15-002801 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Aleluya Roofing Plus Construction, Inc. Status: Closed Recommended Order on Friday, November 13, 2015.

Summary: Recommend $9864.41 fine for failure to secure workers' compensation insurance for roofing employees.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF FINANCIAL SERVICES

DIVISION OF WORKERS'

COMPENSATION ,

Petitioner,

vs. Case No. 15 - 2801

ALELUYA ROOFING PLUS

CONSTRUCTION, INC. ,

Respondent .

_______________________________/

RECOMMENDED ORDER

On September 24, 2015 , Robert E. Meale, Administrative Law

Judge of the Division of Administrative Hearings (DOAH),

conducted the final hearing by videoconference in Miami and

Tallahassee, Florida.

APPEARANCES

For Petitioner: Leon Melnicoff , Qualified Representative

Thomas Nemecek, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

For Respondent : Mariem J osefina Paez, Esq uire

The Law Offices of Mariem J. Paez, PLLC

300 Sevilla Avenue, Suite 304

Coral Gables, Florida 33134

STATEMENT OF THE ISSUE S

T he issues are whether Petitioner has proved that Respondent

failed to secure workers' compensation insurance, as required by

section 440.10, Florida Statutes, and, if so, the amount of the

penalty, pursuant to section 440.107.

PRELIMINARY STATEMENT

By Stop - Work Order issued o n September 25, 2013, Petitioner

ordered Respondent to stop work at a construction site located at

4311 Southwest 15th Street in Miami. The Stop - Work Order

includes an Order of Penalty Assessment, which provides the

formula for calculating a penalty, but does not calculate a

penalty. By letter dated October 20, 2013, Respondent requested

a hearing on the ground that its employees were not performing

work at the site at the time of the inspection that led to the

Stop - Work Order.

Petitioner proposed a pen alty of $15,594.34 b y Amended Order

of Penalty Assessment dated October 30, 2013, and filed in the

subject case on August 6, 2015, with a Motion for Leave to Amend

Order of Penalty Assessment . On September 11, 2015, the

Administrative Law Judge granted Pe titioner's motion for leave to

amend.

At the hearing, Petitioner called three witnesses

and offered into evidence 12 exhibits : Petitioner

Exhibits 1 - 11 and 13 . Respondent called no witnesses and offered

into evidence one exhibit . All exhibits were adm itted.

During the hearing, the parties and the Administrative Law

Judge accessed and took official notice of the official website

of the Miami - Dade County for building permits:

egvsys.miamidade.gov:1608/WWW SERV/ggvt/bnzaw960.dia.

Additionally, the Administrative Law Judge gave the parties

additional time to file supplemental information concerning the

building permit. Respondent filed additional materials, which

are admitted as Respondent Exhibit 1.

The court reporter fi led the transcript on October 9 , 2015 .

Petitioner filed a proposed recommended order on October 19 ,

2015 .

FINDING S OF FACT

1. On S eptember 18, 2013, the owner and Jesus Rodriguez,

representing Respondent, signed a permit application for

reroofing of a single - family residence located at 43 11 Southwest

15th Street, Miami . An official of the Miami - Dade County

Department of Regulatory and Economic Resources approve d the

plans on September 27, 2013.

2. The record does not disclose when work commenced.

However, at about 9:00 a.m. on September 25, 2013, an

investigator of the Division of Workers' Compensation was

randomly canvassing the area, noticed roofing work at the subject

address , and conducted an inspection. T he investigator observed

three persons on the roof engaged in roofing work. When the

investigator asked the three workers for whom they worked, one of

them replied, "Oval Construction," and added that it was owned by

Pedro Alfaro and Jesus R. Rodriguez (Mr. J. Rodriguez) . When

asked for a phone number for the owners, the worker gave the

investigator a cell number for Mr. Alfaro.

3 . Prior to calling Mr. Alfaro, while still at the work

site, the investiga tor researched Oval Construction and learned

that it was an active corporation with two corporate officers:

Mr. Alfaro and Mr. J. Rodriguez. The investigator learned that

the corporation showed no workers' compensation exemptions for

the officers or any workers' compensation coverage.

4. While still at the work site, the investigator then

called Mr. Alfaro and asked him if Oval Construction had workers'

compensation insurance. Mr. Alfaro said that Mr. J. Rodriguez

handled such matters, so the investigator told Mr. Alfaro to have

Mr. J. Rodriguez call the investigator immediately.

5 . Mr. J. Rodriguez did so and inform ed the investigator

that the three workers worked for him, but not under Oval

Construction ; they worked for Respondent, and Respondent had

workers' compensation insurance. Mr. J. Rodriguez stated that he

did not have the insurance information at the moment, but would

call back with the information.

6 . In the meantime, the investigator researc hed Respondent

and learned that it was an active corporation with two officers:

Mr. J. Rodriguez and Mr. Alberto Rodriguez (Mr. A. Rodriguez),

who were not related . (Mr. J. Rodriguez is deceased.) Both

officers had current workers' compensati on exemptio ns, and the

database indicated that Respondent leased its employees from

South East Personnel Leasing Co mpany. The investigator contacted

South East Personnel Leasing and learned that the leasing

contract had terminated o n July 24, 2013, and Respondent ha d no

current workers' compensation coverage through South East

Personnel Leasing. At this poi nt, the investigator called

Mr. J. Rodriguez, who repeated that the workers were employed by

Respondent, not Oval Construction.

7 . Subsequently, the investigat or tried unsuccessfully

several times to speak to Mr. J. Rodriguez. A few days after the

inspection, Mr. A. Rodriguez called the investigator and arranged

for a meeting between the investigator and Mr. J. Rodriguez for

October 1, 2013. On October 1, 2013 , the investigator and

Mr. J. Rodriguez met, and the investigator served on him, in the

name of Respondent, a Request for Production of Business Records

for Penalty Assessment Calculatio n for the three - year period

ending on September 25, 2013 . Respondent never produced any

business records to Petitioner.

8 . On October 2, 2013, Mr. J. Rodriguez caused the transfer

of the building permit for the roofing work from Respondent to

Blue Panther Roofing. On October 1, 2013, Mr. J. Rodriguez

signed a Hold Harmless agreement holding Miami - Dade County

harmless and assuming responsibility for any work already

performed under the building permit issued to Respondent.

9 . Mr. A. Rodriguez testified that he knew nothing about

the subject job. But Mr. J. Rodriguez was the qualifying general

contractor of Respondent, was an officer of Respondent, and owned

20% of Respondent. In fact, Mr. J. Rodriguez was the only

licensed or certified contractor employed by Respondent and was

the sole person who could obta in building permits for work to be

performed by Respondent. Mr. A. Rodriguez's lack of knowledge of

the subject job is therefore not dispositive because

Mr. J. Rodriguez had the authority to , and did, apply for the

building permit in the name of Responden t , and he had the

authority to, and did, obligate Respondent to do the subject

reroofing work .

1 0 . During the above - described three - year period, according

to Petitioner Exhibit 6, page 20, Respondent had workers'

compensation insurance from October 4, 2010, through January 1,

2013 . Additionally, according to Petitioner Exhibit 6, page 23,

Respondent had workers' compensation insurance through South East

Personnel Leasing from October 18, 2012, through February 20,

2013, and March 7, 2013, through July 24, 2013. This is borne

out by the testimony of the investigator. (Tr., pp. 99 - 101.)

12 . Respondent thus did not have workers' compensation

coverage for a total of 85 days during the three years at issue ,

during which time Respondent actively performed construction work

in Florida . The three periods of noncoverage during the three

years at issue are September 26 through October 3, 2010, for a

total of 8 days; February 21, 2013, through March 6, 2013, for a

total of 14 days; and July 25, 2013, through Se ptember 25, 2013,

for a total of 63 days. A conflict in the evidence prevented

Petitioner from proving by clear and convincing evidence a fourth

period of noncoverage: October 4 through 17, 2012 .

1 3 . Additionally, Mr. J. Rodriguez was listed as secretar y

of Respondent and exempt from workers' compensation insurance

from March 1, 2013 , thro ugh March 1, 2015, so he would be counted

as an employee during the noncoverage periods of September 26,

through October 3, 2010, and February 21, 2013, through

Februa ry 28, 2013. Mr. A. Rodriguez was listed as president of

Respondent and exempt from workers' compensation insurance from

October 22, 2012, through October 22, 2014 , so he would be

counted as an employee during the noncoverage period of

September 26, 2010 , through October 3, 2010 . Mr. A. Rodriguez's

wife, Yubanis Ibarra, was also a corporate offi cer and was not

exempt during one week of one noncoverage period: September 26

to October 3, 2010.

13 . On October 30, 2013, Petitioner issued an Amended Order

of Penalty Assessment assessing a penalty of $15,594.34 pursuant

to sect i on 440.107(7)(d). The Amended Order of Penalty

Assessment is supported by a Penalty Calculation Worksheet, which

based the penalty on the three employees found on the job on the

day of the inspection as employees during all periods of

noncoverage and the three above - identified corp orate officers

during their respective periods of nonexemption that occurred

while they served as officers .

14 . Subject to two exceptions, t he Amended Order of Penalty

Assessment correctly calculates the gross payroll based on the

statewide average weekly wage multiplied by 1.5, applies the

correct manual r ates to the gross payroll, determines the correct

evaded premium, and determines the correct penal ty based on the

premium multiplied by 1.5. The first exception is that

Petitioner failed to prove by clear and convincing evidence a

lack of coverage for the above - described 13 days in October 2012.

This failure of proof noted in the preceding paragraph concerns

four employees who generated total penalties of $2510.88, so the

corrected total penalty would be $13,084.46.

15 . The second exception concerns the proof of the duration

of employment of the three employees working on the roof at the

time of th e inspection on September 25, 2013. Petitioner has

proved by clear and convincing evidence their employment only

during the noncoverage period of July 24, 2013, through

September 25, 2013, as discussed in the Conclusions of Law. For

the two other noncoverage periods -- three, if the period noted i n

paragraph 15 already had not been rejected -- the penalty of

$3220.05 has not been established, leaving a net penalty of

$9864.41.

CONCLUSIONS OF LAW

1 6 . DOAH has jurisdiction over the subject matter.

§§ 1 20.569, 120.57 , and 440.107(13) , Fla. Stat. (2013).

(All statutory references are to the 2013 Florida Statutes.)

1 7 . Due to the penal nature of this proceeding, in which

Petitioner seeks to impose monetary penalties against Respondent,

P etitioner is req uired to prove the material allegations by clear

and convincing evidence. Dep't of Banking & Fin. v. Osborne

Stern & Co. , 670 So. 2d 932, 935 (Fla. 1996).

18 . Employers are required to obtain the payment of

workers' compensation for their employees. § 440.10(1)(a). An

employer is any person carrying on employment. § 440.02(16)(a).

In the construction industry, employment occurs when at least one

employee is employed by an employer. § 440.02(17)(b)2.

Respondent employed at least three employees on September 25,

2013, so it was obligated to have workers' compensation

insurance.

19 . Section 440.107(7) provides Petitioner with

considerable authority in calculating the penalty for a failure

to secure workers' compensation, but does not specifically

address how to determine the number of employees during a period

of noncoverage. Section 440.107(7)(d)1. authorizes Petitioner to

apply the manual rates to the employer's payroll, and

s ection 440.107(7)(e) authorizes Petitioner to establish a

payroll based on the statewide average weekly wage multiplied

by 1.5 :

When an employer fails to pro vide business

records sufficient to enable the department

to determine the employerÓs payroll for the

period requested for the calculation of the

penalty provided in paragraph (d), for

penalty calculation purposes, the imputed

weekly payroll for each emplo yee, corporate

officer, sole proprietor, or partner shall

be the statewide average weekly wage as

defined in s. 440.12(2) multiplied by 1.5.

2 0 . Florida Administrative Code R ule 69L - 6.028(3) addresses

this omission in the statutes by providing :

When an e mployer fails to provide business

records sufficient to enable the department

to determine the employerÓs payroll for

the time period requested in the business

records request for purposes of

calculating the penalty provided for in

Section 440.107(7)(d), F.S., the imputed

weekly payroll for each employee, corporate

officer, sole proprietor or partner shall be

calculated as follows:

(a) For each employee, other than

corporate officers, identified by the

department as an employee of such employer

at any time during the period of the

employerÓs non - compliance, the imputed

weekly payroll for each week of the

employerÓs non - compliance for eac h such

employee shall be the statewide average

weekly wage as defined in Section 440.12(2),

F.S., that is in effect at the time the

stop - work order was issued to the employer,

multiplied by 1.5. Employees include sole

proprietors and partners in a partner ship.

(b) If the employer is a corporation, for

each corporate officer of such employer

identified as such on the records of the

Division of Corporations at the time of

issuance of the stop - work order, the imputed

weekly payroll for each week of the

e mployerÓs non - compliance for each such

corporate officer shall be the statewide

average weekly wage as defined in Section

440.12(2), F.S., that is in effect at the

time the stop - work order was issued to the

employer, multiplied by 1.5 .

21 . Rule 69L - 6.028 (3) (b) addresses officers. Their span of

employment is the period during which they are listed as

officers, so their earnings contribute to the penalty during any

noncoverage period within their service as officers.

2 2 . But a nonofficer employee does n ot have such a clearly

defined span of employment. Instead, rule 69L - 6.028(3)(a)

provides that a nonofficer employee's earnings contribute to the

penalty if Petitioner identifies the employee " as an employee of

such employer at any time during t he period of the employerÓs

non - compliance ." "Compliance" means a failure of coverage,

section 440.107(1), so a period of non - compliance is one of the

noncoverage periods noted above.

23 . In this case, Petitioner has proved by clear and

convincing evidence that th e three employees were employees

during the period of noncoverage in which the inspection took

place: July 24, 2013, through September 25, 2013. There is no

basis to interpret section 440.107 to read "during the period s "

of noncoverage. As noted above, t his is a penal statute that, if

ambiguous, must be construed against Petitioner. See , e.g. ,

Osborne Stern , supra ; Lester v. Dep't of Prof'l & Occupational

Reg . , 348 So. 2d 923, 925 (Fla. 1st DCA 1977).

2 4 . Failing to have proved that these three employees were

employees during any noncoverage period other than July 24, 2013,

through September 25, 2013, Petitioner has claimed excessive

penalties on their account. The penalties for the period of

October 4, 2012, through October 17, 2012, has alread y been

eliminated . As noted in the Findings of Fact, r emoving the

penalties on account of these three employees for the periods of

September 26, 2010, through October 3, 2010, and February 20,

2013, through March 6, 2013, eliminates another $3220.05, leav ing

a net penalty of $9864.41.

RECOMMENDATION

It is

RECOMMENDED that the Department of Financial Services,

Division of Workers' Compensation, enter a final order finding

Respondent guilty of not securing workers' compensation and

imposing a penalty of $9864.41 .

DONE AND ENTERED this 13 th day of November , 2015 , in

Tallahassee, Leon County, Florida.

S

ROBERT E. MEALE

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 13 th day of November , 2015 .

COPIES FURNISHED:

Leon Melnicoff , Qualified Representative

Thomas Nemecek, Esquire

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 4229

(eServed)

Mariem Josefina Paez, Esquire

The Law Offices of Mariem J. Paez , PLLC

300 Sevilla Avenue, Suite 304

Coral Gables, Florida 33134

(eServed)

Julie Jones, CP, FRP, Agency Clerk

Division of Legal Services

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 0390

(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.