection, or at any point during the three years preceding the inspection. On November 2, 2006, the Department served a Stop-Work Order and Order of Penalty Assessment on Petitioner, and Ms. Cavazos requested payroll documents and other business records from Petitioner. On November 6, 2006, the Department served an Amended Order of Penalty Assessment,1 which imposed a penalty of $70,599.78 on Petitioner. The penalty was calculated by Ms. Cavazos, using the payroll information provided by Petitioner and the insurance premium rates published by the National Council on Compensation Insurance. The parties stipulated at the final hearing that the gross payroll attributed to Mr. Sultan for the period of January 1, 2006, through November 2, 2006, should have been $88,000, rather than the $104,000 reflected in the penalty worksheet prepared by Ms. Cavazos. The net effect of this $16,000 correction in the gross payroll attributed to Mr. Sultan is a reduction in the penalty to $68,922.18.2 On November 3, 2006, Mr. Sultan filed a notice election for exemption from the Workers’ Compensation Law. His wife did not file a similar election because she is not an officer of Petitioner. The election took effect on November 3, 2006. On November 6, 2006, Petitioner obtained workers’ compensation insurance coverage through American Home Insurance Company, and Petitioner also entered into a Payment Agreement Schedule for Periodic Payment of Penalty in which it agreed to pay the penalty imposed by the Department over a five-year period. On that same date, the Department issued an Order of Conditional Release from Stop-Work Order. Petitioner made the $7,954.30 “down payment” required by the Payment Agreement Schedule, and it has made all of the required monthly payments to date. The payments required by the Payment Agreement Schedule are $1,044.09 per month, which equates to approximately $12,500 per year. Petitioner was in compliance with the Workers’ Compensation Law at the time of the final hearing. Petitioner reported income of $54,358 on gross receipts in excess of $3.1 million in its 2005 tax return. Petitioner reported income of $41,728 in 2004, and a loss of $8,851 in 2003. Petitioner had total assets in excess of $750,000 (including $540,435 in cash) at the end of 2005, and even though Petitioner had a large line of credit with Amsouth Bank, its assets exceeded its liabilities by $99,041 at the end of 2005. Mr. Sultan has received significant compensation from Petitioner over the past four years, including 2003 when Petitioner reported a loss rather than a profit. He received a salary in excess of $104,000 in 2006, and he was paid $145,333 in 2005, $63,750 in 2004, and $66,833 in 2003. Mr. Sultan’s wife is also on Petitioner’s payroll. She was paid $23,333.40 in 2006, $25,000 in 2005, and $12,316.69 in 2004. Mr. Sultan characterized 2005 as an “exceptional year,” and he testified that his business has fallen off recently due to an increase in competition in the area. Todd Baldwin, Petitioner’s accountant, similarly testified that 2006 was not as good of a year as 2005, but no corroborating evidence on this issue (such as Petitioner’s 2006 tax return) was presented at the final hearing. Mr. Sultan testified that payment of the penalty imposed by the Department adversely affects his ability to run his business. The weight given to that testimony was significantly undercut by the tax returns and payroll documents that were received into evidence, which show Petitioner’s positive financial performance and the significant level of compensation paid to Mr. Sultan and his wife over the past several years. The effect of the workers’ compensation exemption elected by Mr. Sultan is that his salary will no longer be included in the calculation of the workers’ compensation insurance premiums paid by Petitioner. If his salary had not been included in Ms. Cavazos’ calculations, the penalty imposed on Petitioner would have been $40,671.36. Ms. Cavazos properly included Mr. Sultan’s salary in her penalty calculations because he was being paid by Petitioner and he did not file an election for exemption from the Workers' Compensation Law until after her inspection.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department issue a final order imposing a penalty of $68,922.18 on Petitioner to be paid in accordance with a modified payment schedule reflecting the reduced penalty and the payments made through the date of the final order. DONE AND ENTERED this 22nd day of August, 2007, in Tallahassee, Leon County, Florida. S T. KENT WETHERELL, II 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 22nd day of August, 2007.
The Issue Whether Respondent violated the provisions of chapter 440, Florida Statutes (2013)1/, by failing to obtain workers? compensation insurance coverage, as alleged in the Stop-Work Order and Amended Order of Penalty Assessment; and, if so, the appropriate penalty.
Findings Of Fact The Department is the state agency responsible for enforcing the requirement that employers secure the payment of workers? compensation insurance coverage, pursuant to chapter 440, Florida Statutes, for their employees. Respondent is a Florida-limited liability company engaged in business operations for the time period of March 16, 2010, through March 15, 2013. Mark Markisen is the managing member of Respondent listed with the State of Florida, Division of Corporations. On March 15, 2013, Jack Gumph, an investigator with the Department, conducted a random on-site compliance inspection of a construction site for a single family residence. Gumph determined that the general contractor for the job was Gulf Shore Homes and that it had subcontracted with Tradewinds Design for certain work inside the home. As Gumph interviewed the different workers present on the worksite, he spoke with Mark and Brett Markisen, who informed him that they worked for Tradewinds Design. Gumph observed Brett Markisen installing a wine cabinet in the home. Gumph confirmed through the Department?s online records that Gulf Shores Homes and Tradewinds Design had current workers? compensation insurance coverage on March 15, 2013. Based on this initial information, Gumph left the worksite. On March 19, 2013, Gumph subsequently learned from a conversation with Mark Markisen that Mark and Brett Markisen were not employees of Tradewinds Design. Rather, Tradewinds had subcontracted with Respondent, Cabinetry by Design of Collier County, L.L.C., to build and install the wine cabinets. Mark Markisen stated that he was the managing member of Cabinetry by Design of Collier County, L.L.C., and that he had selected to be exempt from workers? compensation insurance coverage. Gumph confirmed that Mark Markisen had selected to be exempt from workers? compensation insurance coverage. However, because Respondent did not have worker?s compensation coverage for Brett Markisen, the Department issued a Stop-Work Order on March 19, 2013, and Request for Production of Business Records for Penalty Assessment Calculation on April 8, 2013. Mark Markisen possessed an exemption from the workers? compensation insurance coverage requirement during the penalty period of March 16, 2010, through March 15, 2013. Brett Markisen did not possess an exemption from the workers? compensation insurance coverage requirement during the penalty period. Brett Markisen was employed by Respondent throughout the penalty period. During the penalty period, Brett Markisen received approximately $187,000.00 from Respondent. The amount of this money attributed to wages is unclear, based on the fact that Mark Markisen indicated that some of the payments reflected loans, not wages. Respondent was an “employer” as defined in chapter 440, Florida Statutes, throughout the penalty period. On March 15, 2013, Brett Markisen was Respondent?s “employee” working on the installation of cabinets in the single family residence.2/ On March 15, 2013, Respondent failed to provide workers? compensation insurance coverage for Brett Markisen. Respondent also failed to provide coverage during the penalty period of March 16, 2010, through March 15, 2013. Therefore, the Department properly entered a Stop-Work Order on March 19, 2013. Respondent failed to provide sufficient business records in order to establish a payroll. Therefore, the Department correctly imputed payroll against Respondent. The Amended Order of Penalty Assessment used the proper class code for the calculation of the penalty, concerning the installation of cabinets, and correctly followed the procedure set out in section 440.107(7)(d)1, Florida Statutes, and Florida Administrative Code Rule 69L-6.028.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order upholding the Stop-Work Order and Amended Order of Penalty Assessment, assessing a penalty against Respondent in the amount of $21,436.61. DONE AND ENTERED this 30th day of December, 2013, in Tallahassee, Leon County, Florida. S THOMAS P. CRAPPS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of December, 2013.
The Issue The 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.
