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 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. Petitioner Kenny Nolan, d/b/a/ Great Southern Tree Service, is a sole proprietor located in Jacksonville, Florida, and is engaged in the business of cutting trees, which is not a construction activity. Michael Robinson is an investigator employed by the Division. His duties include making site visits at locations where work is being conducted and determining whether the employers in the state are in compliance with the requirements of the workers' compensation law and related rules. On June 6, 2006, Mr. Robinson visited a job site in a subdivision in Jacksonville, Florida, and observed five individuals at the residential work site. Mr. Robinson interviewed the individuals and, based upon these interviews, determined that four of the individuals worked for Mr. Nolan: Chad Pasanen, David Soloman, Michael Walton, and Eric Kane. None of these workers had a workers' compensation exemption. Mr. Robinson also completed a Field Interview Worksheet on June 6, 2006, when interviewing the four workers. Mr. Robinson wrote on the interview worksheet that Mr. Pasanen worked for Mr. Nolan for three weeks with a daily basis of pay and that Mr. Walton worked for Mr. Nolan for two weeks with a daily basis of pay. The interview worksheet has no entry for the length of time Mr. Solomon worked for Mr. Nolan but does indicate he was paid by the job. The portion of the interview worksheet regarding Mr. Kane is not in evidence. Mr. Robinson checked the database in the Coverage and Compliance Automated System and found no proof of coverage nor an exemption for Mr. Nolan. After conferring with his supervisor, Mr. Robinson issued a Stop-Work Order and Order of Penalty Assessment to Petitioner on June 6, 2006, along with a request for business records for the purpose of calculating a penalty for lack of coverage for the period June 6, 2003 through June 6, 2006. The request for business records instructed Mr. Nolan to produce business records within five days. Mr. Nolan did not produce business records as requested. On June 27, 2006, Mr. Robinson issued an Amended Order of Penalty Assessment to Petitioner for $272,948.96. Attached to the Amended Order of Penalty Assessment is a penalty worksheet with a list of names under the heading, "Employee Name," listing the names of Chad Pasanen, David Solomon, Michael Walton and Eric Kane. The amount of the penalty was imputed using the statewide weekly average wage that was in effect at the time of the issuance of the stop-work order. Through imputation of payroll for the four employees, the Department calculated a penalty for the time period of October 1, 2003 through June 6, 2006. Using rates from an approved manual, Mr. Robinson assigned a class code to the type of work performed by Petitioner and multiplied the approved manual rate with the imputed payroll per one hundred dollars, then multiplied all by 1.5. 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. The payroll was imputed back to October 1, 2003. For the period prior to October 1, 2003, Mr. Robinson assessed a penalty of $100 per day for each calendar day of noncompliance. The portion of the penalty attributable to the period June 6, 2003 through September 30, 2003, is $11,600.00. Respondent's Business Mr. Nolan started the business, Great Southern Tree Service, in February or March 2005, as a sole proprietor. Mr. Nolan was not in business prior to early 2005 and did not employ anyone in 2003 or 2004. At the inception of his tree trimming business, Mr. Nolan's brother worked for Mr. Nolan for two to three months until his brother's health rendered him unable to continue working for Mr. Nolan. Mr. Nolan subsequently worked with Christopher Wilcox until December 2005, when Mr. Wilcox was in an automobile accident and became unable to work. After Wilcox was injured in December 2005, Mr. Nolan did not have any employees for the remainder of the winter. Only Mr. Nolan's brother and Christopher Wilcox worked with Mr. Nolan in 2005. The nature of the tree trimming business is seasonal. Mr. Nolan obtained work sporadically. Typically, he had jobs two or three times a week. It is busiest in the spring and summer and slowest during the fall and winter months. In March 2006, Mr. Nolan was approached by David Solomon who was looking for work. Mr. Solomon worked for Mr. Nolan "maybe twice a week" and possibly three times a week when he was "lucky." Mr. Nolan worked exclusively for residential customers. He obtained business by knocking on doors and handing out business cards. When he was paid by his customers, he immediately paid the men who were helping him. He was usually paid in cash. In the instances when he was paid by a check, he would take his employees to the bank, where he would cash the check and pay off his workers. Eric Kane also began working for Nolan in March 2006. Like Mr. Soloman, he also worked two to three days a week for Mr. Nolan. Kane was at the jobsite on the day Mr. Robinson made the site visit, but was not working that day. He was sitting off to the side and was "just hanging out" with the other men. According to Mr. Kane, Mr. Robinson did not ask him any questions. In May 2006, a storm or small tornado hit an area of Jacksonville called Ortega. The resulting tree damage temporarily enabled Mr. Nolan to get more work. At that point, Mr. Nolan hired Chad Pasanen. Mr. Nolan estimates that Mr. Pasanen worked for him for about three weeks before the site visit by Mr. Robinson. Mr. Pasanen previously worked for Asplundh Tree Expert Company. One of his paycheck stubs establishes that he worked for Asplundh as late as April 8, 2006. Mr. Nolan also hired Michael Walton in May 2006. Mr. Walton previously worked for Seaborn Construction Company. A paycheck stub establishes that he worked for Seaborn as late as April 26, 2006. Mr. Walton sporadically worked for Mr. Nolan for about two weeks prior to the site visit. The Division did not count Mr. Nolan as an employee for purposes of calculating the penalty assessment.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it RECOMMENDED: That the Division of Workers' Compensation enter a Final Order rescinding the Amended Order of Penalty Assessment issued June 27, 2006, and the Stop Work Order issued to Petitioner on June 6, 2006. DONE AND ENTERED this 28th day of November, 2006, 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 28th day of November, 2006.
Findings Of Fact Respondent, Debra Ann Vallancourt, was issued a Class "EE" Recovery Agent Intern License on August 12, 1992. Respondent has never held a Class "R" Recovery Agency License or a Class "E" Recovery Agent License. June MacWithey, who holds a Class "R" Recovery Agency License and a Class "E" Recovery Agent License, sponsored Respondent's internship beginning in April, 1992. Prior to that time, Respondent was sponsored under the Class "E" License of Septhanie MacWithey, one of June MacWithey's employees. The name of June MacWithey's recovery agency is Collateral Collection Corporation. The name was changed in February, 1993. The former name of the corporation was Midnight Auto Adjusters. In November, 1992, June MacWithey formally terminated her sponsorship of Respondent. At approximately the same time, Steve MacWithey had a conversation with Respondent regarding complaints made against her for allegedly contracting to perform repossessions without her sponsor's knowledge or permission. However, it is not clear whether she was informed at that time that her internship was being terminated. Steve MacWithey, June's husband, is a Class "EE" Recovery Agent Intern, and one of June's employees. Charles Mason is the manager of Auto Sports Center, Inc., in Apopka, Florida. In late summer, 1992, Sharon Landis introduced Respondent to Mason as a licensed repossessor. He hired Respondent to perform repossessions as an independent contractor, and paid her by check made payable to Debbie Vallancourt. He eventually hired Respondent as an employee in March or April of 1993. Respondent repossessed approximately 30-35 cars for Mr. Mason between October, 1992 and January, 1993. Respondent never advised Mason that she was working for Midnight Auto Adjusters or Collateral Collection Corporation. However, she would on occasion perform repossessions with Steve MacWithey who would pick her up at Mason's car lot. Some of the repossessions Respondent performed for Mason, between October and December, 1992, were done without the knowledge of her sponsor June MacWithey, and on some of the repossessions performed for Mason, Respondent would cash her check and split the money with Steve MacWithey, bypassing her sponsor. George Namlik, Sr. owns a used car dealership in Apopka, Florida. In early November, 1992, Respondent solicited Namlik for the purpose of performing repossessions for his dealership. She indicated to him that she was licensed to perform repossessions. She showed him her Class "EE" Recovery Agent Intern License, which he made a copy of, and told him that another license was in the mail. Next to the photocopy of the Class "EE" license, Respondent wrote her office number, her digital beeper number, and her quoted price for each repossession. Respondent did not tell Mr. Namlik that she was working with anyone else, and led him to believe that she had the necessary licenses to work as an independent contractor. Namlik assigned her two repossessions which she never completed. She returned the car keys to Namlik following numerous requests and his threat to complain to the Department of State, Division of Licensing. June MacWithey did not properly supervise and direct the activities of Respondent. Between October and December, 1992, Respondent solicited and performed repossessions independent of, and without the knowledge of, her sponsor. Petitioner's explanation for this conduct is not credible.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent be found GUILTY of violating Sections 493.6118(1)(g) and receive a written reprimand and pay an administrative fine in the amount of One Thousand Dollars ($1,000). DONE and ENTERED this 13th day of October, 1993, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of October, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-1885 The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner's proposed findings of fact. Accepted in substance: paragraphs 1-19 Respondent's proposed findings of fact. Respondent did not submit proposed findings. COPIES FURNISHED: Henri C. Cawthon, Esquire Department of State Division of Licensing The Capitol, Mail Station #4 Tallahassee, Florida 32399-0250 Debra Ann Vallancourt (pro se) Post Office Box 269 Apopka, Florida 32712-0269 Honorable Jim Smith Secretary of State The Capitol Tallahassee, Florida 32399-0250 Phyllis Slater General Counsel Department of State The Capitol, PL-02 Tallahassee, Florida 32399-0250
Findings Of Fact 9. The factual allegations contained in the Order of Penalty Assessment issued on September 10, 2009, and the Ist Amended Order of Penalty Assessment filed with the Division of Administrative Hearings on March 30, 2010, attached hereto as "Exhibit A" and "Exhibit B", respectively, and fully incorporated herein by reference, are hereby adopted as the Department's Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Alex Sink, Chief Financial Officer of the State of Florida, or her designee, having considered the record in this case, including the request for administrative hearing received from VIN SON’S AUTO BODY & PAINT SHOP, INC., the Order of Penalty Assessment, and the 1st Amended Order of Penalty Assessment, being otherwise fully advised in the premises, hereby finds that: 1. On September 10, 2009, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”), issued an Order of Penalty Assessment in Division of Workers’ Compensation Case No. 09-171-D2OPA to VIN SON’S AUTO BODY & PAINT SHOP, INC. The Order of Penalty Assessment assessed a total penalty of $37,952.16 against VIN SON’S AUTO BODY & PAINT SHOP, INC. The Order of Penalty Assessment included a Notice of Rights wherein VIN SON’S AUTO BODY & PAINT SHOP, INC. was advised that any request for an administrative proceeding to challenge or contest the Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes, and must conform to Rule 28-106.2015, Florida Administrative Code. 2. On September 14, 2009, the Order of Penalty Assessment was personally served on VIN SON’S AUTO BODY & PAINT SHOP, INC. A copy of the Order of Penalty Assessment is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On September 24, 2009, VIN SON’S AUTO BODY & PAINT SHOP, INC. filed a petition for administrative review (“Petition”) with the Department, which was forwarded to the Division of Administrative Hearings and assigned DOAH Case No. 09-5538. A copy of the Petition is attached hereto as “Exhibit B”. 4. On March 30, 2010, the Department filed with the Division of Administrative Hearings a Motion to Amend Order of Penalty Assessment with an attached 1st Amended Order of Penalty Assessment. The Ist Amended Order of Penalty Assessment assessed a total penalty of $36,287.84 against VIN SON’S AUTO BODY & PAINT SHOP, INC. On June 1, 2010, Administrative Law Judge June C. McKinney entered an Order granting the Department’s Motion to Amend Order of Penalty Assessment. A copy of the 1st Amended Order of Penalty Assessment is attached hereto as “Exhibit C” and incorporated herein by reference. 5. On March 31, 2010, the Department served its First Interlocking Discovery Requests (“discovery requests”) on counsel for VIN SON’S AUTO BODY & PAINT SHOP, INC. Pursuant to Rules 1.340(a), 1.350(b), and 1.370(a), Florida Rules of Civil Procedure, adopted by Rule 28-106.206, Florida Administrative Code, responses to the Department’s discovery requests were due within thirty days after service of the discovery requests. 6. On May 18, 2010, after receiving no responses to its discovery requests, the Department filed with the Division of Administrative Hearings a Motion to Compel Discovery. On June 1, 2010, Administrative Law Judge June C. McKinney entered an Order granting the Department’s Motion to Compel Discovery. The Order required VIN SON’S AUTO BODY & PAINT SHOP, INC. to respond to the Department’s discovery requests on or before June 4, 2010. 7. On June 7, 2010, after receiving no responses to the Department’s discovery requests, the Department filed a Motion to Deem Matters Admitted and to Relinquish Jurisdiction Pursuant to Section 120.57(1)(i), Florida Statutes (“Motion to Deem Matters Admitted”). On June 11, 2010, Administrative Law Judge June C. McKinney entered an Order denying the Department’s Motion to Deem Matters Admitted and an Order granting VIN SON’S AUTO BODY & PAINT SHOP, INC. additional time to answer the Department’s discovery requests. The Judge’s Order granting VIN SON’S AUTO BODY & PAINT SHOP, INC. an extension of time to answer the Department’s discovery requests required VIN SON’S AUTO BODY & PAINT SHOP, INC. to respond to the Department’s discovery requests on or before August 5, 2010. 8. On August 6, 2010, after receiving no responses to the Department’s discovery requests from VIN SON’S AUTO BODY & PAINT SHOP, INC., the Department filed a Renewed Motion to Deem Matters Admitted and to Relinquish Jurisdiction Pursuant to Section 120.57(1)(@), Florida Statutes. On August 16, 2010, Administrative Law Judge June C. McKinney entered an Order deeming all material facts admitted and relinquishing jurisdiction of DOAH Case No. 09-5538 to the Department. Administrative Law Judge June C. McKinney’s August 16, 2010 Order is attached hereto as “Exhibit D”. ”
The Issue The issues are whether the individuals included in the Amended Order of Penalty Assessment were employees of Respondent during the penalty period designated therein and, if so, whether Respondent failed to secure workers' compensation coverage in violation of Section 440.107, Florida Statutes (2003); and whether Petitioner should impose a penalty against Respondent in the amount of $156,880.87.
Findings Of Fact Petitioner is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers' compensation for the benefit of their employees. § 440.107, Fla. Stat. (2002). Respondent is an "S" corporation domiciled in Florida and engaged in the construction industry. The company was incorporated in late October 2003 and began operating at or near that time. At all times relevant to this proceeding, David Roquet was the president and sole shareholder of the company. On April 7, 2004, Petitioner conducted an investigative sweep of areas in Pasco County, including the Lexington Oaks Subdivision. While in the Lexington Oaks Subdivision, one of Petitioner's investigators observed five individuals working on a residence under construction. These individuals were framing the house and performing other carpentry work. At the time of the investigation, John Sullivan, an investigator for Petitioner, spoke to Maurilio Carrizales, one of the five individuals working at the site. Later, Mr. Sullivan also spoke with Mr. Roquet after he arrived at the construction site. On April 7, 2004, Mr. Sullivan issued a Stop Work Order against Respondent after he determined that Maurilio Carrizales and other individuals working on the construction project did not have workers' compensation insurance. That same day, Petitioner issued to Mr. Roquet, as Respondent's president, a Request for Production of Business Records for Penalty Assessment Calculation. On April 12, 2004, pursuant to the Division's request, Mr. Roquet provided the Division with copies of Respondent's business records, which included check stubs, payroll records, tax records, and workers' compensation documents. Respondent's business records revealed that Respondent made direct payments to Maurilio Carrizales, Raudel Carrizales, Victor Carrizales, and George Betz for the construction work they performed for the company. According to the check stubs and tax records, Respondent treated these individuals as subcontractors and did not withhold any taxes from the direct payments that were made to them. Respondent did not have workers' compensation coverage on the individuals named in paragraph 7 during the penalty periods covered in the Amended Order of Penalty Assessment. There was no documentation in Respondent's business records which indicated that Maurilio Carrizales, Raudel Carrizales, Victor Carrizales, and George Betz had workers' compensation coverage or exemptions from such coverage during the penalty period. Moreover, Petitioner, which maintains a database of all workers' compensation exemptions in the State of Florida, determined that there were no exemptions from workers' compensation coverage for Mr. Roquet,1/ Raudel Carrizales, Maurilio Carrizales, Victor Carrizales, and George Betz for the time periods which are at issue in this proceeding. Based on Petitioner's review of its records and on the business records provided by Respondent, Petitioner issued an Amended Order of Penalty Assessment which assessed a penalty of $156,880.87 against Respondent for failing to secure workers' compensation as required by Subsection 440.107(2), Florida Statutes (2003). The penalty amount of $156,880.87 was determined by multiplying the payroll amount by the workers' compensation approved manual rate for carpentry of $37.91. That amount was then multiplied by 1.5. See Subsection 440.107(7)(d), Florida Statutes (2003), for the method of calculating penalties. The penalty assessed in the Amended Order is based on Petitioner's determination that Mr. Roquet, Maurilio Carrizales, Raudel Carrizales, Victor Carrizales, and George Betz were Respondent's employees during designated time periods and on the gross payments Respondent made to those employees. The Penalty Assessment Worksheet, upon which the total penalty amount is based, listed Respondent's employees and its gross payments to the employees and the periods which Petitioner determined the employees had no workers' compensation coverage or exemptions, as follows: (1) from October 30, 2003, until December 17, 2003, Mr. Roquet was paid $22,994; (2) from October 31, 2003, until December 31, 2003, Maurilio Carrizales was paid $33,536; (3) from October 31, 2003, through December 31, 2003, Raudel Carrizales' was paid $33,536; (4) from January 1, 2004, until April 7, 2004, Maurilio Carrizales was paid $57,023; (5) from February 1, 2004, through April 7, 2004, Raudel Carrizales was paid $24,666; (6) from January 4, 2004, until April 7, 2004, Victor Carrizales was paid $99,938; and (7) from January 16, 2004, until January 23, 2004, George Betz was paid $4,190. During this proceeding, Respondent stipulated that during the time period at issue in this proceeding George Betz did not have either workers' compensation coverage or a valid exemption from such coverage.2/ Respondent's net or ordinary income for 2003, as reported on its Internal Revenue Service Form 1120S (IRS Form 1120S) for the tax year 2003, was $22,994. Based on its review of this document, Petitioner determined that in 2003, Mr. Roquet received compensation of $22,994 from the company. Contrary to Petitioner's conclusion, the $22,994 was not compensation to Mr. Roquet and should not have been attributed to him as such. The ordinary income of Respondent, a corporation, reported on IRS Form 1120S prepared for the tax year 2003, does not represent compensation that was paid to Mr. Roquet, the sole shareholder and officer in the company. Because the corporation had initiated operations in late October 2003 and operated only the last two months of 2003, Mr. Roquet had not begun compensating himself in 2003 and had performed no services for the company for which he expected or received remuneration. In mid-October 2003, when Mr. Roquet filed for the corporation's federal identification number, he indicated on the form that he would begin receiving compensation in January 2004. That form was received and approved by IRS on or about October 21, 2003, and consistent with the intent stated therein, Mr. Roquet began receiving compensation from Respondent in January 2004. In 2003, Respondent made a distribution of $6,700 to Mr. Roquet. However, this distribution was not compensation to Mr. Roquet, but was reimbursement to him for expenses he had paid out of his personal funds for some of the company's day-to- day operating costs and was also a withdrawal of dividend distributions from the company. For the reasons stated in paragraphs 13, 14, and 15 above, Respondent's ordinary income of $22,994, and no part thereof, is compensation to Mr. Roquet for purposes of determining any penalty assessment against Respondent. Mr. Roquet, as Respondent's president, entered into an oral agreement with three brothers: Maurilio Carrizales, Raudel Carrizales, and Victor Carrizales. Pursuant to the oral agreement, each brother was a subcontractor of the company and would be paid $1.67 per square foot for the framing work that he completed. With the funds that the company paid, each of the brothers had to buy whatever supplies and materials were needed to complete the job. However, there was no written agreement to describe or define the business relationship between Respondent and each of the brothers. Prior to Respondent's hiring the Carrizales brothers, Mr. Roquet requested information regarding their workers' compensation coverage. Based on information provided, Mr. Roquet mistakenly believed that both Raudel Carrizales and Maurilio Carrizales had workers' compensation coverage through an employee leasing company and that Victor Carrizales had an exemption from such coverage. However, at the time periods relevant to this proceeding, these individuals had neither workers' compensation coverage nor exemptions from coverage. Victor Carrizales, as a sole proprietor of a construction business, had a valid exemption from workers' compensation coverage from October 25, 2000, to October 25, 2002, and from February 15, 2003, until December 31, 2003. The letter of exemption for Victor Carrizales was initially valid from February 15, 2003, until February 14, 2005, but became invalid after December 31, 2003, and individuals previously exempt had to re-apply for exemption. That change in the law became effective January 1, 2004. See Fla. Admin. Code R. 69L-6.012. The portion of the penalty assessment attributable to Victor Carrizales was January 1, 2004, to April 7, 2004, a time period in which he had no workers' compensation coverage or exemption. During this proceeding, Respondent contended that Raudel Carrizales, Maurilio Carrizales, and Victor Carrizales had workers' compensation coverage through a personnel leasing company, Southeast Personnel Services, Inc. (Southeast Personnel). Pursuant to Subsection 468.520(5), Florida Statutes (2003), 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. § 468.520(4), Fla. Stat. (2003). When the employee leasing company accepts a client, the client becomes an employee of the employer's 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 (2003). § 468.529(1), Fla. Stat. (2003). 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. (2003). Records from Southeast Personnel provided to Petitioner reflect that at one time, Raudel Carrizales, through his company, Carrizales Brothers Framing, was associated with that personnel leasing company pursuant to a written agreement (Agreement) entered into on or about October 27, 2003.3/ At the time the Agreement was executed, both Raudel Carrizales and Maurilio Carrizales were listed by Southeast Personnel as employees of Carrizales Brothers Framing. Pursuant to the Agreement, as the leasing company, Southeast Personnel was responsible for providing workers' compensation coverage for its leased employees, who were paid through the leasing company. The Agreement, which refers to leased employees as "assigned employees," provides in relevant part the following: Client "represents and warrants that all wages (including bonuses) paid to any assigned employee are to be paid through SPLI [Southeast Personnel] and that any such assigned employee will receive no additional wages in any form from Client. Client agrees that it will be solely responsible for damages of any nature arising out of Client's failure to report to SPLI [Southeast Personnel] the payment to an assigned employee of any remuneration for services rendered for Client. In addition, SPLI [Southeast Personnel] shall not be considered to be an employer of any individual for who required payroll information is not supplied during any pay period (except as may be required by law). Client assumes full responsibility for workers' compensation claims, . . . and any and all other obligations or claims pertaining in any way to any individual for whom payroll information is not supplied during any payroll period (except as may be required by law), or who is paid in whole or part by Client, as an employee, independent contractor, or in any other capacity. For workers' compensation coverage to apply through the leasing company, the "assigned employees" must be paid through the leasing company. In this case, none of the employees listed on the Penalty Worksheet were paid by Southeast Personnel for the construction work they did for Respondent. Instead, they were paid directly by Respondent. There is no evidence that these direct payments were ever reported to Southeast Personnel. Rodney Holderbau, a marketing specialist with Southeast Personnel, testified that Raudel Carrizales, Maurilio Carrizales, and Victor Carrizales had workers' compensation coverage through Southeast Personnel, even though they were paid directly by Respondent for the work they did for that company and received no payments for that job from Southeast Personnel. However, no documentary evidence was presented to support this position. Mr. Holderbau's testimony that Raudel Carrizales, Maurilio Carrizales, and Victor Carrizales had workers' compensation coverage during all the alleged periods noted on the Amended Order of Penalty Assessment is neither credible nor persuasive. As a marketing specialist responsible for recruiting companies to become clients of Southeast Personnel, Mr. Holderbau failed to establish that he possessed the qualifications or position within Southeast Personnel to speak on behalf of the company and to interpret the terms of the contract. The claim of Mr. Holderbau is inconsistent with and contradicts the meaning of employee leasing companies within the meaning of Chapter 468, Part XI, Florida Statutes (2003), and the terms of the Agreement between Raudel Carrizales' company, Carrizales Brothers Framing, and Southeast Personnel. Raudel Carrizales allowed the Agreement between Carrizales Brothers Framing and Southeast Personnel to expire on January 31, 2004. Raudel Carrizales, on behalf of his new company, signed another contract with Southeast Personnel on April 13, 2004, six days after the Stop Work Order was issued. Therefore, between January 31, 2004, and April 13, 2004, Raudel Carrizales had no workers' compensation coverage through the employee leasing company. Maurilio Carrizales, who was listed on Southeast Personnel documents as an employee of Carrizales Brothers Framing, had no workers' compensation coverage through Southeast Personnel on January 31, 2004, when the contract between Carrizales Brothers Framing and Southeast Personnel expired. Maurilio Carrizales again became eligible for workers' compensation coverage through Southeast Personnel, as a leased employee, effective April 13, 2004, almost a week after the Stop Work Order was issued. Between January 31, 2004, and April 12, 2004, Raudel Carrizales had no workers' compensation coverage through Southeast Personnel. During the time period alleged in the Amended Order of Penalty Assessment, Raudel Carrizales and Maurilio Carrizales received direct payments from Respondent, thus, circumventing Southeast Personnel and the coverage that they may have had through that employee leasing company. Respondent did not intend to violate the law. Rather, he mistakenly believed that Raudel Carrizales, Maurilio Carrizales, and George Betz had workers' compensation coverage; that Victor Carrizales had an exemption from workers' compensation coverage; and/or that the aforementioned individuals were subcontractors to whom he had no insurance- related responsibility. Nonetheless, these individuals did not have workers' compensation coverage or exemptions from coverage. Thus, they were employees of Respondent and, as such, Respondent was required to provide workers' compensation coverage for them. Petitioner correctly calculated the penalty assessment based on the money paid to Respondent's employees, Raudel Carrizales, Maurilio Carrizales, Victor Carrizales, and George Betz; the class code assigned to each employee utilizing the SCOPES Manual; and the statutory guidelines in Subsection 440.107(d), Florida Statutes (2003). Based on that calculation, the correct penalty assessment in this case is $143.805.33.
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 Stop Work Order and imposing a penalty in the amount of $143,805.33. DONE AND ENTERED this 28th day of December, 2004, 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 28th day of December, 2004.
The Issue The issue in this case is whether Respondents violated the provisions of chapter 440, Florida Statutes, by failing to secure the payment of workers? compensation as alleged in the Stop-Work Order and Amended Order of Penalty Assessment, and if so, what penalty is appropriate.
Findings Of Fact Petitioner, Department of Financial Services, Division of Workers' Compensation (the Department), is the state agency responsible for enforcing the requirement that employers in the State of Florida secure the payment of workers' compensation for their employees. Mr. Alfred Strange was a managing member of Respondent Al?s Painting Service, LLC (the LLC), which had been created at least as early as 2004. The LLC was administratively dissolved on September 24, 2010, for failure to file an Annual Report. After this date, no further Annual Reports were filed. As a managing member of the LLC, Mr. Strange had initially obtained an exemption from workers? compensation coverage beginning on October 21, 2004, which was renewed once for a two-year period and finally expired on October 20, 2008. Mr. Frederick Crutchfield, another managing member of the LLC, had an exemption which expired on November 20, 2008. After this date, no further Requests for Exemption were filed by the company or its officers. Mr. Strange and Mr. Crutchfield did not have exemptions in effect from January 8, 2010, until September 24, 2010, when the LLC was dissolved. Mr. Carl Woodall is a senior investigator with the Division of Workers? Compensation. Mr. Woodall was appointed as an investigator on July 2, 2007, and was appointed as a senior investigator, Position Number 43003044, on September 1, 2012. He has been involved with over 400 enforcement cases under chapter 440. The position description for Position Number 43003044, effective September 1, 2012, provides in relevant part: The incumbent in this position is responsible for conducting investigations for the purpose of ensuring employer compliance with the workers? compensation requirements; entering and inspecting any place of business at any reasonable time for purpose of investigating employer compliance; examining and copying business records; and issuing, serving, and enforcing stop-work orders, penalty assessment orders, and any other orders required under s. 440.107 F.S. On January 7, 2013, Investigator Woodall conducted a site visit to a commercial building at 20721 Central Avenue East, Blountstown, Florida. Outside this address, there was a van with advertising on its side showing a man painting with a paint roller, the words “Al?s Painting,” and a phone number. Inside, he encountered Mr. Strange painting the east wall of the building. Investigator Woodall was wearing a shirt displaying a seal with the words “State of Florida Workers? Compensation Investigator” emblazoned on it. Investigator Woodall showed Mr. Strange his identification, which contained his name and identification number 03044, and indicated that he was a senior compliance investigator with the Division of Workers? Compensation. In response to questions from Investigator Woodall, Mr. Strange provided identification in the form of his driver?s license and stated that he had been working at the Central Avenue address for a few days and was painting only part of the building. Mr. Strange stated that he was being paid $15.00 per hour and that he had been paid once by check. Mr. Strange provided a business card to Investigator Woodall. Investigator Woodall testified that Mr. Strange may have told him that he had an old card in the van and Investigator Woodall remembered that Mr. Strange did go to the van and look for something. The business card that was provided to Investigator Woodall was printed with “Al?s Painting Service, LLC.” It is not clear that Mr. Strange ever held himself out as doing business under the name “Al?s Painting Service, LLC” in obtaining the work at Central Avenue or at any time after the LLC was dissolved. Investigator Woodall checked workers? compensation information for Al?s Painting Service, LLC, by accessing the Coverage and Compliance Automated System (CCAS) maintained by the Department. The database indicated no workers? compensation coverage was in effect for the LLC. It indicated that Mr. Strange and Mr. Crutchfield were managing members of the LLC but that their exemptions had expired in 2008. Information in the CCAS is submitted by insurance companies and the National Council of Compensation Insurance (NCCI). Investigator Woodall also accessed the Department of State, Division of Corporations? website. That database indicated that Al?s Painting Service, LLC, had been dissolved on September 24, 2010. On January 7, 2013, at approximately 12:40 p.m., Investigator Woodall personally served a Stop-Work Order and Order of Penalty Assessment on Mr. Strange and the LLC, along with a Request for Production of Business Records for Penalty Assessment Calculation. Mr. Strange was actively involved in business operations in Florida during the period of January 8, 2010, through January 7, 2013, inclusively. Mr. Strange operated within the construction industry during the period of January 8, 2010, through January 7, 2013, inclusively. Mr. Strange was an "employer" during the time period of January 8, 2010, through January 7, 2013, inclusively, as that term is defined in section 440.02(16). Mr. Strange neither obtained workers' compensation insurance coverage under chapter 440 for any of the individuals listed on the Penalty Worksheet, nor verified that any of those individuals or corporations had workers' compensation coverage before contracting with them for construction services at any point in time during the period of January 8, 2010, through January 7, 2013, inclusively. Class Code 5474, used on the penalty worksheet attached to the Amended Order of Penalty Assessment, and as defined by the NCCI SCOPES Manual, is the correct occupational classification for Alfred Strange, d/b/a Al's Painting Service, LLC, a Dissolved Florida Limited Liability Company. None of the employees listed on the Penalty Worksheet of Exhibit C were covered by workers' compensation insurance obtained through an employee leasing company for the period of January 8, 2010, through January 7, 2013. Alfred Strange and Frederick Crutchfield were "employees" of Alfred Strange, d/b/a Al's Painting Service, LLC, a Dissolved Florida Limited Liability Company, as that term is defined in section 440.02(15), during the period of January 8, 2010, through January 7, 2013, whether continuously or not. Neither Alfred Strange nor Frederick Crutchfield was an independent contractor of Alfred Strange, d/b/a Al's Painting Service, LLC, a Dissolved Florida Limited Liability Company, as that term is defined in section 440.02(15), during the period of January 8, 2010, through January 7, 2013. Remuneration was paid to Alfred Strange and Frederick Crutchfield during January 8, 2010, through January 7, 2013. The Request for Admission that the approved manual rates applied on the Penalty Worksheet attached to the Amended Order of Penalty Assessment were correct was deemed admitted pursuant to Florida Rule of Civil Procedure 1.370.1/ The penalty shown in column „g? of the Penalty Worksheet attached to the Amended Order of Penalty Assessment is the correct penalty for the employees listed there. Mr. Strange did not provide the Department any of the records requested in the Request for Production of Business Records for Penalty Assessment Calculation. The imputed salary amounts for each employee listed on the penalty worksheet of the Amended Order of Penalty Assessment equal the statewide average weekly wage multiplied by 1.5.
Recommendation Upon consideration of the above Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Financial Services, Division of Workers? Compensation, enter a final order determining that Respondent Mr. Alfred T. Strange violated the requirement in chapter 440, Florida Statutes, to secure workers' compensation coverage, and imposing upon him a total penalty assessment of $28,175.64. DONE AND ENTERED this 22nd day of August, 2013, in Tallahassee, Leon County, Florida. S F. SCOTT BOYD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of August, 2013.
The Issue Whether Fantastic Construction of Daytona, Inc. (“Respondent”), failed to secure the payment of workers’ compensation coverage for its employees; and, if so, whether the Department of Financial Services, Division of Workers’ Compensation (“Petitioner” or “Department”), correctly calculated the penalty to be assessed against Respondent.
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. Respondent is a corporation engaged in the construction industry with headquarters in Daytona Beach, Florida. On November 19, 2015, the Department’s compliance investigator, Scott Mohan, observed five individuals framing a single-family house at 173 Botefuhr Avenue in Daytona, Florida. Mr. Mohan interviewed the individuals he observed working at the jobsite and found they were working for Respondent on lease from Convergence Leasing (“Convergence”). Mr. Mohan contacted Convergence and found that all of the workers on the jobsite were employees of Convergence, except Scott Barenfanger. Mr. Mohan also confirmed that the workers’ compensation policy for Convergence employees was in effect. Mr. Mohan reviewed information in the Coverage and Compliance Automated System, or CCAS, for Respondent. CCAS indicated Respondent’s workers were covered for workers’ compensation by Convergence and that Respondent’s contract with Convergence was active. Mr. Mohan also confirmed, through CCAS, that Foster Coleman, Respondent’s president, had previously obtained an exemption from the workers’ compensation requirement, but that his exemption expired on July 18, 2015. Mr. Mohan then contacted Mr. Coleman via telephone and informed him that one of the workers on the jobsite was not on the active employee roster for Convergence, thus Respondent was not in compliance with the requirement to obtain workers’ compensation insurance for its employees. Mr. Coleman reported to the jobsite in response to Mr. Mohan’s phone call. Mr. Coleman admitted that Mr. Barenfanger was not on the Convergence employee leasing roster. Mr. Coleman subsequently obtained an application from Convergence for Mr. Barenfanger and delivered it to his residence. Mr. Mohan served Mr. Coleman at the jobsite with a Stop-Work Order and a Request for Production of Business Records for Penalty Assessment Calculation (“BRR”). In response to the BRR, Respondent provided to the Department business bank statements, check stubs, copies of checks, certificates of liability insurance for various suppliers and subcontractors, and an employee leasing roster for most of the audit period from November 20, 2013, to November 19, 2015.1/ Respondent did not produce any check stubs for November and December 2013. Mr. Coleman testified, credibly, that his bookkeeper during that time period did not keep accurate records. Mr. Coleman did produce his business bank statements and other records for that time period. Based on the review of initial records received, the Department calculated a penalty of $17,119.80 and issued an Amended Order of Penalty Assessment in that amount on February 18, 2016. On March 17, 2016, Respondent supplied the Department with additional records. Altogether, Respondent submitted over 400 pages of records to the Department. The majority of the records are copies of check stubs for checks issued on Respondent’s business bank account. The check stubs are in numerical order from 1349 to 1879, and none are missing. The check stubs were hand written by Mr. Coleman, who is 78 years old. Some of his writing on the check stubs is difficult to discern. On April 4, 2016, following review of additional records received, the Department issued a Second Amended Order of Penalty Assessment in the amount of $9,629.36. The Department assigned penalty auditor Sarah Beal to calculate the penalty assessed against Respondent. Identification of Employees Ms. Beal reviewed the business records produced by Respondent and identified Respondent’s uninsured employees first by filtering out payments made to compliant individuals and businesses, and payments made for non-labor costs. However, the evidence demonstrated that the Department included on its penalty calculation worksheet (“worksheet”) payments made to individuals who were not Respondent’s employees. Neal Noonan is an automobile mechanic. Mr. Noonan was neither an employee of, nor a subcontractor for, Respondent for any work performed by Respondent during the audit period. Mr. Noonan performed repairs on Mr. Coleman’s personal vehicles during the audit period. Checks issued to Mr. Noonan during the audit period were for work performed on Mr. Coleman’s personal vehicles. The Department’s worksheet included a “David Locte” with a period of noncompliance from June 19, 2014, through December 31, 2014. The basis for including Mr. Locte as an employee was a check stub written on December 10, 2014, to a business name that is almost indiscernible, but closely resembles “Liete & Locke” in the amount of $100. The memo reflects that the check was written for “architect plans.” Mr. Coleman recognized the worksheet entry of David Locte as pertaining to David Leete, an architect in Daytona. Mr. Leete has provided architectural services to Respondent off and on for roughly five years. Mr. Leete signs and seals plans for, among others, a draftsman named Dan Langley. Mr. Langley provides drawings and plans for Respondent’s projects. When Respondent submits plans to a local governing body which requires architectural drawings to accompany permit applications, Mr. Leete reviews and signs the plans. Mr. Leete was neither an employee of, nor a subcontractor for, Respondent during the audit period. The single payment made to Mr. Leete by Respondent during the audit period was for professional architectural services rendered. Mr. Langley was neither an employee of, nor a subcontractor for, Respondent during the audit period. Payments made to Mr. Langley during the audit period were for professional drafting services rendered. Among the names on the Department’s worksheet is R.W. Kicklighter. Mr. Kicklighter is an energy consultant whose office is located in the same building with Mr. Leete. Mr. Kicklighter prepares energy calculations, based on construction plans, to determine the capacity of heating and air-conditioning systems needed to serve the planned construction. Mr. Kicklighter was neither an employee of, nor a subcontractor for, Respondent during the audit period. Payments made to Mr. Kicklighter during the audit period were for professional services rendered. Respondent made a payment of $125 on September 15, 2014, to an entity known as Set Material. Set Material is a company that rents dumpsters for collection of concrete at demolition and reconstruction sites. Removal and disposal of the concrete from the jobsite is included within the rental price of the dumpster. The Department included on the worksheet an entry for “Let Malereal.” The evidence revealed the correct name is Set Material and no evidence was introduced regarding the existence of a person or entity known as Let Malereal. Set Material was neither an employee of, nor a subcontractor for, Respondent during the audit period. The single payment made to Set Material during the audit period was for dumpster rental. The Department’s worksheet contains an entry for “CTC” for the penalty period of January 1, 2014, through May 1, 2014. Respondent made a payment to “CTC” on April 11, 2014, in connection with a job referred to as “964 clubhouse.” The records show Respondent made payments to Gulfeagle Supply, Vern’s Insulation, John Wood, Bruce Bennett, and Ron Whaley in connection with the same job. At final hearing, Mr. Coleman had no recollection what CTC referred to. Mr. Coleman’s testimony was the only evidence introduced regarding identification of CTC. CTC could have been a vendor of equipment or supplies for the job, just as easily as an employee. The evidence is insufficient to support a finding that CTC was an employee of, or a subcontractor for, Respondent during the audit period. The check stub for check 1685 does not indicate to whom the $60 payment was made. The stub reads “yo for Doug.” The Department listed “Doug” as an employee on its worksheet and included the $60 as wages to “Doug” for purposes of calculating workers’ compensation premiums owed. At hearing, Mr. Coleman was unable to recall ever having employed anyone named Doug, and had no recollection regarding the January 7, 2015, payment. The evidence was insufficient to establish that “Doug” was either Respondent’s employee or subcontractor during the audit period. Ken’s Heating and Air was not an employee of, nor a subcontractor to, Respondent for any work undertaken by Respondent during the audit period. Ken’s Heating and Air conducted repairs on, and maintenance of, Mr. Coleman’s personal residence during the audit period. Checks issued to Ken’s Heating and Air during the audit period were payments for work performed at Mr. Coleman’s personal residence. Barry Smith is an electrical contractor. Mr. Smith was neither an employee of, nor subcontractor to, Respondent for any work performed by Respondent during the audit period. Mr. Smith did make repairs to the electrical system at Mr. Coleman’s personal residence during the audit period. Checks issued to Mr. Smith during the audit period were payments for work performed at Mr. Coleman’s personal residence. The remaining names listed on the Department’s penalty calculation worksheet were accurately included as Respondent’s employees.2/ Calculation of Payroll Mr. Coleman’s exemption certificate expired on July 18, 2015, approximately four months shy of the end of the audit period. Payments made by Respondent to Mr. Coleman during the time period for which he did not have a valid exemption (the penalty period) were deemed by the Department as wages paid to Mr. Coleman by Respondent. Respondent’s business records show seven checks written either to Mr. Coleman or to cash during that time period in the total amount of $3,116.52. The Department included that amount on the worksheet as wages paid to Mr. Coleman. Check 1873 was written to cash, but the check stub notes that the payment of $1,035.69 was made to Compliance Matters, Respondent’s payroll company. Check 1875 was written to cash, but the check stub notes that the payment of $500 was made to Daytona Landscaping. The evidence does not support a finding that checks 1873 and 1875 represented wages paid to Mr. Coleman. The correct amount attributable as wages paid to Mr. Coleman during the penalty period is $1,796.52. Respondent’s employees Tyler Eubler, Brian Karchalla, Keith Walsh, and John Strobel, were periodically paid by Respondent during the audit period in addition to their paychecks from Convergence. Mr. Coleman testified that the payments were advances on their wages. He explained that when working on a job out of town, the crew would arrive after Convergence had closed for the day, and Mr. Coleman would pay them cash and allow them to reimburse him from their paychecks the following day. Unfortunately for Respondent, the evidence did not support a finding that these employees reimbursed Mr. Coleman for the advances made. The Department correctly determined the payroll amount attributable to these employees. The Department attributed $945 in payroll to “James Sharer.” The Department offered no evidence regarding how they arrived at the name of James Sharer as Respondent’s employee or the basis for the payroll amount. James Shores worked off-and-on for Respondent. Mr. Coleman recognized the worksheet entry of “James Sharer” as a misspelling of Mr. Shores’ name. Respondent’s records show payments totaling $535 to Mr. Shores during the audit period. The correct amount of payroll attributable to Mr. Shores from Respondent during the audit period is $535. The Department included wages totaling $10,098.84 to Mr. Barenfanger during the period of noncompliance from November 20, 2013, to December 31, 2013. The Department imputed the average weekly wage to Mr. Barenfanger for that period because, in the Department’s estimation, Respondent did not produce records sufficient to establish payroll for those two months in 2013. See § 440.107(7)(e), Fla. Stat. The voluminous records produced by Respondent evidenced not a single payment made to Mr. Barenfanger between January 2014, and November 19, 2015. Even if Mr. Coleman had not testified that he did not know or employ Mr. Barenfanger before November 19, 2015, it would be ludicrous to find that he worked weekly for Respondent during the last two months of 2013. Mr. Coleman testified, credibly, that Mr. Barenfanger worked the jobsite for Respondent on November 18 and 19, 2015, but not prior to those dates. The evidence does not support a finding that the worksheet entry for Mr. Barenfanger in the amount of $10,098.84 accurately represents wages attributable to Mr. Barenfanger during the period of noncompliance. The Department’s worksheet includes an employee by the name of Ren W. Raly for the period of noncompliance from January 1, 2014, through May 1, 2014, and a Ronnie Whaley for the period of noncompliance from June 19, 2014 through December 31, 2014. Mr. Coleman testified that he never had an employee by the name of Raly and he assumed the first entry was a misspelling of Ronnie Whaley’s name. Mr. Coleman testified that Ronnie Whaley was a concrete finisher and brick layer who did work for Respondent. Mr. Coleman testified that he submitted to the Department a copy of Mr. Whaley’s “workers’ comp exempt,” but that they must not have accepted it. The records submitted to the Department by Respondent do not contain any exemption certificate for Ronnie Whaley. However, in the records submitted to the Department from Respondent is a certificate of liability insurance dated February 25, 2014, showing workers’ compensation and liability coverage issued to Direct HR Services, Inc., from Alliance Insurance Solutions, LLC. The certificate plainly states that coverage is provided for “all leased employees, but not subcontractors, of Ronald Whaley Masonry.” The certificate shows coverage in effect from February 1, 2013, through February 1, 2015. Petitioner did not challenge the reliability of the certificate or otherwise object to its admissibility.3/ In fact, the document was moved into evidence as Petitioner’s Exhibit P1. Petitioner offered no testimony regarding whether the certificate was insufficient proof of coverage for Mr. Whaley during the periods of noncompliance listed on the worksheet. The evidence does not support a finding that Mr. Whaley was an uninsured individual during the periods of noncompliance. Thus, the wages attributed to Mr. Whaley by the Department were incorrect. Ms. Beal assigned the class code 5645—Carpentry to the individuals correctly identified as Respondent’s uninsured employees because this code matched the description of the job being performed by the workers on the jobsite the day of the inspection. Ms. Beal correctly utilized the corresponding approved manual rates for the carpentry classification code and the related periods of noncompliance to determine the gross payroll to the individuals correctly included as Respondent’s uninsured employees. Calculation of Penalty For the employees correctly included as uninsured employees, Ms. Beal applied the correct approved manual rates and correctly utilized the methodology specified in section 440.107(7)(d)1. and Florida Administrative Code Rules 69L-6.027 and 69L-6.028 to determine the penalty to be imposed. For the individuals correctly included as uninsured employees, and for whom the correct payroll was calculated, the correct penalty amount is $2,590.06. The correct penalty for payments made to Mr. Coleman during the penalty period is $571.81. The correct penalty for payments made to James Shores is $170.24. The correct total penalty to be assessed against Respondent is $3,332.11. The Department demonstrated by clear and convincing evidence that Respondent was engaged in the construction industry in Florida during the audit period and that Respondent failed to carry workers’ compensation insurance for its employees at times during the audit period as required by Florida’s workers’ compensation law. The Department demonstrated by clear and convincing evidence that Respondent employed the employees named on the Second Amended Order of Penalty Assessment, with the exception of Ken’s Heating and Air, CTC, Don Langly, Ren W. Raly, R.W. Kicklighter, Dave Locte, Let Malereal, Ronnie Whaley, and “Doug.” The Department did not demonstrate by clear and convincing evidence that it correctly calculated the gross payroll attributable to Mr. Coleman and Mr. Shores. The Department demonstrated by clear and convincing evidence that Ms. Beal correctly utilized the methodology specified in section 440.107(7)(d)1. to determine the appropriate penalty for each of Respondent’s uninsured employees. The Department did not demonstrate by clear and convincing evidence that the correct penalty is $9,629.36. The evidence demonstrated that the correct penalty to be assessed against Respondent for failure to provide workers’ compensation insurance for its employees during the audit period is $3,332.11.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers’ Compensation, finding that Fantastic Construction of Daytona, Inc., violated the workers’ compensation insurance law and assessing a penalty of $3,332.11. DONE AND ENTERED this 18th day of August, 2016, in Tallahassee, Leon County, Florida. S SUZANNE VAN WYK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of August, 2016.
The Issue The issue is whether Respondent, Department of Financial Services, Division of Workers' Compensation, properly assessed a penalty of $90,590.42 against Petitioner, S.A.C., LLC.
Findings Of Fact The Department is the state agency responsible for enforcing the statutory requirement that employers secure payment of workers' compensation for the benefit of their employees pursuant to Section 440.107, Florida Statutes. At all times relevant to this proceeding, Petitioner, S.A.C., LLC, was a corporation domiciled in Florida. S.A.C.'s 2007 Limited Liability Company Annual Report lists its principal place of business as 626 Lafayette Court, Sarasota, Florida, 34236, and its mailing address as Post Office Box 49075, Sarasota, Florida 34230. At all times relevant to this proceeding, William R. Suzor was the president and managing member of S.A.C. Collen Wharton is an Insurance Analyst II with the Department. In this position, Ms. Wharton conducts inspections to ensure that employers are in compliance with the law. On June 20, 2007, Ms. Wharton conducted a compliance check at 2111 South Osprey Avenue in Sarasota, Florida. During the compliance check, Ms. Wharton observed three males working at that location. The three men were framing a single-family house that was under construction. This type of work is carpentry, which is considered construction. During the compliance check, Ms. Wharton asked David Crawford, one of the men working at the site, who was their employer. Mr. Crawford told Ms. Wharton that he and the other two men worked for S.A.C., but were paid by a leasing company. Mr. Crawford told Ms. Wharton that the company was owned by Mr. Suzor and, in response to Ms. Wharton's inquiry, he gave her Mr. Suzor's telephone number. In addition to Mr. Crawford, the other workers at the site were identified as Terry Jenkins and Frank Orduno. By checking the records the Department maintains in a computerized database, Ms. Wharton determined that S.A.C. did not carry workers' compensation insurance, but had coverage on its employees through Employee Leasing Solutions, an employee leasing company. She also determined, by consulting the Department's database, that none of the men had a workers' compensation exemption. Ms. Wharton telephoned Employee Leasing Solutions, which advised her that two of the workers at the site, Mr. Crawford and Mr. Jenkins, were on the roster of employees that the company maintained. The company advised her that the other worker, Mr. Orduno, was not on its roster of employees. This information was verified by an employee list that the leasing company provided to Ms. Wharton. On June 20, 2007, after determining that one worker at the work site had no workers' compensation coverage, Mr. Wharton prepared a Stop-Work Order. She then telephoned Mr. Suzor, told him that he had one worker at the site who did not have workers' compensation coverage and requested that he come to the work site. During the conversation, Mr. Suzor advised Ms. Wharton that Mr. Crawford was in charge at the work site, that she could give the Stop-Work Order to Mr. Crawford, and that he (Mr. Suzor) would meet her the following day. Ms. Wharton, after she telephoned Mr. Suzor, she conferred with her supervisor and then issued Stop-Work Order No. 07-125-D3, posting it at the work site and serving it on Mr. Crawford. On June 21, 2007, Mr. Suzor met with Ms. Wharton at her office. During that meeting, Ms. Wharton served a copy of Stop-Work Order No. 07-125-D3 on Mr. Suzor. She also served him with a Request for Production of Business Records for Penalty Assessment Calculation ("Request for Business Records"). The Request for Business Records listed specific records that Mr. Suzor/S.A.C. should provide to the Department so that the Department could determine the workers who S.A.C. paid during the period of June 19, 2004, through June 20, 2007. The Request for Business Records notes that the requested records must be produced within five business days of receipt. According to the Request for Business Records, if no records are provided or the records provided are insufficient to enable the Department to determine the payroll for the time period requested for the calculation of the penalty in Subsection 440.107(7)(d), Florida Statutes, "the imputed weekly payroll for each employee, . . . shall be the statewide average weekly wage as defined in section 440.12(2), F.S. multiplied by 1.5." S.A.C. did not respond to the Department's Request for Business Records. On July 17, 2007, the Department had received no records from S.A.C. Without any records, Ms. Wharton had no information from which she could determine an accurate assessment of S.A.C.'s payroll for the previous three years. Therefore, Ms. Wharton calculated the penalty based on an imputed payroll. In her calculations, Ms. Wharton assumed that Mr. Orduno worked from June 21, 2004, through June 20, 2007, and that he was paid 1.5 times the state-wide average weekly wage for the class code assigned to the work he performed for each year or portion of the year. The Department then applied the statutory formula set out in Subsection 440.107(7)(d), Florida Statutes. Based on that calculation, the Department correctly calculated S.A.C.'s penalty assessment as $90,590.42, as specified in the Amended Order of Penalty Assessment dated July 17, 2007. The Amended Order of Penalty Assessment reflecting the correct penalty amount was served on S.A.C.'s attorney, John Myers, Esquire, by hand-delivery, on July 17, 2007.3/ On July 21, 2007, S.A.C., through its former counsel, filed a Petition for Hearing.
Recommendation Based upon the Findings of Fact and Conclusions of Law, RECOMMENDED that Respondent, Department of Financial Services, Division of Workers' Compensation, enter a final order which affirms the Amended Order of Penalty Assessment issued July 17, 2007, assessing a penalty of $90,590.42, and the Stop-Work Order issued to Petitioner, S.A.C., LLC, on June 20, 2007. DONE AND ENTERED this 25th day of March, 2008, in Tallahassee, Leon County, Florida. S CAROLYN S. HOLIFIELD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 25th day of March, 2008.
