Findings Of Fact Petitioner began forking for the Respondent on the Ralph R. Bailey Concert Hall & Music Building on January 25, 1978, as a sheet metal journeyman. His employment with the Respondent was terminated on December 24, 1978. During the term of Petitioner's employment, the prevailing wage for sheet metal journeymen was $10.55 per hour. Petitioner's affidavit claiming noncompliance with the Florida Prevailing Wage Law was signed on April 12, 1979, and was received by the Business Affairs Office of Broward Community College on April 17, 1979. That affidavit, together with sample pay stubs, together with the Schedule of Prevailing Wages Rates for construction of Ralph R. Bailey Concert Hall & Music Building signed by Luther J. Moore, together with correspondence from Clinton D. Hamilton dated April 20, 1979, were admitted into evidence. The wages actually received by the Petitioner ranged from between $7.00 per hour to $8.50 per hour, although the record is devoid of evidence regarding the number of hours worked at each varying rate of pay. Respondent stipulated to the total number of hours for which Petitioner claims additional pay as being 1,880. Petitioner's pay stubs, attached to his affidavit and admitted into evidence, reflect that for the week's pay period ending January 29, 1970, Petitioner was paid at the rate of $8.00 per hour; that for the week's pay period ending February 5, 1978, Petitioner was paid at the rate of $8.00 per hour; that for the week's pay period ending September 17, 1978, Petitioner was paid at the rate of $8.50 per hour; and that for the week's pay period ending November 26, 1978, Petitioner was paid at the rate of $7.00 per hour. The admitted pay stubs further reflect that by November 26, 1978, the Respondent had paid to the Petitioner herein actual wages in the amount of $16,543.00. Petitioner's pay stubs reflect the amount of wages actually received for four different weeks during Petitioner's employment. The highest wage received by Petitioner was $8.50 per hour. Since the record fails to reflect that Petitioner was paid in excess of that rate at any time during his employment, and since the Petitioner has failed to show that he was paid less than that rate other than for the three other weeks set forth above, the highest rate paid of $8.50 per hour shall be used in computing the additional wages due the Petitioner herein. The Petitioner worked a total of 1,880 hours for the Respondent herein. For the week ending January 29, 1978, Petitioner was paid $8.00 per hour for 40 hours of work and is therefore owed the sum of $102.00; for the week ending February 5, 1978, Petitioner was paid $8.00 per hour for 38.5 hours of work and is therefore owed the sum of $98.17; for the week ending September 17, 1978, Petitioner was paid $8.50 per hour for 60 hours of work and is therefore owed the sum of $123.00; for the week ending November 26, 1978, Petitioner was paid $7.00 per hour for 40 hours of work and is therefore owed the sum of $142.00. Assuming the Petitioner was paid the highest rate of $8.50 per hour for the remaining 1,701.5 hours, the Petitioner is owed the additional sum of $3,488.07. Accordingly, Petitioner is owed the total sum of $3,953.24. No testimony was presented regarding the date of completion or acceptance of the building in question.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, the undersigned Hearing Officer recommends that Robert J. Clark be paid $3,953.24 from the amounts withheld from the contractor on this project. DONE AND ENTERED this 13th day of February, 1980, in Tallahassee, Florida. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings Department of Administration Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Mr. Robert J. Clark 5540 Mesa Verde Margate, Florida 33063 Mr. Sidney H. Levin Secretary of Commerce 510C Collins Building Tallahassee, Florida 32301 L. Byrd Booth, Jr., Esquire 2900 East Oakland Park Boulevard Post Office Drawer 11088 Fort Lauderdale, Florida 33301 Mr. Luther J. Moore Administrator of Prevailing Wage Division of Labor 1321 Executive Center Circle, East Tallahassee, Florida 32301
The Issue The issue in the case is whether the Department of Labor and Employment Security (Department), in implementing a workforce reduction that resulted in layoffs and demotions for employees, should have adopted by rulemaking, policies related to compensation reductions that occurred during the workforce reduction.
Findings Of Fact In 1999, a funding shortfall at the Department of Labor and Employment Security resulted in implementation of a workforce reduction plan. Petitioners Altamese Thompson and Sue Ezell were employees of the Department with permanent status in the Career Service system and whose employment and compensation were substantially affected by the Department’s workforce reduction program. Petitioner Florida Public Employees Council 79, AFSCME, represented the employees on collective bargaining issues affected in the workforce reduction. AFSCME members’ employment and compensation were substantially affected by the Department’s workforce reduction program. The 1999 workforce reduction was not the Department’s first experience with employee layoffs. In previous reductions, Department policy, set forth in LES Manual 1101.1.1.1 (October 1, 1996) was to retain, at existing salaries, as many employees as funding permitted. The Department policy was not adopted as an administrative rule. When the Department began to consider the workforce reduction of mid-1999, the Department apparently decided to increase the number of retained employees by reducing the salaries of workers who accepted "voluntary" demotions in lieu of layoff. By issuance of a "Change Notice" to LES Manual 1101.1.1.1, dated May 14, 1999, the Department redefined voluntary demotion to include "demotions requested by associates in lieu of layoff during workforce reduction pursuant to Chapter 60K-17, F.A.C." The revision also set forth a formula by which the compensation paid to employees who accepted voluntary demotion in lieu of transfer would be reduced. The change in the Department policy was not adopted as an administrative rule. Chapter 60K-17, Florida Administrative Code, sets forth the rules applicable to reduction of Career Service employees through the layoff process. The rule essentially establishes what is generally identified as the "bumping" procedure utilized by state agencies when employee levels are reduced. Rule 60K-17.004(3)(j), Florida Administrative Code, states in part, "[w]ithin 7 calendar days after receiving the notice of layoff, the employee shall have the right to request a demotion or reassignment. " Rule 60K-17.004(3)(p), Florida Administrative Code, states that "[a]n employee who accepts a voluntary demotion in lieu of layoff and is subsequently promoted to a position in the same class in the same agency from which the employee is demoted in lieu of layoff, shall be promoted with permanent status." Chapter 60K-17, Florida Administrative Code, does not prohibit salary reductions implemented as part of a voluntary demotion. Rule 60K-4.007, Florida Administrative Code, governs "demotion appointments" in the career service system. The rule states that a "demotion appointment" includes assignment to a job class having a "lower maximum salary or having the same or higher maximum salary but a lower level of responsibility. Rule 60K-2.004, Florida Administrative Code, governs salary determinations upon appointment to employment. Rule 60K- 2.004(4), Florida Administrative Code, states, "[a]n employee who is given a demotion appointment in accordance with Chapter 60K-4, F.A.C., may be demoted with or without a reduction in base rate of pay. " Rule 60K-9.005, Florida Administrative Code, addresses a Career Service employee’s right to appeal employment actions to the Public Employees Relations Commission. Generally, an employee who has attained permanent status in the Career Service System can appeal employment actions to the Public Employees Relations Commission. However, Rule 60K-9.005(5)(c), Florida Administrative Code, states than "[a]n employee who receives a reduction in pay, a demotion, or a transfer shall waive all rights to appeal such action if the employee has signed a written statement that the action is voluntary." By certified letters dated May 24, 1999, Petitioners Thompson and Ezell were advised that "[d]ue to impending budget cuts" the Department was reducing the number of positions in the Department’s Division of Jobs and Benefits (where Petitioners Thompson and Ezell worked) and that "[r]egretfully, you will be adversely affected by this work force reduction on June 30, 1999, at the close of business." The May 24 letter included a form titled "STATEMENT OF CHOICE OF OPTIONS DUE TO LAYOFF SITUATION" which set forth available jobs and included an option allowing the employee to select a layoff rather than the job demotion. The form included a signature line that stated, "I understand that by selecting demotion as an option, I am requesting a voluntary demotion in lieu of layoff, and my pay upon such voluntary demotion will be subject to the newly revised Section 1101.1.1.1.9d of the LES Personnel Manual." The evidence fails to establish the content of Section 1101.1.1.1.9d of the revised LES Personnel Manual. The documents entered into evidence at the hearing are identified as 1101.1.1.1. There is no subsection 9d. Subsection (c)2.c. addresses pay upon voluntary demotion and states as follows: Associates requesting voluntary demotions must have their base rate of pay reduced by one-half (1/2) of the percentage/salary increase received upon promotion and/or reassignment. For example, if an associate received a 10 percent promotional increase, his/her base rate of pay must be reduced by 5 percent. Permanent career service associates who have not had a promotional increase will have their base rate reduced by 5 percent. The Division Director/Commission Chairman equivalent has authority to take final action provided, however, that any variations must be submitted to the Assistant Secretary of Administration for review prior to final action. This provision also applies to demotions to classes that are higher or lower than the classes held prior to promotion and/or reassignment. Ms. Thompson noted her preferences as to the available jobs positions and signed the form. Ms. Ezell noted her preferences as to the available jobs positions and signed the form, but wrote a notation on the form indicating her disagreement with the situation, in part stating, "I am not voluntarily requesting demotion. I have absolutely no other choice after 27 years. A pay reduction should not occur. " At hearing, both Ms. Thompson and Ms. Ezell suggested that being forced to accept a demotion and pay reduction in lieu of total layoff did not present an entirely voluntary choice. There is no evidence that the Department provided copies of the cited Personnel Manual revision directly to affected employees either before or after the May 24 letters were issued. There is no evidence that either Ms. Thompson or Ms. Ezell saw the revised Personnel Manual prior to signing the "STATEMENT OF CHOICE" forms. During the spring of 1999, the Division’s Director circulated a publication entitled "Friday Fax" to employees of the Department’s Division of Jobs and Benefits. The "Friday Fax" dated March 19, 1999 indicates that an employee demoted as part of the pending reduction in force would retain their current salary. This reflects the existing policy of the Department that had been applied in prior workforce reductions. There is no credible evidence that the Division Director was explicitly authorized to restate the Department policy in the March 19, 1999 Friday Fax. There is evidence that the Department executives were considering the possibility of salary reductions during the ongoing planning for the workforce reduction. By the following week, a new Division Director had been appointed. By April 2, 1999, publication of "Friday Fax" was suspended. A new publication "Just The Facts. . ." began to be issued by the Department’s Office of Communications and was circulated to agency personnel. On May 24, 1999, the same day that the workforce reduction letters were mailed to Petitioners Thompson and Ezell, an issue of "Just The Facts" was published which stated that demotions in lieu of layoff would incur salary reductions, and referenced the revised LES Personnel Manual section as "1101.1.1.1 9.d.(1)(6)(c)2.c."
The Issue Whether certain payments received by the Petitioner, James Gomia, from the Leon County Clerk of Court subsequent to July 1, 1989, constitute creditable "compensation" within the meaning of Rule 22B-6.001(16), Florida Administrative Code, for purposes of determining Mr. Gomia's retirement benefits.
Findings Of Fact Mr. Gomia's Employment. The Petitioner, James Gomia, has been employed by the Clerk of Court in and for Leon County, Florida, for the past eleven years. At all times relevant to this proceeding, Mr. Gomia has been employed as an Assistant Finance Director and Deputy Clerk. By virtue of his employment with the Clerk's office Mr. Gomia is eligible to participate in the Florida Retirement System pursuant to Chapter 121, Florida Statutes. Mr. Gomia's Compensation. At all times relevant to this proceeding, Mr. Gomia received a monthly base salary from his employment with the Clerk's office. The Clerk's office operates for budget purposes on a fiscal year which begins October 1st and ends September 30th. In addition to his base salary, Mr. Gomia has been paid the following amounts (hereinafter referred to as "Additional Compensation"), during the following months: Month Amount September, 1989 $1,750.00 May, 1990 500.00 September, 1990 1,750.00 May, 1991 600.00 September, 1991 2,150.00 Mr. Gomia has been paid Additional Compensation twice a year since he was employed by the Clerk's office. The Clerk's Policy of Paying Additional Compensation. It has been the policy of Paul F. Hartsfield, Leon County Clerk of Court, to pay Additional Compensation to employees of the Clerk's office, with one exception not relevant to this proceeding, for at least the past twenty years. Additional Compensation has been paid to Clerk's office employees twice a year. One payment is made in May/June and the other payment is made in September/October/November. The amount of Additional Compensation paid to each employee is the same. For example, in May, 1991, all employees received $600.00 as Additional Compensation. The amount to be paid as Additional Compensation is included in the budget submitted by the Clerk's office each year for approval by the Board of County Commissioners. The amount requested is included as part of a lump-sum request for the amount of funds necessary to pay all salary, including employees' base salary. Although the amount of the payments to be made as Additional Compensation is broken out in the work papers to the budget each year, those figures are only seen by the financial personnel and not the Board of County Commissioners. Lack of Written Policy. The decision of whether Additional Compensation is paid is within the sound discretion of the Clerk to make. The Clerk of Court is under no legal obligation to make such payments even if included in an approved budget. The policy of paying Additional Compensation has not been reduced to writing. Nowhere has the Clerk stated in writing that the Clerk's office has a policy: That applies all employees will receive Additional Compensation equally; Additional Compensation will be paid no later than the eleventh year of employment; Additional Compensation will be paid for as long as an employee continues employment; and Additional Compensation will be paid at least annually. The only written indication that Additional Compensation will be paid to employees is the inclusion of the dollar amount necessary to make the payments in the work papers of the Clerk's office budget. Nowhere in the work papers to the budget or the budget itself are the conditions set out in finding of fact 13 included. Even if the work papers (or the budget) of the Clerk's office were sufficient to constitute a formal written policy, the policy evidenced in the work papers only applies to the fiscal year the work papers relate to. Therefore, if the work papers or budget constitute a written policy it is only a policy to pay Additional Compensation for the upcoming fiscal year and not on a recurring basis. Although a policy of paying Additional Compensation to Clerk's office employees exists, that policy has not formally been reduced to writing. Mr. Hartsfield, the Leon County Clerk of Court, admitted that there was no formal written policy during his deposition and in a letter dated November 12, 1991, attached as Respondent's exhibit 1 to Mr. Hartsfield's deposition.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services, Division of Retirement, enter a Final Order declaring that the Additional Compensation paid to James Gomia between September, 1989, and September, 1991, was not paid as "average final compensation" for purposes of Rule 22B-6.001(6), Florida Administrative Code, and dismissing Mr. Gomia's Amended Petition with prejudice. DONE and ENTERED this 2nd day of September, 1992, in Tallahassee, Florida. LARRY J. SARTIN 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 2nd day of September, 1992. APPENDIX Case Number 92-2504 The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. Mr. Gomia's Proposed Findings of Fact Findings of fact 1, 4 and 6-11. Hereby accepted. The Department's Proposed Findings of Fact Findings of fact 1-3. Findings of fact 4 and 6. Finding of fact 16. Conclusion of law. Findings of fact 4, 6 11 and 13. Finding of fact 4 and 6. Whether the payments come within the Department's rules is a conclusion of law. COPIES FURNISHED: Harry H. Mitchell, Esquire 103 North Gadsden Street Tallahassee, Florida 32301 Burton M. Michaels Assistant Division Attorney Division of Retirement Department of Administration Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399-1566 A. J. McMullian, III, Director Division of Retirement Cedars Executive Center, Building C 2639 N. Monroe Street Tallahassee, Florida 32399-1560 Larry Strong Acting Secretary Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950 Susan Kirkland General counsel Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950
Findings Of Fact In February of 1995, the Department issued a request for proposals for Lease No. 700:0717. The RFP called for leasing office space for probation and parole personnel in the New Smyrna Beach area. The proposed lease was going to begin on October 1, 1995 and partially replace a lease in Port Orange, which expired on September 30, 1995. Staff at the Port Orange office were going to move to offices in downtown Daytona, Ormond Beach, and to the proposed site. Part of the RFP provided as follows: The Department reserves the right to reject any and all proposals for reason[s] which shall include, but not be limited to, the agency's budgetary constraints; waive any minor information or technicality in proposals, to accept that proposal deemed to be the lowest and in the best interest of the State, and if necessary, to reinstate procedure for soliciting competitive proposals. On January 26, 1995, the Petitioner attended a pre-bid conference in Daytona Beach concerning the subject lease. At this pre-bid conference, there were at least three potential bidders in attendance. At this conference, it was stated that the Department's current budgetary limit for office space in this part of the State, as set by the Department of Management Services (DMS), was $16.07/ft2/year. The Department had no leases at that rate, and the Port Orange lease had a rate of $12.75 per square foot for the term expiring on September 30, 1995. There were no other budgetary constraints discussed at this pre-bid conference except that the lowest and best bid would be the winning bid and that bids for future years in this five-year lease would be reduced to their present value for evaluation purposes. No protest were filed challenging the terms and conditions of the RFP. On February 2, 1995, the Petitioner submitted the only proposal. The proposal submitted by the Petitioner was found to be responsive. A site visit was conducted at the site proposed by the Petitioner on February 2, 1995. The Petitioner proposed to lease the Department 3,838 square feet at the rates of $15.00, $15.45, $16.07, $16.87, and $17.71 per square foot for the first through fifth years, respectively. The total cost for the first year lease of the space proposed by the Petitioner was $57,570.00. The Department computed the present value of the lease rates proposed by the Petitioner, as required by the Department of Management Services (DMS). Although the Department was paying $15.75/square foot/year in St. Augustine, the Petitioner's proposal was questioned because the proposed rates were substantially higher than the current $12.75 rate, which the Department was paying in the same general area of Port Orange; and the Department felt that the Petitioner's proposed rate was too expensive for the Daytona area. The Department was attempting to lease space at the lowest rate per square foot. The average lease rate in Volusia County was $13.82 per square foot. The Department was paying an average of just $11.00 per square foot for all offices in Region II in excess of 150,000 square feet. On February 6, 1995, the Petitioner was notified by facsimile from the Department of the rejection of his proposal because his bid exceeded the current maximum rental cap of $16.07/ft2 year in its fourth and fifth years. The Petitioner received duplicate notification of the rejection by certified mail on February 8, 1995, and the Petitioner filed his protest on that date. On February 23, 1995, within the time frame of Section 120.53(5)(d), Florida Statutes, the Department telephoned the Petitioner to provide an opportunity to resolve the protest by mutual agreement. The Petitioner participated in a conference call with Beth Atchison, the attorney representing the Department at the time, Sandy Richards, and Dan Lawson. During the course of the bid protest settlement negotiations mandated by Section 120.53(5)(d), Florida Statutes, the Department offered the Petitioner $13.82/ft2/year for each of the five years of the proposed lease, and the Petitioner countered with a constant $13.00/ft2/year for each of the five years, provided the Department's discount factor was applied to the four out-years. This lease rate of $13.00/ft2/year was approximately what the Department was currently paying for its office in the Port Orange area. The counter-proposal of the Petitioner was rejected by the Department without explanation, and the protest continued to formal hearing. After the Petitioner's protest was dismissed for his non-appearance at the hearing, the Department re-bid the RFP. The Petitioner and two others submitted proposals. The Department notified the Petitioner of its intent to award the lease to him by correspondence dated May 22, 1995. Thereafter, the Department learned that the legislature had not funded 41 staff positions in Region II, eliminating nine positions in the Seventh Circuit, Volusia County. Rather, than needing additional office space as anticipated in the RFP, the Department had to reduce staffing and decided not to proceed with the proposed lease space in New Smyrna Beach. The Department notified the Petitioner of its intent to cancel all proposals due to legislative budget cuts and staff reductions. The Petitioner has a civil suit for breach of contract against the Department pending in the Seventh Judicial Circuit, in and for Volusia County. The Department has no policy, formal or informal, that required it to reject all bids when only one bid is submitted.
Recommendation Based upon the failure of the Petitioner to appear and present any evidence, it is RECOMMENDED that this case be dismissed with prejudice, and the action of the agency affirmed. DONE AND ENTERED this 21st day of March, 1995, in Tallahassee, Florida. STEPHEN F. DEAN 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 21st day of March, 1995. COPIES FURNISHED: R. Beth Atchison, Esquire Department of Corrections 2601 Blair Stone Road Tallahassee, Florida 32399-2500 William L. Ross, Jr., Esquire 221 North Causeway New Smyrna Beach, Florida 32169-5239 Harry K. Singletary, Jr., Secretary Department of Corrections 2601 Blair Stone Road Tallahassee, Florida 32399-2500 Louis A. Vargas, Esquire General Counsel Department of Corrections 2601 Blair Stone Road Tallahassee, Florida 32399-2500
Findings Of Fact The Respondent is a Public Employer within the meaning of Florida Statutes Section 447.203(2). Lloyd A. Perry was formerly an employee of the Respondent, and a public employee within the meaning of Florida Statutes Section 447.203(3). Dana E. Pratt was formerly an employee of the Respondent, and a public employee within the meaning of Florida Statutes Section 447.203(3). Prior to February 17, 1976, Lloyd A. Perry was employed by the Citrus County Road Department for a period of over four years. Immediately prior to the time that his employment was terminated, Perry was a roller operator. Except for rare occasions when he performed work as a flagman, or other work in conjunction with his roller work, Perry operated a tandem road roller. For the several months prior to February, 1976, Perry had continuously operated the same roller machine. Prior to February, 1976, none of Perry's supervisors informed him that his work was unsatisfactory, reprimanded him for performing work in an unsatisfactory manner, or indicated to him in any way that his job was in jeopardy for unsatisfactory performance of his duties. Dana E. Pratt had been employed by the Citrus County Road Department for approximately five years prior to February, 1976. For four years prior to that date he had been a motor grader operator. Pratt had annually received formal evaluations and his evaluations had always been very good. Prior to February, 1976, Pratt had never been criticized for below average or unsatisfactory work. He had never received any written reprimand for unsatisfactory performance on the job. From approximately December, 1973 until February, 1976, Perry had operated the newest grader machine in use by the Citrus County Road Department. No one else had operated the machine since it was acquired by the Citrus County Road Department. During February, 1976, Thomas Hutchinson was the Citrus County Road Superintendent. William Hitt was thee Assistant Road Superintendent. Hutchinson and Hitt served under the direction of the Citrus County Board of County Commissioners. Perry, Pratt, and numerous other employees of the Citrus County Road Department had, prior to February, 1976, become dissatisfied with conditions in the Road Department, primarily the manner of direction given the department by Hutchinson and Hitt. On Sunday, February 8, 1976, Perry drafted a petition specifying numerous grievances against Hutchinson and Hitt. It was his intention to secure the signatures of employees of the Road Department on the petition, and to present it to the Board of County Commissioners. Perry sought the assistance of County Commissioner DeBusk in drafting the petition. DeBusk offered several suggestions and his daughter typed the petition for Perry. Perry secured six or seven signatures on that Sunday. He was the first person to sign the petition, and Dana Pratt was the third. On Monday, February 9, Pratt informed his office that he had business to attend to and would not be at work that day. He did not claim sick leave for the time he missed. Prior to work and during the lunch hour he called as many employees of the Road Department as he could. After working hours he waited at a business establishment called the "Country Store" which was located in close proximity to the place where Road Department employees checked out of work. Forty-six employees of the Road Department signed the petition. Dana Pratt assisted in soliciting people to sign the petition. There was no evidence offered at the hearing from which it could be determined that those persons signing the petition did so other than freely and voluntarily. On Tuesday, February 10, 1976, Perry called his supervisor, Mr. Hutchinson, and told him that he had business to attend to. Hutchinson asked him if he was going to solicit more signatures. Perry told him that he was not. The Board of County Commissioners was meeting on that date, and Perry presented the petition to the Board. Members of the Board discussed the petition at length during the meeting. One commissioner asked Perry if he was big enough to go back to work and forget about the matter. Perry said that he was. On February 11, 1976 Perry returned to work at the regular time. Rather than being assigned to his regular duty as a roller operator, he was assigned to flag traffic for a grader operator. He continued in that capacity until Tuesday, February 17. On that date, at approximately 11:00 or 11:30 A.M. Tom Morton, the grader foreman, informed Perry that his employment was terminated as of 1:00 P.M. on that date. Both Morton and William Hitt told Perry that they did not know why he was fired. Dana Pratt attended the County Commission meeting on February 10. He was asked about whether he threatened a Road Department employee named Langley with respect to signing the petition. Pratt told the County Commission that he did not threaten Langley, and no evidence was offered at the hearing to establish that he did. On February 12, 1976, Pratt used the new grader machine that he had been using for some time prior thereto. At the end of that day his supervisors informed him that he would be using the oldest machine in the Department thereafter. He began using it on February 13. It took some time to get it started on that date. It also took some time to get it started on Monday, February 16. This was an old machine, and had been difficult to start for some years prior to the time that it was assigned to Pratt. At 12:30 on February 17, 1976, Tom Morton informed Pratt that his employment was terminated as of 1:00 P.M. on that date. Pratt was never given any reasons for his termination. On February 17, 1976, the Citrus County Board of County Commissioners acted to terminate the employment of Perry and Pratt. These actions were taken upon the recommendation of Mr. Hutchinson. Ostensibly the reason for Pratt's termination was that he had marked out on sick leave on a day when he was not sick. Ostensibly the reason for Perry's termination was that he had been missing from the job for approximately an hour. The evidence would not support a finding that Perry and Pratt were fired for these reasons. These reasons offered by Hutchinson, and followed by the Board of County Commissioners, were used as a ruse. On February 18, 1976, the day after Pratt and Perry were fired, Hutchinson called a meeting of all employees of the Road Department. Hutchinson told the employees that he had nothing to do with the termination, but he also told them that he would tolerate no more petitions and that if anyone did not like working conditions at the Road Department they could leave. He said that he had four County Commissioners in his pocket, and he reminded the employees that unemployment in Citrus County was high. He told the employees that he would take care of any petitions they distributed. During the week the petition was distributed, Hutchinson told one employee of the Road Department, James Johnson, that Johnson could be put in jail for signing the petition. During that same week he told his assistant superintendent, William Hitt, that all of the men who signed the petition had to go. After Perry and Pratt were fired, Hutchinson told Hitt that he got two, and he would get the rest. The basis for Hutchinson's recommendation to the Board of County Commissioners that Perry and Pratt be terminated was the fact that they participated in the distribution of the petition, and presenting it to the Board of County Commissioners. There was no evidence offerred at the hearing to indicate that any members of the Board of County Commissioners knew Hutchinson was presenting false reasons for the terminations; however, they did act to adopt the recommendation. The Board of County Commissioners did know that Pratt and Perry were among the leaders in distributing the petition highly critical of Hutchinson's work, and was clearly on notice that Hutchinson may have ulterior motives in recommending their dismissal.
The Issue The issue posed herein is whether or not the Petitioner remitted to Respondent, pursuant to Chapter 212.05(1), Florida Statutes, the, proper amount of sales tax on the boat "Captain Deebold" which was purchased on November 29, 1976. A related issue, assuming that the proper sales taxes were not remitted by Petitioner, is whether or not a levy of penalty and interest is warranted under the circumstances.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received, legal memoranda submitted by the parties and the entire record compiled herein, the following relevant facts are found. Petitioner purchased the vessel "Captain Deebold" on November 29, 1976, and alleged that the purchase price of the boat was $20,000.00. Accordingly, Petitioner remitted to the Department sales taxes based on the declared value of $20,000.00. Respondent maintained that the subject boat was purchased for the sum of $75,000.00 and has, therefore, issued an assessment against Petitioner for the additional taxes, penalty and interest. By letter dated November 29, 1978, Respondent's Revenue Investigator, Leslie J. Smithling, advised Petitioner that a routine verification concerning his purchase of the subject boat revealed a transaction amount of $75,000.00 upon which the four percent Florida Sales Tax is $3,000.00. Petitioner was further advised therein that his remittance in the amount of $4,202.00 was due no later than December 15, 1979. Taxes, penalties and interest were calculated as follows: Purchase Price $75,000.00 Tax Rate 4% Tax $ 3,000.00 Minus Tax Paid (Based on $20,000.00) $ 800.00 Tax Due $ 2,200.00 Administrative Penalty (Ch. 212.12[2], F.S.) $ 550.00 Fraud Penalty (Ch. 212.12[2], F.S.) $ 1,100.00 Interest: 1% per month from 8/1/77 to 12/1/77 16% Plus $.72 daily thereafter Total Interest Accrued $ 352.00 Total Tax, Penalties & Interest Due $ 4,202.00 In support of its position that the true purchase price of the boat was only $20,000.00, Petitioner points out that the seller of the boat, Frank Deebold, had neglected the boat and had only made repairs that were absolutely necessary to operate the vessel. Thus, when Petitioner purchased the vessel, numerous repairs were made to make it seaworthy including 1) repaired electrical wiring; 2) sealed the deck seams; 3) reconnected the port fuel tank; 4) repaired the clutch in the port engine; 5) repaired leaks in the starboard stern quarter; 6) replaced and rebolted the chines; 7) replaced a section of the keel; 8) rebuilt the main clutch; 9) caulked deck; 10) replaced or repaired the winch on the anchor; 11) reworked and/or repaired the engine room, including insulation, lighting, lining, painting and hauling. To perform these repairs, Petitioner places the value on materials utilized at approximately $18,000.00. Additionally, Petitioner estimated that the value of his labor involved in making the approximately $25,000.00. The articles of agreement for the purchase of the boat provides in pertinent part as follows: Witnesseth, that if the said party of the second part shall (purchaser) first make the payments and perform the covenants hereinafter mentioned on his part to be made and performed, the said party of the first part (seller) hereby covenants and agrees to convey and assure to the said party of the second part, his heirs, personal represent- atives or assigns, clear of all encumbrances, whatever by a good and sufficient bill of sale the Oil Screw vessel, Captain Deebold, o/n294675, gross tons-36, its equipment, hull, machinery, present insurance policies and business including fifty or more used rods and reels, one 3.5 KW Lister auxiliary generator, used and in need of repair, spare Jabsco water pump (used and in need of repair), spare 24 volt DC alternator, spare 24 volt DC main engine starter, spare stub shaft, three spare propellers (used and in need of repair) and a spare UHF Pierce- Simpson radio transceiver (used and in need of repair) and the said party of the second part hereby covenants and agrees to pay to the said party of the first part the sum of seventy-five thousand and 00/100 ($75,000.00) dollars in the manner following. . . . Nevertheless, Petitioner stressed that inasmuch as the Articles of Agreement provided that the seller only required Petitioner to maintain insurance coverage in the amount of $50,000.00 indicating that the purchase price was something less than $75,000.00 and in fact was no more than $50,000. Pursuant to the Articles of Agreement, the amount insurance coverage required was $50,000.00. Petitioner also declared that included in the $75,000.00 purchase price were other items which included the business (dock space), and reduced prices for miscellaneous supplies and fuel prices. In this regard, an examination of the Articles revealed that these items were provided Petitioner on a cost plus basis and the dock space was leased for an amount based on a rebate of the percentage of ticket sales or charter fees received. Petitioner ultimately sold the boat for 95,000.00. Petitioner initially tried to sell the boat for the sum of $105,000.00 of which $10,000.00 represented the value he (Petitioner) placed on the business. An examination of the accounting records introduced indicated that Petitioner placed the sum of $75,000.00 as the purchase price for the boat. Petitioner thought that his estimation of the labor and materials necessary to properly repair the boat were items that could be used as a setoff to reduce the amount of taxes due. Petitioner testified that he, in no way, intended to defraud the Respondent of taxes properly due and owing. Petitioner's testimony in this regard is credited.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that: Petitioner remit to the Respondent the proper interest as set forth herein in paragraph 4 of the Conclusions of Law. Petitioner remit to the Respondent an administrative penalty of 5 percent of the aggregate taxes due as set forth herein in Paragraph 5 of the Conclusions of Law. Petitioner not be held liable for payment of for allegedly filing a "false or fraudulent" return for reasons set forth herein in Paragraph 6 of the Conclusions of Law. RECOMMENDED this 27th day of February 1981, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 27th day of February 1981.
The Issue The issues to be resolved in this proceeding concern whether the Petitioner corporation's workers' compensation insurance policy was in compliance with the provisions of Chapter 440, Florida Statutes, cited below, despite not having a specific Florida endorsement; whether the Department properly issued a Stop Work Order against the Petitioner and whether the proposed penalty of $240,927.55 was properly assessed.
Findings Of Fact The Petitioner, American Coatings, Inc., is a commercial painting corporation based in Tennessee. It has been in business since 1994 in the State of Tennessee, and through a predecessor entity, since 1985. The Petitioner does business in other states, including the State of Florida, and in fact operates in approximately 14 states. It has done so since the year 2000. It has had no workers' compensation claims from any of its Florida work sites during the entire time it has operated in Florida. On February 19, 2008, the Petitioner was painting portions of the premises at "the Estates of Rockledge" in Rockledge, Florida. It had other operations in Florida in the three years prior to February 28, 2008. When the Petitioner applied for workers' compensation coverage in Tennessee, the Petitioner advised its broker and insurance carrier that it maintained operations in Florida. The workers' compensation carrier and agent provided certificates of workers' compensation insurance for the Petitioner's Florida operations which supported its good faith belief that it had valid workers' compensation insurance in Florida. Respondent presented no evidence that Mr. Carswell and the Petitioner have committed fraud, misrepresentation, or omission concerning the obtaining and maintaining of workers' compensation insurance coverage for its Florida operations. There was no attempt to conceal the fact that the Petitioner had insurable operations in Florida. For the three years prior to February 28, 2008, the Petitioner maintained a policy of workers' compensation insurance for all employees, including those employees that performed operations in Florida. A workers' compensation premium was paid for each employee in question for all periods in the three years preceding February 28, 2008. The Respondent is an Agency of the State of Florida responsible for enforcing the various statutory requirements of Chapter 440, Florida Statutes, including Sections 440.107 and 440.38, Florida Statutes (2007). Its authority includes Section 440.10(1)(a), Florida Statutes, which imposes upon all employers in Florida the obligation to secure the payment of workers' compensation. The Respondent is statutorily charged with the obligation to monitor employers operating in Florida, to ensure that statutory employers maintain appropriate workers' compensation coverage on employees. There is no dispute that the Petitioner, is an "employer" for purposes of Sections 440.02(16)(a) and 440.02(17)(b)2., Florida Statutes (2007). It was operating in the construction industry and regularly employed at least one person. Pursuant to the Division's statutory authority, Investigator Eugene Wyatt of the Department's Division of Workers' Compensation, Bureau of Compliance, visited the subject worksite in Brevard County, Florida, where an apartment complex was under construction. Mr. Wyatt inquired at the general contractor's headquarters trailer and was told that a painting subcontractor known as American Coatings was employing workers on the site. Using the Federal Employer Identification Number, Mr. Wyatt checked with the Department's Coverage and Compliance Automated System (CCAS) data base and learned that American Coatings, Inc. the Petitioner, which did business in Florida as A.C. Painting, Inc., did not have a record of a Florida workers' compensation coverage policy since December of 2003. Upon inquiry of the general contractor's supervisor at the job site, Mr. Wyatt learned that American Coatings, Inc., had furnished proof of insurance to the general contractor. It was shown as a certificate of liability insurance from American Coatings, in evidence as Department's Exhibit 17. Investigator Wyatt contacted the agent who had produced the Certificate of Insurance and asked if a Florida endorsement had been procured for that policy. He was told that the policy had a "an all states" endorsement. Mr. Wyatt then contacted the underwriter and was told that it was a policy for Tennessee and not for Florida (apparently Tennessee rates and codes applied). The investigator then contacted Benjamin Carswell, the President of the Petitioner. He informed him that in his view the company was not in compliance with the Florida requirement that workers' compensation policies covering Florida work and Florida employees be specifically endorsed for the State of Florida. He stated that he would issue a Stop Work Order, which he did on February 19, 2008. (SWO). The SWO was posted at the worksite and served personally on Mr. Carswell on February 21, 2008. After the Petitioner entered into an installment payment plan as to the penalty, the SWO was ended with an Order of Conditional Release, on February 28, 2008. The Petitioner sent a copy of consolidated insurance policy number WC8263193, by fax to Terrence Phillips, the chief of the Respondent's Orlando compliance office. The information page of this policy showed that only Tennessee was listed in item 3A of the policy. Item 3C stated that the policy was in effect in all other states, however, except for North Dakota, Ohio, Washington, West Virginia, and the states listed in item 3A. Item 4 listed various occupational classifications with their codes and the premium rates for each. The codes were for the State of Tennessee. The effect of these terms was that Florida was included in the category for "all other states." Florida Law requires that Florida be listed as a state in item 3A, and requires a policy to utilize Florida class codes, rates, rules, and manuals, in order for an employer to be compliant with workers' compensation coverage requirements of Chapter 440, Florida Statutes. Investigator Wyatt determined that compliance was deficient and that a penalty should be calculated and assessed. He therefore served a request for production of business records on Mr. Carswell on February 21, 2008. The business records were necessary to construct the payroll amounts and number of employees at issue, so that the penalty, based upon the Petitioner's Florida Payroll, could be calculated. Mr. Carswell believed in good faith, throughout all times pertinent to this matter that his company was compliant with Florida workers' compensation coverage requirements. After compliance was called into question, however, he also obtained an additional workers' compensation insurance policy, apparently obtained on or about February 20, 2008. It showed that coverage was effective, related back to May 1, 2007. Based upon this additional policy, the Petitioner provided Investigator Wyatt with an additional certificate of insurance for this policy. On March 6, 2008, Investigator Wyatt learned that the SWO was a duplicate and had to be substituted. A new SWO was issued as an amended SWO. A Second Amended Order of Penalty Assessment and an Amended Order of Conditional Release from SWO, under the second SWO number of 08-092-D4, was issued. Investigator Wyatt calculated the penalty by reviewing the business records supplied by the Petitioner and determining what each employee had been paid between February 23 and December 31, 2005; during all of 2006; during all of 2007 and between January 1, and February 22, 2008. Each employee's payroll, for each year or portion thereof, was divided by 100 and multiplied by an actuarial figure known as the "approved manual rate," which is related to the job duties the employee performed. In the case at hand, all the employees were engaged in commercial painting and, therefore, their classification codes were all 5474. Each trade, occupation or profession has a particular code assigned to it by the National Council on Compensation Insurance (NCCI) and each code has its own rate, the codes and rates being adopted in the Respondent Agency's Rules. The product of one one-hundredth of the gross payroll, and the approved manual rate, constitutes the "evaded premium." In effect this is the insurance premium the employer should have paid during the years it did not actually secure the appropriate payment of workers' compensation for its Florida Employees (proper Florida or Florida-endorsed coverage). Each employee's premium added together was then multiplied by the statutory factor of 1.5 in order to determine the total penalty amount the Respondent seeks to assess. The penalty amount herein was calculated using the correct Florida Approved Manual Rate and class codes. The Respondent established that its calculations indicated that, for the Florida employees of the Petitioner, based upon its Florida payrolls for the three year period in question, the total workers' compensation premium, under the Florida rate, would be in the amount of $160,618.15. Based upon that Florida workers' compensation premium amount, when multiplied by the statutory factor of 1.5 times that amount, the Respondent arrived at a total proposed assessed penalty of $240,927.55. The Petitioner established, through the testimony of Mr. Carswell that, for the time period at issue, for the Florida employees and payroll, the Petitioner had paid workers' compensation premiums of $111,682.21 for the coverage it had in effect. It acknowledges that this was not paid pursuant to Florida rates, rather it was based upon Tennessee rates. It is the position of the Petitioner that the difference in premiums. between the above Florida premium amount, and the premium that the Petitioner actually paid, was $48,935.94. The Petitioner maintains that this differential is what really should be determined to be the unpaid or "evaded" premium, based upon Florida rates, and, if that amount was multiplied by 1.5 then the total penalty actually due should be $73,403.91. An initial penalty payment of $24,092.76 has already been made by the Petitioner. Periodic penalty payments, assessed beginning March 2008, and continuing, have been paid in the amount of $36,139.40. The total penalty already paid by the Petitioner, as of the hearing date, is thus $60,232.16. The Petitioner contends that the actual penalty to be paid should be based upon the differential between the correct total premium due, when using the correct Florida manual rate, and the total premium actually paid by the Petitioner, which, when applied in the above-referenced calculation results in the penalty due of $73,402.91. This would then be reduced by $60,232.17, the amount already paid, for a total remaining amount due of $13,171.75, as of the hearing date.
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, finding that the Petitioner failed to fully secure the payment of workers' compensation for its employees in the manner prescribed by the above-referenced authority and that a penalty in the amount of $73,402.91 is due, less a credit of $60,232.16 already paid, and with credit applied to the above amount for penalty payments made since January 28, 2009. DONE AND ENTERED this 5th day of May, 2009, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of May, 2009. COPIES FURNISHED: Robert L. Dietz, Esquire Zimmerman, Kiser & Sutcliffe, P.A. Post Office Box 3000 Orlando, Florida 32802 Thomas H. Duffy, Esquire Douglas D. Dolan, Esquire Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399 Tracey Beal, Agency Clerk Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 Benjamin Diamond, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307 Honorable Alex Sink Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
The Issue The issue to be resolved in this proceeding concerns whether the Petitioner was discriminated against through an adverse employment decision by the Respondent, because of the Petitioner's age.
Findings Of Fact The Petitioner was hired by the Respondent on or about April 27, 1998, as a salesperson. When the Petitioner was hired he was 77 years of age. He is currently 84 years of age. Apparently the principal reason the Petitioner was hired was because of his substantial business contacts and principal client, which was Winn Dixie Stores, Inc. The Petitioner had sold food, principally seafood, to Winn Dixie for a substantial period of time. The Petitioner worked for a division of the Respondent known as the Great Fish Company. The Great Fish Company began operations in October of 1998. Mr. Carter, the president of Great Fish Company was the Petitioner's supervisor. During his employment with the Respondent, the Petitioner worked from his home. He sold seafood to customers, principally Winn Dixie, for which he was primarily paid on a commission basis. During his term of employment his compensation plan was periodically changed by the Respondent. Some of those changes financially benefited the Petitioner in some years and other changes served to reduce his commission or compensation. During the term of the Petitioner's employment with the Respondent, the Respondent also periodically changed the compensation plans of other employees of the Respondent; some of those changes involved reductions of their compensation plans and some involved increases. This depended upon the sales volume of those individual employees or the revenue situation of the company overall. In or about June of 2003, the Respondent changed the Petitioner's compensation plan. This change did not benefit the Petitioner but represented a reduction in compensation. This change to his compensation plan, however, was based upon legitimate business and financial reasons and was non- discriminatory, because it was based upon a down-turn in business, sales, and revenue for the company. Around the same period of time, the Petitioner advised the Respondent that he believed he was underpaid on earned commissions. Because of this the Respondent performed an audit of the Petitioner's commissions to determine if indeed he had been underpaid. The results of that audit did not establish that the Petitioner had been underpaid but rather that he had been overpaid by approximately $9,000.00 dollars. The audit results were provided to the Petitioner and the Petitioner disputed the results. The Petitioner never complained during his employment to any employees of the Respondent or supervisors suggesting that any employees or supervisors had discriminated against him or retaliated against him because of his age or because of his dispute concerning compensation, during his term of employment. There is no evidence that the Petitioner was singled-out or treated less favorably than other employees, including other employees of different ages, in terms of his compensation or other employment conditions. Indeed, there was no persuasive evidence presented at hearing that the Petitioner was treated less favorably in any way than other employees of the Respondent, regardless of their ages. There apparently came a time after June of 2003 and during 2004 when the Petitioner earned very little or no commissions from the Respondent. His employment was never actually terminated by the Respondent. The Petitioner rather either voluntarily quit his employment sometime prior to the final hearing or his sales opportunities dropped off so that, essentially, he was earning little or no compensation from the Respondent, while working out of his home in accordance with their arrangement. This down-turn in business apparently had a great deal to do with the severe financial circumstances his principal customer, Winn Dixie Stores, Inc., found itself in during this same period of time. In any event, the reduction in the Petitioner's commissions and compensation was not shown to be due to any effort or intent by the Respondent to single him out because of his age and reduce his compensation in some effort to force him to resign or retire. The reduction in his compensation was for the business reason of a decrease in revenues generated by the Petitioner himself or being experienced by the company as a whole, necessitating reduction of not only the Petitioner's but other employee's compensation, as a matter of a prudent business practice by the Respondent.
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 argument of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Florida Commission on Human Relations dismissing the Petition for Relief in its entirety. DONE AND ENTERED this 11th day of August, 2004, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 11th day of August, 2004. COPIES FURNISHED: Cecil Howard, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Wyn Samuel 130 Willow Pond Lane Ponte Vedra Beach, Florida 32082 J. Scott Hudson, Esquire 200 South Orange Avenue, Suite 1220 Orlando, Florida 32801 Robert J. Stovash, Esquire Stovash, Case and Tingley, P.A. SunTrust Center 200 South Orange Avenue, Suite 1220 Orlando, Florida 32801
The Issue The issue for consideration in this proceeding is whether the activities of petitioner, Mallinckrodt, Inc., were subject to the Florida corporate income tax for the years 1972, 1973 and 1974.
Findings Of Fact Upon consideration of the testimony, depositions and stipulation of counsel concerning four depositions, the following relevant facts are found: At the time of enactment of the Florida corporate income tax, petitioner was in the process of closing down a small plastics plant located in Jacksonville, Florida. This facility, which had an inventory of $77,054.00, was closed and disposed of at the end of January 1972. Among other endeavors, petitioner is in the business of manufacturing and selling calcium stearates. The stearates are manufactured in St. Louis, Missouri, and all inventories are located at the St. Louis plant. Calcium stearates are manufactured from animal (usually beef) fats and tallows and are used in the manufacture of polyvinyl chloride (PVC) pipe, essentially as a lubricant to facilitate the extrusion process. They come in a powdered form and are packaged in heavy paper sacks approximating the size of a sack of cement. Numerous sacks are placed on a wooden pallet, strapped with steel binders to the pallet for shipment and, often, the entire pallet will be wrapped in heavy cardboard in order to minimize breakage and spillage. The pallets are then loaded on common carriers in full carload or truckload quantities for shipment to the customers, with freight charges being paid by the petitioner. During the years in question -- 1972 through 1974, petitioner had from ten to fifteen stearate customers in the State of Florida. Bill Rhymes represented the petitioner in Florida and other southeastern states. He resided in Charlotte, North Carolina, and did not maintain a residence or an office within Florida. His purpose was to make potential customers aware of the products manufactured and sold by the petitioner and to act as a liaison between St. Louis and individual customers if technical problems arose. Orders from Florida customers were placed directly to St. Louis, either by telephone or by written order. The orders were either accepted or rejected exclusively by the St. Louis office. Credit checks and collection efforts were accomplished out of the St. Louis office. The principal salesman in Florida did not make actual sales arrangements and had no authority over pricing, freight or other conditions of sales. While the salesman in Florida did periodically contact petitioner's Florida customers, this was not done for the purpose of servicing the sold goods. Primarily, the contacts were made to insure that if there was a problem with the stearates due to the customer's machinery or manufacturing process, the next batch ordered would be of a different compound. The majority of petitioner's customers in Florida were large companies to which full truckload shipments of stearates were made direct. However, petitioner also had three smaller customers new into the field of manufacturing PVC pipe. These new businesses lacked storage capacity and had limited cash flow. In order to accommodate these smaller businesses, petitioner allowed them to purchase under a blanket order specified bulk quantities of stearates at bulk prices. Petitioner then arranged to ship the entire load of stearates to the U & Me Warehouse in West Palm Beach for periodic pick up by the customer and payment by the pickup. Petitioner entered into an "in and out" arrangement with the U & Me Warehouse. It was charged for the cost of moving the stearates into the warehouse, for the cost of loading them upon the customer's trucks and for the cost of storage based upon the actual amount of space required for the stearates. The prices and costs to petitioner fluctuated from month to month depending upon the amount of activity. The U & Me Warehouse and the petitioner did not have a rental agreement whereby petitioner paid a specified fee for a specified amount of space reserved to it in the warehouse. All shipments of stearates by petitioner to the U & Me Warehouse were the result of a blanket order from a specific customer. Due to the labor and space costs of segregating the material, the individual pallets and sacks of stearates were not marked as being designated to any particular customer. Prior approval was required from petitioner before any goods were released from U & Me to the customer. Petitioner never sold merchandise out of the U & Me Warehouse to persons other than the customer who originally ordered it and there were no instances where the specified customer failed to pick up on a periodic basis its entire order of stearates. As noted above, the use of the West Palm Beach warehouse was primarily for the benefit of petitioner's smaller customers who had limited cash flow and storage capabilities. The warehouse arrangement allowed those customers to purchase stearates at truckload prices and pick them up in less than truckload quantities. These customers were billed by the pickup, and also received a freight rebate on each delivery. As one of the three original customers which utilized the warehouse method of delivery grew in size, it was able to take direct full truckload shipments at its plant. During the year 1972, petitioner shipped approximately 60,000 pounds of stearates to the U & Me Warehouse every two or three months. Lesser amounts were shipped in 1973 and 1974. Petitioner's agents did make periodic checks of the status of the stearates located in the warehouse. This was done for the purpose of determining the actual physical condition of the goods and their treatment by the shippers and the warehouse. The goods were briefly examined to determine if the sacks had been broken and how they were stacked and stored. No physical count of the goods was made. No check was made of stearates in the possession of customers. Because of the presence in the State of Florida of its plastic plant in Jacksonville in January of 1972, petitioner filed a Florida corporate income tax return showing the full value of that property at the beginning of the year and a value of zero at the end of the year. An auditor with the respondent determined that the stearates shipped to the U & Me Warehouse during 1972, 1973 and 1974 constituted inventory which established a tax nexus for those years. The respondent accordingly issued its notice of proposed deficiency. Contending that it's sole activity in Florida beyond January 31, 1972, was the solicitation of orders which were approved and filled outside the State of Florida, petitioner maintains that it is not subject to the Florida corporate income tax and requests that the proposed deficiencies be set aside.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is RECOMMENDED THAT the proposed deficiency assessment against petitioner of corporate income taxes for 1972, 1973 and 1974 be set aside, and that the petitioner's liability for those years be confined to only that amount (less the amount previously paid) which reflects petitioner's activities with regard to the plastic plant in Jacksonville which was closed at the end of January, 1972. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 5th day of May, 1980. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings 101 Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Benjamin K. Phipps Post Office Box 1351 Tallahassee, Florida 32302 and Raymond H. Mann Post Office Box 1351 St. Louis, Missouri 63134 Shirley W. Ovletrea Assistant Attorney General Department of Legal Affairs The Capitol - Room LL04 Tallahassee, Florida 32301 Randy Miller Executive Director Department of Revenue Carlton Building Tallahassee, Florida 32301
