06-002785
Kenny Nolan, D/B/A Great Southern Tree Service vs.
Department Of Financial Services, Division Of Workers' Compensation
Status: Closed
Recommended Order on Tuesday, November 28, 2006.
Recommended Order on Tuesday, November 28, 2006.
1STATE OF FLORIDA
4DIVISION OF ADMINISTRATIVE HEARINGS
8KENNY NOLAN, d/b/a GREAT )
13SOUTHERN TREE SERVICE, )
17)
18Petitioner, )
20)
21vs. )
23) Case No. 06 - 2785
29DEPARTMENT OF FINANCIAL )
33SERVICES, DIVISION OF )
37WORKERS' COMPENSATION, )
40)
41Respondent. )
43)
44RECOMMENDED ORDER
46A hearing was held pursuant to notice, before Barbara J.
56Staros, Administrative Law Judge with the Division of
64Administrative Hearings, on October 5, 2006, via video -
73teleconference in Jacksonville and Tallahassee, Florida.
79APPEARANCES
80For Petitioner: David C. Hawkins, Esquire
86Department of Financial Services
90200 East Gaines Street
94Tallahassee, Florida 32399
97For Respondent: Kenneth B. Wright, Esquire
103Bledsoe, Jacobsen, Schmidt, Wright,
107Wilkinson, & Lang
1101301 Riverplace Boulevard, Suite 1818
115Jacksonville, Florida 32207
118STATEMENT OF THE ISSUE
122The issue is whether The Department of Financial Services
131properly imposed a Stop W ork Order and Amended Order of Penalty
143Assessment pursuant to the requirements of Chapter 440, Florida
152Statutes.
153PRELIMINARY STATEMENT
155On June 6, 2006, the Department of Financial Services,
164Division of Workers' Compen sation (Division) issued a Stop Work
174Order and Order of Penalty Assessment to Petitioner, Kenny Nolan
184d/b/a Great Southern Tree Service. On June 27, 2006, the
194Division issued an Amended Order of Penalty Assessment in the
204amount of $272,948.96. Respondent contested the Stop Work Order
214and Amended Penalty Assessment, and requested an administrative
222hearing. The matter was forwarded to the Division of
231Administrative Hearings on or about August 3, 2006.
239A Notice of Hearing was issued scheduling the hearing for
249October 5, 2006. On September 29, 2006, the Division filed a
260Motion to Amend Administrative Charges, seeking to further amend
269the Order of Penalty Assessment by increasing the amount by
279$47,000. Petitioner opposed the motion. Argument was heard on
289the motion at the commencement of the hearing. Upon
298consideration of the m otion, the r esponse, and arguments of
309counsel, the m otion was denied.
315At hearing, Petitioner presented the testimony of Kenny
323Nolan, David Soloman, and Eric Kane. Petitioner offer ed
332Exhibits numbered 1 and 2, which were admitted into evidence.
342Respondent presented the testimony of Michael Robinson and
350Andrew Sabolic. Respondent offered Exhibits numbered 1 through
3585 and 8 through 13, which were admitted into evidence.
368A one - vol ume Transcript was filed on October 23 2006. The
381parties timely filed Proposed Recommended Orders which have been
390considered in the preparation of this Recommended Order.
398References to statutes are to Florida Statutes (2006)
406unless otherwise noted.
409FI NDINGS OF FACT
4131. The Division is charged with the regulation of workers'
423compensation insurance in the State of Florida.
4302. Petitioner Kenny Nolan, d/b/a/ Great Southern Tree
438Service, is a sole proprietor located in Jacksonville, Florida,
447and is engage d in the business of cutting trees, which is not a
461construction activity.
4633. Michael Robinson is an investigator employed by the
472Division. His duties include making site visits at locations
481where work is being conducted and determining whether the
490emp loyers in the state are in compliance with the requirements
501of the workers' compensation law and related rules.
5094. On June 6, 2006, Mr. Robinson visited a job site in a
522subdivision in Jacksonville, Florida, and observed five
529individuals at the resident ial work site.
5365. Mr. Robinson interviewed the individuals and, based
544upon these interviews, determined that four of the individuals
553worked for Mr. Nolan: Chad Pasanen, David Soloman, Michael
562Walton, and Eric Kane. None of these workers had a worker s'
574compensation exemption.
5766. Mr. Robinson also completed a Field Interview
584Worksheet on June 6, 2006, when interviewing the four workers.
594Mr. Robinson wrote on the interview worksheet that Mr. Pasanen
604worked for Mr. Nolan for three weeks with a daily b asis of pay
618and that Mr. Walton worked for Mr. Nolan for two weeks with a
631daily basis of pay. The interview worksheet has no entry for
642the length of time Mr. Solomon worked for Mr. Nolan but does
654indicate he was paid by the job. The portion of the interv iew
667worksheet regarding Mr. Kane is not in evidence.
6757. Mr. Robinson checked the database in the Coverage and
685Compliance Automated System and found no proof of coverage nor
695an exemption for Mr. Nolan.
7008. After conferring with his supervisor, Mr. Robin son
709issued a Stop - Work Order and Order of Penalty Assessment to
721Petitioner on June 6, 2006, along with a request for business
732records for the purpose of calculating a penalty for lack of
743coverage for the period June 6, 2003 through June 6, 2006. The
755reque st for business records instructed Mr. Nolan to produce
765business records within five days.
7709. Mr. Nolan did not produce business records as
779requested.
78010. On June 27, 2006, Mr. Robinson issued an Amended Order
791of Penalty Assessment to Petitioner for $ 272,948.96. Attached
801to the Amended Order of Penalty Assessment is a penalty
811worksheet with a list of names under the heading, "Employee
821Name," listing the names of Chad Pasanen, David Solomon , Michael
831Walton and Eric Kane.
83511. The amount of the penalt y was imputed using the
846statewide weekly average wage that was in effect at the time of
858the issuance of the stop - work order. Through imputation of
869payroll for the four employees, the Department calculated a
878penalty for the time period of October 1, 2003 t hrough June 6,
8912006. Using rates from an approved manual, Mr. Robinson
900assigned a class code to the type of work performed by
911Petitioner and multiplied the approved manual rate with the
920imputed payroll per one hundred dollars, then multiplied all by
9301.5. Penalties are calculated by determining the premium amount
939the employer would have paid based on his or her Florida payroll
951and multiplying by a factor of 1.5. The payroll was imputed
962back to October 1, 2003. For the period prior to October 1,
9742003, Mr. Robinson assessed a penalty of $100 per day for each
986calendar day of noncompliance. The portion of the penalty
995attributable to the period June 6, 2003 through September 30,
10052003, is $11,600.00 .
1010Respondent's Business
101212. Mr. Nolan started the busines s, Great Southern Tree
1022Service, in February or March 2005, as a sole proprietor.
1032Mr. Nolan was not in business prior to early 2005 and did not
1045employ anyone in 2003 or 2004.
105113. At the inception of his tree trimming business,
1060Mr. Nolan's brother worked f or Mr. Nolan for two to three months
1073until his brother's health rendered him unable to continue
1082working for Mr. Nolan.
108614. Mr. Nolan subsequently worked with Christopher Wilcox
1094until December 2005, when Mr. Wilcox was in an automobile
1104accident and becam e unable to work.
111115. After Wilcox was injured in December 2005, Mr. Nolan
1121did not have any employees for the remainder of the winter.
1132Only Mr. Nolan's brother and Christopher Wilcox worked with
1141Mr. Nolan in 2005.
114516. The nature of the tree trimming bus iness is seasonal.
1156Mr. Nolan obtained work sporadically. Typically, he had jobs
1165two or three times a week. It is busiest in the spring and
1178summer and slowest during the fall and winter months.
118717. In March 2006, Mr. Nolan was approached by David
1197S olomon who was looking for work. Mr. Solomon worked for
1208Mr. Nolan "maybe twice a week" and possibly three times a week
1220when he was "lucky."
122418. Mr. Nolan worked exclusively for residential
1231customers. He obtained business by knocking on doors and
1240handing out business cards. When he was paid by his customers,
1251he immediately paid the men who were helping him. He was
1262usually paid in cash. In the instances when he was paid by a
1275check, he would take his employees to the bank, where he would
1287cash the check a nd pay off his workers.
129619. Eric Kane also began working for Nolan in March 2006.
1307Like Mr. Soloman, he also worked two to three days a week for
1320Mr. Nolan.
132220. Kane was at the jobsite on the day Mr. Robinson made
1334the site visit, but was not working that day. He was sitting
1346off to the side and was "just hanging out" with the other men.
1359According to Mr. Kane, Mr. Robinson did not ask him any
1370questions.
137121. In May 2006, a storm or small tornado hit an area of
1384Jacksonville called Ortega. The resulting tre e damage
1392temporarily enabled Mr. Nolan to get more work.
140022. At that point, Mr. Nolan hired Chad Pasanen.
1409Mr. Nolan estimates that Mr. Pasanen worked for him for about
1420three weeks before the site visit by Mr. Robinson.
142923. Mr. Pasanen previously worke d for Asplundh Tree Expert
1439Company. One of his paycheck stubs establishes that he worked
1449for Asplundh as late as April 8, 2006.
145724. Mr. Nolan also hired Michael Walton in May 2006.
1467Mr. Walton previously worked for Seaborn Construction Company.
1475A payche ck stub establishes that he worked for Seaborn as late
1487as April 26, 2006. Mr. Walton sporadically worked for Mr. Nolan
1498for about two weeks prior to the site visit.
150725. The Division did not count Mr. Nolan as an employee
1518for purposes of calculating the penalty assessment.
1525CONCLUSIONS OF LAW
152826. The Division of Administrative Hearings has
1535jurisdiction over the parties and subject matter of this
1544proceeding pursuant to Sections 120.569 and 120.57(1), Florida
1552Statutes (2006).
155427. Administrative fines are penal in nature. Department
1562of Banking and Finance, Division of Securities and Investor
1571Protection v. Osborne Stern, Inc. , 670 So. 2d 932 (Fla. 1996).
1582Therefore, the Division bears the burden of proof herein by
1592clear and convincing evidence.
159628. S ection 440.10(1), Florida Statutes, requires every
1604employer coming within the provisions of Chapter 440 to secure
1614coverage under that chapter.
161829. Subsection 440.02(17), Florida Statutes, reads in
1625pertinent part as follows:
1629440.02. Definitions. --
1632(17) (a) "Employment," subject to the other
1639provisions of this chapter, means any
1645service performed by an employee for the
1652person employing him or her.
1657(b) "Employment" includes:
1660* * *
16632. All private employments in which four or
1671mor e employees are employed by the same
1679employer or, with respect to the
1685construction industry, all private
1689employment in which one or more employees
1696are employed by the same employer.
1702(emphasis supplied)
170430. Section 440.107, Florida Statutes, authorizes th e
1712Division to issue stop - work orders and penalty assessment orders
1723in its enforcement of workers' compensation coverage
1730requirements, and reads in pertinent part:
1736(7 )(d)1 . In addition to any penalty, stop -
1746work order, or injunction, the department
1752shall as sess against any employer who has
1760failed to secure the payment of compensation
1767as required by this chapter a penalty equal
1775to 1.5 times the amount the employer would
1783have paid in premium when applying approved
1790manual rates to the employer's payroll
1796during periods for which it failed to secure
1804the payment of workers' compensation
1809required by this chapter within the
1815preceding 3 - year period or $1,000, whichever
1824is greater.
1826* * *
1829(e) When an employer fails to provide
1836business recor ds sufficient to enable the
1843department to determine the employer's
1848payroll for the period requested for the
1855calculation of the penalty provided in
1861paragraph (d), for penalty calculation
1866purposes, the imputed weekly payroll for
1872each employee, corporate offi cer, sole
1878proprietor, or partner shall be the
1884statewide average weekly wage as defined in
1891s. 440.12(2) multiplied by 1.5.
189631. Florida Administrative Code Rule 69L - 6.028 reads in
1906pertinent part:
1908(1) In the event an employer fails to
1916provide business reco rds sufficient for the
1923department to determine the employer's
1928payroll for the period requested for the
1935calculation of the penalty pursuant to
1941Section 440.107(7)(e), F.S., the department
1946shall impute payroll at any time after the
1954expiration of fifteen busin ess days after
1961receipt by the employer of a written request
1969to produce such business records.
1974(2) When an employer fails to provide
1981business records sufficient to enable the
1987department to determine the employer's
1992payroll for the period requested for th e
2000calculation of the penalty pursuant to
2006Section 440.107(7)(d), F.S., the imputed
2011weekly payroll for each employee, corporate
2017officer, sole proprietor or partner for the
2024portion of the period of the employer's non -
2033compliance occurring on or after October 1 ,
20402003, shall be calculated as follows:
2046(a) . . . [ F ] or . . . each employee
2059identified by the department as an employee
2066of such employer at any time during the
2074period of the employer's non - compliance , the
2082imputed weekly payroll for each week of the
2090empl oyer's non - compliance for each such
2098employee shall be the statewide average
2104weekly wage . . . that is in effect at the
2115time the stop work order was issued to the
2124employer, multiplied by 1.5. Employees
2129include sole proprietors and partners in a
2136partnership .
2138* * *
2141(c) If a portion of the period of non -
2151compliance includes a partial week of non -
2159compliance, the imputed weekly payroll for
2165such partial week of non - compliance shall be
2174prorated from the imputed weekly payroll for
2181a full we ek.
2185* * *
2188(4) Where periods of the employer's non -
2196compliance occurred prior to October 1,
22022003, and the employer fails to provide
2209business records sufficient to enable the
2215department to determine the employer's
2220payroll for periods of non - compliance prior
2228to October 1, 2003, for purposes of
2235calculating the penalty to be assessed
2241against the employer for periods of non -
2249compliance prior to October 1, 2003, the
2256department shall assess against the employer
2262a penalty of $100 per day for each and every
2272calendar day in the period of non - compliance
2281occurring prior to October 1, 2003, the
2288employer was not in compliance, pursuant to
2295Section 440.107(5), F.S. (2002).
2299(emphasis supplied)
230132. In Meyer v. Kimberly , 765 So. 2d 951 (Fla. 1st DCA
231320 00), the Court addresses the definition of "employer" as it
2324relates to persons not in the construction industry:
2332By its terms, the statute imposes no
2339obligation upon one who is not an
"2346employer," and a private employer with less
2353than four employees, who engages in business
2360outside the construction industry is, by
2366legislative definition, not an "employer"
2371for purposes of chapter 440. . . . Chapter
2380440 automatically relieves such employers of
2386any obligation to secure compensation, and
2392no separate election i s required.
2398765 So. 2d 951 at 952 and 953 .
240733. To be subject to the workers' compensation
2415requirements of Chapter 440, including the requirement to
2423maintain records sufficient for the Division to determine an
2432employer's payroll for periods of non - compli ance, an individual
2443who is not in the construction business must employ four
2453persons. Meyer v. Kimberly, supra ; § 440.02(17)(b)2., Fla.
2461Stat.
246234. Clearly, Mr. Nolan was not an employer before he
2472started his business in early 2005. Thus, all of the pro posed
2484penalty attributed to the time period June 6, 2003 until when he
2496started his business in February or March 2005, has no basis in
2508law or fact.
251135. During 2005, Mr. Nolan worked only with his brother
2521and Christopher Wilcox. Therefore, he was not an employer for
2531purposes of Chapter 440 in 2005, as he had fewer than four
2543employees during that year. Consequently, the proposed penalty
2551attributed to all of 2005 is not supported by the evidence.
256236. In March 2006, both Mr. Soloman and Mr. Kane began
2573work ing for Mr. Nolan two to three days a week. He only had two
2588employees during January and February 2006, and, therefore, was
2597not an employer during that time for purposes of Chapter 440.
2608Thus, the proposed penalty for January and February, 2006, is
2618not su pported by the evidence.
262437. From March until May 2006, when Mr. Pasanen and
2634Mr. Walton began working for Mr. Nolan on a part - time basis,
2647Mr. Nolan only had two employees, Mr. Soloman and Mr. Kane.
2658Therefore, Mr. Nolan was not an employer from March unti l May,
26702006, for purposes of Chapter 440. Thus, the amount of the
2681proposed assessment for March and April 2006 is not supported by
2692the evidence.
269438. The only remaining question is whether or not Mr.
2704Nolan was an employer for purposes of Chapter 440 from May 2006
2716until June 6, 2006, the day of Mr. Robinson's site visit.
272739. Both Mr. Soloman and Mr. Kane worked occasionally for
2737Mr. Nolan. All of the employees interviewed were paid on a
2748daily or job basis, which is consistent with occasional or
2758sporadic employment. At the time of the site visit, Mr. Pasanen
2769had worked for Mr. Nolan for three weeks and Mr. Walton had
2781worked for Mr. Nolan for two weeks. Both Pasanen and Walton
2792worked two or three days a week. Both Pasanen and Walton began
2804working for Mr. Nolan as a result of an event, i.e. a storm that
2818caused tree damage.
282140. Courts have interpreted "employment" as used in
2829Section 440.02(17)(b)2., Florida Statutes, as follows:
2835. . . an occasional increase in the number
2844of workmen for some unusual oc casion does
2852not automatically res ult in application of
2859the Act. [citations omitted] The prevailing
2865theory is that liability of an employer
2872should not vary from day to day according to
2881the number of persons in his employ each
2889day, but should be governed by the
2896established mode or plan of his business or
2904operation, and from that determine if he
2911regularly and customarily employs the
2916requisite number. . . . In order,
2923therefore, to bring employment within the
2929purview of our Act, it was necessary to show
2938the ex istence of an established more or plan
2947of hiring [four] [1 / ] or more persons pursuant
2957to some constant or periodic custom
2963resulting in a numerical pattern of
2969employment that becomes the rule and not the
2977exception.
2978Mathers v. Sellers , 113 So. 2d 443, 44 4 - 445 (Fla. 1st DCA 1959) ;
2993Accord Subterranean Circus v. Lewis , 319 S o . 2d 600 (Fla. 1st
3006DCA 1975).
300841. Applying the reasoning of the Mathers and Subterranean
3017Circus opinions, to the facts in evidence, the undersigned is
3027not persuaded that Mr. Nolan w as an employer for pur poses of
3040Chapter 440 from May until June 6, 2006. Thus, under the
3051rationale of this case law, the proposed penalty for that period
3062of time is not supported by the evidence.
3070RECOMMENDATION
3071Based upon the Findings of Fact and Conclusi ons of Law, it
3083is,
3084RECOMMENDED:
3085That the Division of Workers' Compensation enter a Final
3094Order rescinding the Amended Order of Penalty Assessment issued
3103June 27, 2006, and the Stop Work Order issued to Petitioner on
3115June 6, 2006.
3118DONE AND ENTERED this 2 8 th day of November, 2006, in
3130Tallahassee, Leon County, Florida.
3134S
3135BARBARA J. STAROS
3138Administrative Law Judge
3141Division of Administrative Hearings
3145The DeSoto Building
31481230 Apalachee Parkway
3151Tallahassee, Florida 32399 - 3060
3156(850) 488 - 9675 SUNCOM 278 - 9675
3164Fax Filing (850) 921 - 6847
3170www.doah.state.fl.us
3171Filed with the Clerk of the
3177Division of Administrative Hearings
3181this 2 8 th day of November, 2006.
3189ENDNOTE
31901/ Section 4 40. 02 , Florida Statutes, was amended in 1990,
3201increasing the number of employees from three to four in the
3212definition of "employment". At that time, the definition was
3222found in Section 440.02(15), Florida Statutes (1989). s. 9,
3231Ch. 90 - 201, Laws of Flori da.
3239COPIES FURNISHED :
3242David C. Hawkins, Esquire
3246Department of Financial Services
3250Division of Workers' Compensation
3254200 East Gaines Street
3258Tallahassee, Florida 32399
3261Kenneth B. Wright, Esquire
3265Bledsoe, Jacobson, Schmidt, Wright
3269Wilkinson & Lang
327213 01 Riverplace Boulevard, Suite 1818
3278Jacksonville, Florida 32207
3281Honorable Tom Gallagher
3284Chief Financial Officer
3287Department of Financial Services
3291The Capitol, Plaza Level 11
3296Tallahassee, Florida 32399 - 0300
3301Carlos G. Mu ? niz, General Counsel
3307Department of Financial Services
3311The Capitol, Plaza Level 11
3316Tallahassee, Florida 32399 - 0300
3321NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
3327All parties have the right to submit written exceptions within
333715 days from th e date of this Recommended Order. Any exceptions
3349to this Recommended Order should be filed with the agency that
3360will issue the Final Order in this case.
- Date
- Proceedings
- PDF:
- Date: 03/30/2007
- Proceedings: Petition and Application for Attorneys Fees Pursuant to the Florida Equal Access to Justice Act filed. (DOAH CASE NO. 07-1479F ESTABLISHED)
- PDF:
- Date: 11/28/2006
- Proceedings: Recommended Order cover letter identifying the hearing record referred to the Agency.
- PDF:
- Date: 11/03/2006
- Proceedings: Petitioner's Notice of Filing Proposed Recommended Order of Petitioner Kenneth Nolan d/b/a Great Southern Tree Service filed.
- PDF:
- Date: 11/02/2006
- Proceedings: Proposed Recommended Order of Petitioner Kenneth Nolan d/b/a Great Southern Tree Service filed.
- Date: 10/23/2006
- Proceedings: Transcript of Proceedings filed.
- Date: 10/05/2006
- Proceedings: CASE STATUS: Hearing Held.
- PDF:
- Date: 10/04/2006
- Proceedings: Nolan`s Opposition to Division`s Motion to Amend Administrative Charges and for Expedited Ruling filed.
- PDF:
- Date: 10/03/2006
- Proceedings: Division`s Notice of Filing Exhibit filed (Proposed Hearing Exhibits not available for viewing).
- PDF:
- Date: 10/02/2006
- Proceedings: Prehearing Stipulation of Petitioner Kenny Nolan d/b/a Great Southern Tree Service filed.
- PDF:
- Date: 09/29/2006
- Proceedings: Appendix to the Division`s Unilateral Pre-hearing Statement filed (Proposed hearing exhibits not available for viewing).
- PDF:
- Date: 09/29/2006
- Proceedings: Division`s Motion to Amend Administrative Charges and for Expedited Ruling filed.
- PDF:
- Date: 09/12/2006
- Proceedings: Amended Notice of Hearing by Video Teleconference (hearing set for October 5, 2006; 10:30 a.m.; Jacksonville and Tallahassee, FL; amended as to Starting time).
- PDF:
- Date: 08/15/2006
- Proceedings: Notice of Hearing by Video Teleconference (hearing set for October 5, 2006; 9:30 a.m.; Jacksonville and Tallahassee, FL).
Case Information
- Judge:
- BARBARA J. STAROS
- Date Filed:
- 08/03/2006
- Date Assignment:
- 08/04/2006
- Last Docket Entry:
- 03/30/2007
- Location:
- Jacksonville, Florida
- District:
- Northern
- Agency:
- ADOPTED IN TOTO
Counsels
-
David C Hawkins, Esquire
Address of Record -
Kenneth B. Wright, Esquire
Address of Record