15-003168 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Bargain Bob's Carpets, Inc. Status: Closed Recommended Order on Friday, January 22, 2016.

Summary: Petitioner proved that some portions of the penalty assessment were correct, but failed to prove that other portions of the penalty assessment were correct. Recommend recalculation of the penalty to be assessed.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL

SERVICES, DIVISION OF WORKERS'

COMPENSATION,

Petitioner,

vs. Case No. 15 - 3168

BARGAIN BOB'S CARPETS, INC.,

Respondent.

_______________________________/

RECOMMENDED ORDER

A hearing was conducted in this case pursuant to sections

120.569 and 120.57(1), Florida Statutes (201 5 ), before Cathy M.

Sellers, an Administrative Law Judge ( " ALJ " ) of the Division of

Administrative Hearings ( " DOAH " ), on August 3, 2015 , by video

teleconference at sites in West Palm Beach and Tallahassee,

Florida.

APPEARANCES

For Petitioner: Alexander Brick, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399

For Respondent: Davi d Steinfeld, Esquire

Law Office of David Steinfeld, P.L.

3801 PGA Boulevard , Suite 600

Palm Beach Gardens, Florida 33410

STATEMENT OF THE ISSUE S

The issue s in this case are whether Respondent violate d

chapter 440, Florida Statutes (201 4 ) , 1/ by failing to secure the

payment of workers' compensation c overage as alleged in the

Stop - w ork Order and 2 nd Amended Order of Penalty Assessment, and

if so, the amount of the penalty that should be assessed.

PRELIMINARY STATEMENT

On January 23, 2015, Petitioner , Department of Financial

Services, Division of Workers' Compensation, issued a Stop - w ork

Order , ordering Respondent, Bargain Bob's Carpets, Inc., to

cease business operations on the alleged basis that it failed to

secure payment of workers' compensation coverage meeting the

requirements of chapter 440 and the Insurance Code. Petitioner

issued an Amended Order of Penalty Assessment o n February 24,

2015. On April 23, 2015, Petitioner issued a 2 nd Amend ed Order

of Penalty Assessment, as sessing a penalty of $31,061.68.

Respondent requested an administrative hearing to contest the

penalty assessed in the 2 nd Amended Order of Penalty Assessment .

T he matter was referred to DOAH for assignment of an ALJ to

c onduct a hearing pursuant to sections 120.569 and 120.57(1).

The final hearing was held on August 3, 201 5 . Petitioner

presented the testimony of Peter Sileo and Eric Ruzzo.

Petitioner's Exhibits 1 through 11 were admitted into evidence

without objectio n. Respondent presented the testimony of John

Charles and Andrew Calideen, Respondent's owners and corporate

officers . Respondent did not offer any exhibits for admission

into evidence.

The one - volume Transcript was filed on August 18, 2015, and

the parties were given until August 28, 2015, to file proposed

recommended orders. Respondent timely filed its Proposed

Recommended Order on August 19, 2015, and Petitioner filed its

Proposed Rec ommended Order on August 31, 2015. Both proposed

recommended orders were duly considered in preparing this

Recommended Order.

FINDINGS OF FACT

The Parties

1. Petitioner, Department of Financial Services, Division

of Workers ' Compensation, is the state agency responsible for

enforcing the requirement in chapter 440 that employers in the

s tate of Florida secure the payment of workers ' compensation

insurance covering their employees.

2. Respondent, Bargain Bob's Carpets, Inc . , is a

corporation registered to do business in Florida. Its principal

business address is 3954 Byron Drive, Riviera Beach, Florida.

The Compliance Investigation

3. A s the result of a n anonymous referral , Petitioner's

compliance investigator, Peter Sileo, investigat ed Respondent t o

determine whether it had secured workers' compensation coverage

for its employees as required by chapter 440.

4 . Before Sileo visited Respondent's business location, he

checked the State of Florida Coverage and Compliance Automated

System ("CCAS") comp uter database, which contains information

regarding workers' compensation insurance policies that have

been obtained by employers. Th e CCAS database showed no record

of any workers' compensation policies covering Respondent's

employees having been issued.

5. On Sileo's first visit to Respondent's business

location, he observed a man loading carpeting into a van. Upon

being questioned, the man identified himself as Gary P e rsad . He

told Sileo that he was a carpet installation subcontractor for

Respondent .

6. Sileo checked CCAS and determined that Pe rsad was

covered by workers' compensation insurance.

7. On January 23, 2015 , Sileo again visit ed Respondent's

business location , which is a warehouse housing large rolls of

carpeting and other flooring m aterials.

8. There, Sileo met John Charles, an owner and corporate

officer of Respondent. Charles claimed that he did not know

that Respondent was required to have workers' compensation

coverage for its employees.

9 . Charles told Sileo that Resp ondent sold flooring but

did not install it and that all installation was performed by

subcontractors.

10 . At the time of the inspection, Sileo determined that

Respondent employed five employees: Charles and Calideen, each

of whom own more than ten per cent of Respondent's business; Alex

Stark; Peter Phelps; and Anthony Frenchak.

1 1 . Sileo served a Stop - w ork Order, ordering Respondent to

cease all b usiness operations in the state pending demonstrating

compliance with the workers' compensation coverage requirement.

Sileo also served a Request for Production of Business Records

for Penalty Assessment Calculation .

1 2 . Respondent subsequently demonstr ated compliance with

the workers' compensation coverage requirement , and Petitioner

lifted the Stop - w ork Order . 2 /

1 3 . Respondent also produced business records consisting

of s preadsheets showing quarterly payroll, transaction listings,

affidavits, insura nce coverage documents, and other records.

The Penalty Assessment

1 4 . Eric Ruzzo, a penalty auditor with Petitioner, used

the se records to calculate the penalty to be assessed against

Respondent. Th e $31,061.68 penalty is reflected in the 2 nd

Amended Order of Penalty Assessment , issued April 23, 2015, that

is the subject of this proceeding.

15. To calculate the applicable penalty, Petitioner

determine s the employer's gross payroll for the two - year period

preceding the noncompliance determination ÏÏ the so - called

"penalty period" ÏÏ from a review of the employer's business

records. For days during the penalty period for which records

are not provided, Petitioner imputes the gross payroll based on

the average weekly wage for the state of Florida.

16. Her e, the penalty period commenced on January 24 ,

2013 , and ended on January 23, 20 15 , the day on which the

comp liance inspection was conducted , and Respondent was

determined to not be in compliance with the workers'

compensation coverage requirement.

17. I nitially, Respondent produced payroll records that

did not identify the subcontractors Respondent hired to install

the carpeting. Ruzzo identified the subcontractors using

Respondent's transaction records. Respondent subsequently

provide d information, including affidavits and certificates of

exemption regarding the subcontractors it had hired during the

penalty period.

18. At all times during the penalty period, Respondent

employed four or more non - construction employees, including

Char les and Calideen. 3 /

19 . Based on the business records produced, R uzzo compiled

a list of the persons , including the subcontractors and

non - construction employees who were on Respondent's payroll , but

not covered by workers' compensation insurance durin g the

penalty period . This list of employees and the penalty

computation for each is set forth on the Penalty Calculatio n

Worksheet attached to the 2 nd Amended Order of Penalty

Assessment.

20 . Using the National Council on Compensation Insurance

("NCCI ") workers' compensation insurance occupation class codes

set forth in the NCCI Scopes Manual , Ruzzo determined the

occupation class code applicable to each employee listed on the

Penalty Calculation Worksheet.

21 . Respondent's subcontractors were cla ss ified in NCCI

class code 5478 , which is the class code for the flooring

installation industry . This is consistent with Florida's

construction industry class code rule, Florida Administrative

Code Rule 69L - 6.021(2)(kk) , which identifies the installation of

carpet and other floor covering as NCCI class code 5478.

22 . Alex Stark, Amber Krembs, Jacquelyn Skwarek, and

Monica Stahl were classified in NCCI class code 8018 , which

applies to workers engaged in selling merchandise, including

carpeting and linoleu m, at the wholesale level.

23 . Calideen, Frenchak, and Phelps were classified in NCCI

class code 8742, which applies t o outside s alespersons primarily

engaged in sales off of the employer's premises.

24 . Charles was classified in NCCI class code 8810, which

applies to clerical office employees.

25 . Ruzzo then determined the period of Respondent's

noncompliance for each employee listed on the Penalty

Calculation Worksheet .

26 . F or each of these employee s , Ruzzo determined the

gross payroll paid to that employee for the period during which

Respondent was noncompliant , divided the employee's gross

payroll by 100 pursuant to Petitioner's calculation methodology,

then multiplied that amount by the numeric rate set by NCCI for

that employee's spe cific occupation class c ode. This

calculation yielded the workers' compensation coverage premium

for that specific employee for which Respondent was noncompliant

during the penalty period. The premium amount then was

multiplied by two, as required by sta tute, to yield the penalty

to be imposed for failure to provide workers' compensation

coverage for that specific employee.

27 . Respondent did not provide records covering Charles,

Calideen, Stark, Frenchak, or Phelps for the period between

January 1, 2015, and January 23, 2015. Fo r this period , Ruzzo

imputed the gross payroll for each of these employees using the

statewide average weekly wage as defined in section 440.12(2) , 4 /

multiplied by two. Ruzzo then performed the same computations

discussed ab ove to determine the penalty amount to be imposed

for Respondent's failure to provide workers' compensation for

those employees during this time period .

28 . Ruzzo added the penalty determined for each employee

using actual gross payroll and imputed pay roll, as applicable,

to arrive at the total penalty assessment amount of $31,061.68 .

Respondent's Defense

2 9 . Respondent is engaged in the retail sale of various

types of flooring, such as carpeting, and hires subcontractors

to install the flooring. The evidence did not establish that

Respondent engaged in wholesale sales of flooring.

30 . Charles testified that Respondent had attempted to

operate its business as a "cash and carry" operation in which

Respondent would sell the flooring to retail cus tomers, who

would take the purchased flooring from Respondent's premises and

would be solely responsible for securing their own installation

services. In Charles' words, "[t]hat didn't work. The public

demanded that we provide them, as part of the sale , installers ÏÏ

I might be saying it wrong legally, but they demanded that it

all be done in one shot." Thus, Respondent began hiring

subcontractors to do the installation work. Charles explained

that Respondent makes retail sales of flooring to customers ,

e ither on Respondent's premises or at the customer's premises

through its outside sales people. T he flooring is then cut from

the roll on Respondent's premises and placed in the installer's

vehicle . The installer transports the purchased flooring to,

and installs it at , the customer's premises. C harles estimated

that Respondent currently does approximately five percent of its

business as "cash and carry" sales, and the remaining 95 percent

consist s of sales requiring installation.

31 . Charles testified that he and Calideen , as corporate

officers of Respondent, previously had obtained exemptions from

the workers' compensation coverage requirements for themselves ;

however, they were unaware that the exemptions had to be

renewed , so their exemptions had expire d . As of the date of the

2 nd Amended Order of Penalty Assessment , neither Charles nor

Calideen possessed valid certificates of exemp t ion from the

workers' compensation coverage requirement.

3 2 . Charles testified that Respondent always had tried t o

oper ate in compliance with the law. H e was of the view that

because he and Calideen were exempt from the worker's

compensation coverage requirement, Respondent effectively

employed only three employees ÏÏ one fewer than the workers'

compensation coverage requirement threshold of four employees

applicable to non - construction industry businesses.

3 3 . Charles and Calideen testified that when Respondent

initially hired subcontractors, they required copies of their

insurance policies, including proof of workers' compensation

coverage or exemption therefrom . Calideen testified that

thereafter, he and Charles assumed that the subcontractors were

in compliance with the workers' compensation laws , and they did

not know that they needed to obtain updated certificates of

workers' compensation exemption or coverage from the

subcontractors.

34. On that basis, Charles asserted that Respondent should

not be required to "babysit" its subcontractors to ensure that

they are in compliance with the workers' compensation law.

Respondent thus asserts that it should not be responsible for

securing workers' compensation coverage for subcontractors whose

workers' compensation policies or exemptions had expired during

the penalty pe riod.

3 5 . The undisputed evidence establishes that Charles '

e mployment entail s clerical work .

3 6 . Calideen testified, credibly, that Stark's employment

duties entail selling flooring on Respondent's business

premises , and that he does not engage in sales off the premises .

3 7 . Calideen testified , credibly, that Frenchak and Phelps

primarily are engaged in outside sales off of Respondent's

premises.

3 8 . Calideen testi fied, credibly, that he performs

clerical duties rather than sales duties.

3 9 . Calideen and Charles both testified, credibly, that

employees Krembs, Skwarek, and Stahl performed computer - related

duties for Respondent, such as entering business information

into Respondent's computer database s, and that they did not work

on Responde nt's business premises.

40 . Calideen testified, credibly, that subcontractor Mike

Smith was hired on a one - time basis to paint parking place

stripe s at the newly - repaved parking lot behind Respondent's

business premises.

Findings of Ultimate Fact

4 1 . The credible, persuasive evidence establishes that

Responden t is engaged in the retail sale of carpeting and other

flooring materials and that Respondent itself does not install

the flooring.

4 2 . The credible, persuasive evidence establishes, and the

parties stipulated, that Respondent is not a member of the

construction industry.

4 3 . The credible, persuasive evidence establishes that at

all times during the penalty period, Respondent employed more

than four employees who were engaged in non - construction

employment. Accordingly, Respondent was required to secure

workers' compensa tion coverage for its employees , including

Charles and Calideen, whose previously - issued certificates of

exemption had expired and were not i n effect during the penalty

period.

4 4 . The undisputed evidence establishes that at certain

times during the penalty period, Respondent employed

subcontractors who performed floor installation. The evidence

clearly establishes that the subcontractors , in installing the

flooring, perform a service that is integral to Respondent's

business and that they work specifically at Respondent's

direction for each particular installation job.

4 5 . Even though Respondent is not classified as a member

of the co nstruction industry, it nonetheless is a "statutory

employer" of its subcontractors , who are members of the

construction industry. Thus, Respondent is responsible for

securing workers' compensation coverage for its subcontractors

who failed to secure an e xemption or coverage f or themselves. 5/

4 6 . The credible, persuasive evidence establishes that

Petitioner c orrectly calculated the penalty attributable to

flooring installation subcontractors for which Respondent was

noncompliant during the penalty period.

4 7 . However, the unrebutted evidence establishes that

subcontractor Mike Smith was hired on a one - time basis to paint

parking lot stripes in Respondent's parking lot. Thus,

Petitioner's classification of Smith in NCCI class code 5478 ÏÏ

which is a construction industry code that applies to workers

engaged in flooring installation ÏÏ obviously is incorrect, and no

evidence was presented showing the correct NCCI class code in

which Smith should be classified. Accordingly, Smith should not

be include d in Petitioner's calculation of the penalty to be

assessed against Respondent.

4 8 . The credible, persuasive evidence establishes that

Petitioner correctly calculated the penalty attributable to

Respondent's noncompliance with respect to Charles, French ak,

and Phelps during the penalty period.

4 9 . The credible, persuasive evidence establishes that

Stark is engaged in retail sales on Respondent's business

premises. However, in calculating the penalty, Petitioner

classified Stark in NCCI class code 801 8, which applies to

salespersons engaged in selling merchandise at the wholesale

level, rather than at the retail level. Thus , Petitioner

incorrect ly classified Stark in NCCI class code 8018 . T here is

no evidence in the record identifying the correct NCC I class

code in which Stark should be classified. Accordingly, Stark

should not be included in Petitioner's calculation of the

penalty to be assessed against Respondent.

50 . The credible, persuasive evidence establishes that

Calideen performs cle rical employment duties and does not

perform sales duties, so he should be classified i n NCCI class

code 8810 , rather than in class code 8742. Accordingly,

Petitioner should recalculate the portion of the penalty

attributable to Respondent's noncompliance for Calideen using

NCCI class code 8810.

5 1 . The credible, persuasive evidence establishes that

Krembs, Skwarek, and Stahl are not employed as salespersons at

the wholesale level . T hus, Petitioner incorrectly classified

these employees in NCCI class code 8018. In its P roposed

R ecommended O rder, Petitioner contends that because Respondent

disputes the classification of these employees in class code

8018, Respondent is responsible for identifying the correct

applicable class code , which it has not done . T his pos ition

disregards that in this proceeding, Petitioner bears the burden

of proof , by clear and convincing evidence, to show that its

proposed penalty assessment against Respondent is accurate .

Thus , Petitioner ÏÏ not Respondent ÏÏ is responsible for corr ectly

identifying the NCCI class codes applicable to Respondent's

employees. Here, the credible, persuasive evidence establishes

that in calculating the penalty, Petitioner incorrectly

classifi ed Krembs, Skwarek, and Stahl i n class code 8018 , 6 / and

no evidence was presented showing the correct NCCI class code

applicable to these employees. A ccordingly, Krembs, Skwarek,

and Stahl should not be included in Petitioner's calculation of

the penalty to be assessed against Respondent.

CONCLUSIONS OF LAW

5 2 . DOAH has jurisdiction over the parties to, and subject

matter o f, this proceeding. §§ 120.569 & 120.57(1), Fla. Stat.

5 3 . This is a penal proceeding brought to enforce the

workers ' compensation coverage requirements in chapter 440 .

Thus, Petitioner has the burden of proof to show, by clear and

convincing evidence, that Respondent committed the violation s

alleged in the administrative charging D ocument ÏÏ here, the 2 nd

Amended Order of Penalty Assessment. Dep ' t of Banking & Fin. v.

Osborne S tern & Co. , 670 So. 2d 932, 935 (Fla. 1996); Ferris v.

Turlington , 510 So. 2d 292 (Fla. 1987).

5 4 . The clear and convincing evidence standard of proof

has been described by the Florida Supreme Court as follows:

Clear and convincing evidence requires that

the evidence must be found to be credible;

the facts to which witnesses testify must be

distinctly remembered; the testimony must be

precise and explicit and the witnesses must

be lacking in confusion as to the facts in

issue. The evidence must be of suc h weight

that it produces in the mind of the trier of

fact a firm belief or conviction, without

hesitancy, as to the truth of the

allegations sought to be established.

In re Davey , 645 So. 2d 398, 404 (Fla. 1994) (quoting Slomowitz

v. Walker , 429 So. 2d 797, 800 (Fla. 4th DCA 1983 ) ).

5 5 . Pursuant to sections 440.10, 440.107(2), and 440.38,

every employer is required to obtain workers ' compensation

insurance coverage for the benefit of its employees unless

exempted or otherw ise excluded under chapter 44 0. Strict

compliance with the workers ' compensation law by the employer is

required. See C & L Trucking v. Corbett , 546 So. 2d 1185, 1187

(Fla. 5th DCA 1989); Dep ' t of Fin. Servs. v. L & I Consol.

Servs., Inc. , Case No. 08 - 5911 (Fla. DOAH May 28, 2009; Fla. DFS

July 2, 2009).

5 6 . "Employment" is defined, in pertinent part, as "any

service performed by an employee for the person employing him or

her," and includes "[a]ll private employments in which four or

more employees are employed by the same employ er."

§ 440.02(17), Fla. Stat.

5 7 . " Employer " is defined, in pertinent part, as " every

person carrying on any employment " § 440.02(16), Fla. Stat.

5 8 . " Employee " is defined to include " any person who

receives remuneration from an employer for the pe rformance of

work or service under any appointment or contract for hire or

apprenticeship. " § 440.02(15)(a), Fla. Stat.

59 . As discussed above, the evidence establishes that at

all times during the penalty period, Respondent was an employer

who employe d at least four persons , so it is responsible for

securing workers Ó compensation coverage for its employees.

§ 440.10(1)(a), Fla. Stat.; § 440.02(17)(b)2., Fla. Stat.

60 . Section 440.05 aut horizes corporate officers to obtain

an exempt ion from the wor kers' compensation coverage requirement

by filing a notice of exemption with Petitioner, pursuant to the

process and conditions established in section 440.05 and rule

69L - 6.012. Exemption certificates are valid for a specified

period and must be renewed i n order for the covered corporate

officer to remain exempt. See Fla. Admin. Code R. 69L - 6.012.

As discussed ab ove, although Charles and Calidee n previously had

obtained certificates of exemption, those certif icates had

expired , so Respondent was required to secure workers'

compensation coverage for them.

61 . Additionally, t he subcontractors who Respondent hired

to perform flooring installation and who did not have valid

certificates of exemption or workers' compensation coverage

during the penalty peri od are "statutory employees" of

Respondent, pursuant to section 440.10(1)(b). That statute

states in pertinent part:

( b) In case a contractor sublets any part

or parts of his or her contract work to a

subcontractor or subcontractors, all of the

employees of such contractor and

subcontractor or subcontractors engaged on

such contract work shall be deemed to be

employed in one and the same business or

establishment, and the contractor shall be

liable for, and shall secure, the payment of

compensation to all such employees, except

to employees of a subcontractor who has

secured such payment.

62 . This law imputes employment, by the employer, of its

subcontractors for purposes of securing workers' compensation

coverage. Thus, if a subcontractor has secured its own

coverage, or has a valid certificate of exemption, then the

employer is not liable for securing workers' compensation for

that subcontractor. However, if the subcontractor has not

secured workers' compensation coverage and does not have a valid

ce rtificate of exemption, then the employer is liable for

securing workers Ó compensation coverage for that subcontractor.

See Smith v. Larry Rice Const r . , Inc. , 730 So. 2d 336 , 339 (Fla.

1st DCA 1999) ( where a subcontractor does not have valid

certificate of exemption, he or she is a "statutory employee" of

the employer, pursuant to section 440.10, for purposes of

liability to secure workers' compensation coverage for the

subcontractor).

6 3 . Here, it is undisputed that Respondent contracted with

subcontrac tors to perform flooring installation services , which

were a n integral component of its flooring sales to customer s,

and that some of those subcontractors did not have valid

certificates of exemption or workers' compensation coverage

during certain interva ls in the penalty period. Ac cordingly,

Respondent is liable, under section 440.10, for securing

worker s' compensation coverage for thos e subcontractors , and its

failure to do so violates chapter 440. See id.

6 4 . Thus , in calculating the penalty to be assessed

against Respondent, Petitioner correctly considered the flooring

installation subcontractors identified in the Penalty

Calculation Worksheet and correctly computed the portion of the

penalty applicable to these s ubcontractors , as shown on the

Penalty Calculation W orksheet.

6 5 . However, as discussed in detail above, the evidence

establishes that Petitioner did not correctly classify certain

employees in the correct NCCI class code, so that the portion of

the p enalty attributable to those employees has not been

correctly calculated. As directed above, the portions of the

penalty attributable to those employees either should be removed

from Petitioner's final assessment as not supported by the

credible, persuasi ve evidence in the record, or where supported

by the record evidence, should be recalculated in conformance

with the findings above.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that Petitioner , Depa rtment of Financial

Services, Division of Workers ' Compensation, issue a final o rder

amending the penalty to be assessed against Respondent as

follow s :

1. Subtracting the penalty assessed for subcontractor Mike

Smith , as shown on the Penalty Calculation Worksheet; and

2. Subtracting the penalties assessed for Respondent's

alleged noncompliance with respect to employees Amber Krembs,

Jacquelyn Skwarek, and Monica Stahl , as shown on the Penalty

Calculation Worksheet ; and

3. Reclassifying employee Andy Calideen in NCCI class

code 8810 and recalculating the portion of the penalty

attributable to Respondent's noncompliance for Calideen using

this class code ; and

4. Reclassifying employee Alexander Stark in NCCI clas s

code 5784 and recalculating the portion of the penalty

attributable to Respondent's noncompliance for Stark using this

class code .

DONE AND ENTERED this 22 day of January, 2016, in

Tallahassee, Leon County, Florida.

S

C ATHY M. SELLERS

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 22 day of January, 2016.

ENDNOTES

1/ The penalty period applicable to this proceeding commenced on

January 24, 2013, and ended on January 23, 2015. Accordingly,

the 2012, 2013, and 2014 versions of chapter 440 apply to this

proceeding. P rovisions of chapter 440 pertinent to this

proceeding were amended over the course of the penalty period;

however, those amendments primarily were technical and , in any

event, do not affect the outcome in this proceeding. Thus, for

brevity and clarity, the undersigned has cited to the 2014

version of chapter 440.

2/ Respondent demonstrated that it had come into compliance with

the workers' compensation coverage requirement and paid a

penalty of $1,000 as a down payment on to tal penalty owed.

3/ Petitioner classified the employees on Respondent's payroll,

other than the subcontractors, as non - construction industry

employees. This is germane because under section

440.02(17)(a)2., private employments in non - construction

indus tries in which fewer than four employees are employed by

the same employer are not considered "employment" for purposes

of triggering the requirement for the employer to secure

workers' compensation coverage for those employees.

4 / Section 440.12(2) defi nes "statewide weekly average wage" as

the weekly average wage paid by employers subject to the Florida

Reemployment Assistance Program Law as reported to the Florida

Department of Economic Opportunity ("DEO") for the four calendar

quarters ending each Jun e 30, which is determined by DEO on or

before November 30 of each year and is used in determining the

maximum weekly compensation rate for injuries occurring in the

immediately following calendar year.

5/ Section 440.10(1)(c) affirmatively places the bur den on the

contractor to require the subcontractor to provide evidence of

workersÓ compensation insurance or a valid certificate of

exemption. Although Respondent considers this to constitute

"babysitting," the Legislature, in enacting this statute,

speci fically intended to provide workers' compensation coverage

protection for subcontractors equal to that provided for actual

employees. See Andrews v. Drywall Enter. , Inc. , 569 So. 2d 821,

823 (Fla. 1st DCA 1990).

6 / At the final hearing, the undersigned noted that the NCCI

classification codes were part of the record eviden ce and

informed Petitioner that if the testimony and other evidence

presented at the final hearing supported reclassification of

these employees, Petitioner could address re classification of

Respondent's employees in its Proposed Recommended Order.

Petitioner declined to do this and continued to take the

position that these employees were properly classified i n NCCI

class code 8018.

COPIES FURNISHED:

Trevor S. Suter, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399

(eServed)

Alexander Brick, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399

(eServed)

David Steinfeld, Esquire

Law Office of David Steinfeld, P.L.

3801 PGA Boulevard , Suite 600

Palm Beach Gardens, Florida 33410

(eServed)

Julie Jones, CP, FRP, Agency Clerk

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399 - 03 90

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.