17-001558 Department Of Financial Services, Division Of Workers&Apos; Compensation vs. Royal Roofing And Restoration, Inc.
 Status: Closed
Recommended Order on Wednesday, January 24, 2018.


View Dockets  
Summary: Petitioner proved by clear and convincing evidence that Respondent failed to secure workers' compensation insurance coverage for certain of its employees; Petitioner did not correctly calculate the penalty to be imposed against Respondent.

1STATE OF FLORIDA

4DIVISION OF ADMINISTRATIVE HEARINGS

8DEPARTMENT OF FINANCIAL

11SERVICES, DIVISION OF WORKERS'

15COMPENSATION,

16Petitioner,

17vs. Case Nos. 17 - 0879

2317 - 1558

26ROYAL ROOFING AND RESTORATION,

30INC.,

31Respondent.

32_______________________________/

33RECOMMENDED ORDER

35A duly - noticed hearing was held in th ese case s on

48September 14, 2017, in Tallahassee, Florida, before

55Administrative Law Judge Suzanne Van Wyk.

61APPEARANCES

62For Petitioner: Leon Melnicoff, Esquire

67Department of Financial Services

71200 East Gaines Street

75Tallahassee, Florida 32399 - 4229

80For Respondent: Gary Lee Printy, Esquire

86Gary Lee Printy , Attorney at Law

921804 Miccosukee Commons Drive, Suite 200

98Tallahassee, Florida 32308

101S TATEMENT OF THE ISSUE S

107Whether Royal Roofing and Restoration, Inc. (Respondent or

115Royal Roofing), failed to secure workersÓ compensation insurance

123coverage for its employees; and, if so, whether the Department

133of Financial Services, Division of WorkersÓ Co mpensation

141(Petitioner or Department), correctly calculated the penalty to

149be assessed against Respondent.

153PRELIMINARY STATEMENT

155On May 4 and June 8, 2016, the Department served Respondent

166with Stop - Work Orders and Orders of Penalty Assessment, pursuant

177to chapter 440, Florida Statutes, for failing to secure workersÓ

187compensation for its employees, arising from two separate

195inspections. On August 22, 2016, after review of records

204received from Respondent, the Department issued an Amended Order

213of Penalty A ssessment in the first case, assessing Respondent a

224penalty of $30,112.34. On August 23, 2016 , the Department

234issued an Amended Order of Penalty Assessment in the second

244case, assessing Respondent a penalty of $76,209.64.

252On September 29, 2016, Respondent filed separate requests

260for hearing to dispute the Stop - Work Order and Amended Order of

273Penalty Assessment in both cases. On February 9, 2017,

282Petitioner referred the first case to the Division of

291Administrative Hearings (Division) for assignment of an

298A dministrative Law Judge to conduct a final hearing in the

309matter. That case was assigned DOAH Case No. 17 - 0879.

320On March 15, 2017, Petitioner referred the second case,

329which was assigned DOAH Case No. 17 - 1558.

338The final hearing in DOAH Case No. 17 - 0879 wa s originally

351scheduled for April 6, 2017, but was continued following the

361referral of DOAH Case No. 17 - 1558 and the partiesÓ request to

374consolidate the cases. The cases were consolidated on March 21,

3842017, and scheduled for final hearing on May 31, 2017. The

395final hearing was subsequently continued twice, once at the

404request of Petitioner, and again by joint request of the parties

415to analyze large volumes of data in an effort to further reduce

427the penalty to be assessed. The final hearing was rescheduled

437to September 14, 2017.

441Following records review and the deposition of RespondentÓs

449President , Petitioner requested, and was granted, leave to file

458a Second Amended Order of Penalty Assessment in both cases. On

469August 30, 2017, Petitioner filed a Second A mended Order of

480Penalty Assessment in DOAH Case No. 17 - 0879, reducing the

491penalty to $19,115.84, and in DOAH Case No. 17 - 1558, reducing

504the penalty to $60,072.96.

509The final hearing commenced as rescheduled on September 14,

5182017. At the final hearing, Peti tioner presented the testimony

528of Ginger Chalker; Jesse Holman, Department Compliance

535Investigator; Donald Hurst, Department Compliance Facilitator;

541and Eunika Jackson, Department Penalty Auditor. PetitionerÓs

548Exhibits P1 through P35, were admitted into e vidence.

557Respondent offered the testimony of Traci Fisher,

564RespondentÓs President , and introduced RespondentÓs Exhibits R24

571through R32, which were admitted into evidence.

578A one - volume Transcript of the proceedings was filed on

589October 4, 2017. Petition er timely filed a Proposed Recommended

599Order, which has been considered by the undersigned in preparing

609this Recommended Order. Respondent requested, and was granted,

617an extension of time until November 6, 2017, to submit a

628proposed recommended order; how ever, as of the date of this

639Recommended Order, Respondent ha s not made any post - hearing

650filing.

651Unless otherwise indicated, all references to the Florida

659Statutes herein are to the 2016 version.

666FINDING S OF FACT

6701. Petitioner is the state agency charged with enforcing

679the requirement of chapter 440, that Florida employers secure

688workersÓ compensation c overage for their employees.

695§ 440.107(3), Fla. Stat.

6992. Respondent is a Florida for - profit corporation

708organized on July 28, 2015, and engaged in the bu siness of

720roofing and storm damage restoration. The company was formed,

729and initially conducted business, in Tallahassee, Florida, but

737expanded to the Panama City area in 2016.

7453. Traci Fisher is RespondentÓs President and Registered

753Agent, with a mailin g address of 1004 Kenilworth, Tallahassee,

763Florida 32312.

765DOAH Case No. 17 - 0879

7714. On May 4, 2016, Department Compliance Investigator

779Jesse Holman, conducted a routine workersÓ compensation

786compliance inspection at 374 Brown Place in Crestview, Florida.

795Mr. Holman observed four men removing shingles from the roof of

806a residential structure at that address.

8125. Mr. Holman first interviewed a worker who identified

821himself as Dustin Hansel and reported that he and the other

832three workers on site were a ne w crew for Respondent, the permit

845for the job had not yet been pulled, and the workers were not

858aware of the rate of pay for the job.

8676. Mr. Hansel telephoned RespondentÓs sales manager,

874Dillon Robinson, who then spoke directly with Mr. Holman via

884teleph one.

8867. Mr. Robinson informed Mr. Holman that Respondent

894obtained workersÓ compensation coverage through Payroll

900Management Inc. (PMI), an employee - leasing company.

9088. Mr. Holman identified the three remaining workers at

917the job site as Milton Trice, Wi nston Perrotta, and Kerrigan

928Ireland.

9299. Mr. Holman contacted PMI and secured a copy of

939RespondentÓs then - active employee roster. None of the workers

949at the job site, including Mr. Hansel, were included on

959RespondentÓs employee roster.

96210. Upon inquiry, Mr. Holman was informed that PMI had no

973pending employee applications for Respondent.

97811. Mr. Holman consulted the DepartmentÓs Coverag e

986Compliance Automated System (CCAS ) and found Respondent had no

996workersÓ compensation insurance policy and no active e xemptions.

100512. During Mr. HolmanÓs onsite investigation, the workers

1013left the job site.

101713. Mr. Holman could not immediately reach Ms. Fisher, but

1027did speak with her husband, Tim Fisher. Mr. Fisher informed

1037Mr. Holman that the crew was on their way to the PMI Fort Walton

1051office to be enrolled on RespondentÓs employee roster.

105914. On May 5, 2016, based on his investigation, and after

1070consultation with his supervisor, Mr. Holman issued Respondent

1078S top - W ork O rder (SWO) 16 - 148 - 1A, along with a Business Rec ords

1097Request (BRR) for records covering the audit period of July 27,

11082015 through May 4, 2016.

111315. Later that day, Mr. Holman spoke to Ms. Fisher, who

1124informed him the crew did not have permission to begin the work

1136on that date, as she had not yet pulled the permit for the

1149reroof. Ms. Fisher further explained that the crewmembers had

1158been instructed to complete applications with PMI prior to

1167departing Tallahassee for Crestview. Ms. Fisher confirmed the

1175crewmembers were completing applications at PMI For t Walton that

1185same day.

118716. Mr. Holman met with Ms. Fisher the following day and

1198personally served SWO 16 - 148 - 1A. Ms. Fisher delivered to

1210Mr. Holman an updated employee roster from PMI which included

1220Mr. Hansel, Mr. Perrotta, and Mr. Ireland; a letter d ocumenting

1231Mrice was not employed by Respondent; and a $1000 check as

1242downpayment on the penalty.

124617. Respondent initially submitted business records in

1253response to the BRR on May 23 and 25, 2017.

1263DOAH Case No. 17 - 1558

126918. On June 8, 2016 , Mr. Holm an conducted a random

1280workersÓ compensation compliance inspection at 532 Rising Star

1288Drive in Crestview. The single - family home at that address was

1300undergoing renovations and Mr. Holman observed three men on the

1310roof removing shingles.

131319. None of the m en on the roof spoke English, but a

1326fourth man, who identified himself as Jose Manuel Mejia,

1335appeared and stated he worked for Respondent, and that all the

1346workers onsite were pa i d through PMI at a rate of $10.00 per

1360hour. Mr. Mejia admitted that one of t he workerÓs onsite,

1371Emelio Lopez, was not enrolled with PMI and explained that

1381Mr. Mejia brought him to the worksite that day because he knew

1393Mr. Lopez to be a good worker.

140020. The remaining workers onsite were identified as Juan

1409Mencho and Ramon Gonzale z, both from Atlanta, Georgia.

1418Mr. Mejia produced some PMI paystubs for himself and Mr. Mencho.

142921. Mr. Mejia stated that he and his crews also received

1440reimbursement checks directly from Respondent for gas, rentals,

1448materials, and the like.

145222. Mr. H olman contacted PMI, who produced RespondentÓs

1461then - active employee roster. Mr. Mejia and Mr. Mencho were on

1473the roster, but neither Mr. Gonzalez nor Mr. Lopez was included.

148423. Mr. Holman next contacted Ms. Fisher, who identified

1493Mr. Mejia as a subcont ractor, but was not familiar with any of

1506the other men Mr. Holman encountered at the worksite.

151524. Mr. Holman consulted via telephone with his

1523supervisor, who instructed him to issue an SWO to Respondent for

1534failing to secure workersÓ compensation covera ge for its

1543employees. Mr. Holman issued SWO 16 - 198 - 1A by posting the

1556worksite on June 8, 201 6 . Department Facilitator Don Hurst,

1567personally served Ms. Fisher with SWO 16 - 198 - 1A in Tallahassee

1580that same day.

1583SWO 16 - 148 - 1A Penalty Calculation 1/

159225. Depa rtment Penalty Auditor Eunika Jackson, was

1600assigned to calculate the penalties associated with the SWOs

1609issued to Respondent.

161226. On June 8, 2016, Ms. Jackson began calculating the

1622penalty associated with SWO 16 - 148 - 1A. Ms. Jackson reviewed the

1635document s submitted by Respondent in response to the BRR. The

1646documents included RespondentÓs Wells Fargo bank statements,

1653check images, and PMI payroll register for the audit period. 2/

166427. Based on a review of the records, Ms. Jackson

1674identified the following individuals as RespondentÓs employees

1681because they received direct payment from Respondent at times

1690during the audit period: Davi d Rosinsky, Dylan Robinson, Jar od

1701Bell, Tommy Miller, and David Shields.

170728. Ms. Jackson determined periods of non - complianc e for

1718these employees based on the dates they received payments from

1728Respondent and were not covered for workersÓ compensation via

1737PMI employment roster, separate policy, or corporate officer

1745exemption.

174629. Ms. Jackson deemed payments to each of the indi viduals

1757as gross payroll for purposes of calculating the penalty.

176630. Based upon Ms. FisherÓs deposition testimony,

1773Ms. Jackson assigned National Council on Compensation Insurance

1781(NCCI) class code 5551, Roofing, to Mr. Miller; NCCI class

1791code 5474, Pain ting, to Mr. Rosinsky; NCCI class code 8742,

1802Sales, to Mr. Bell and Mr. Robinson; and NCCI class code 8810,

1814clerical office employee, to Mr. Shields.

182031. Utilizing the statutory formula for penalty

1827calculation, Ms. Jackson calculated a total penalty of $ 191.28

1837associated with these five Ðemployees.Ñ

184232. Ms. Jackson next calculated the penalty for Dustin

1851Hansel, Kerrigan Ireland, Milton Trice, and Winston Perrotta,

1859th e workers identified at the job site as employees on May 4,

18722016.

187333. The Department ma intains that the business records

1882submitted by Respondent were insufficient to determine

1889RespondentÓs payroll to these Ðemployees,Ñ thus, Ms. Jackson

1898used the statutory formula to impute payroll to these workers.

190834. Ms. Jackson calculated a penalty of $ 14,970.12 against

1919Respondent for failure to secure payment of workersÓ

1927compensation insurance for each of these four ÐemployeesÑ during

1936the audit period. The total pen alty associated with these

1946four ÐemployeesÑ is $59,880.48.

195135. Ms. Jackson calculated a total penalty of $60,072.96

1961to be imposed against Respondent in connection with SWO 16 - 148 -

19741A.

1975Business Records

197736. In compliance with the DepartmentÓs BRR, Respondent

1985submitted additional business records on several occasions --

1993March 21, May 3 and 31 , June 7, and August 15 and 24, 2017 -- in

2009order to establish its complete payroll for the audit period.

2019While the Department admits that the final documents submitted

2028do establish RespondentÓs complete payroll, the Department did

2036not issue amended penalty assessment based on those records in

2046either case. The Department maintains Respondent did not timely

2055submit records, pursuant to Florida Administrative Code Rule

206369L - 6.028(4), which allows an employer 20 business days after

2074service of the first amended or der of penalty assessment to

2085submit sufficient records to establish payroll.

209137. All business records submitted by Respondent were

2099admitted in evidence and included as part of the record. The

2110undersigned is not limited to the record before the Departmen t

2121at the time the amended penalty assessments were imposed, but

2131must determine a recommendation in a de novo proceeding. The

2141undersigned has relied upon the complete record in arriving at

2151the decision in this case.

2156Penalty Calculation for Ireland, Trice , and Perrotta

216338. For purposes of workersÓ compensation insurance

2170coverage, an ÐemployeeÑ is Ðany person who receives remuneration

2179from an employerÑ for work or services performed under a

2189contract. § 440.02(15)(a), Fla. Stat.

219439. Respondent did not iss ue a single check to

2204Mr. Ireland, Mrice, or Mr. Perrotta during the audit period.

221440. Mr. Ireland, Mrice, and Mr. Perrotta are not

2223included on any PMI leasing roster included in the record for

2234the audit period.

223741. The uncontroverted evidence, in cluding the credible

2245and unrefuted testimony of each person with knowledge,

2253established that Mr. Ireland, Mrice, and Mr. Perrotta were

2262newly hired for the job in Crestview on May 4, 2016, and began

2275working that day prior to submitting applications at P MI ,

2285despite Ms. FisherÓs directions otherwise.

229042. Petitioner did not prove that either Mr. Ireland,

2299Mr. Trice, or Mr. Perrotta was RespondentÓs employee at any time

2310during the audit period.

231443. Petitioner did not correctly calculate the penalty of

2323$44,9 11.26 against Respondent for failure to secure workersÓ

2333compensation insurance for Mr. Ireland, Mrice, and

2340Mr. Perrotta during the audit period.

2346Penalty Calculation for Hansel

235044. Ms. Fisher testified that Mr. Hansel has owned several

2360businesses with which Respondent has conducted business over the

2369years.

237045. Originally, Mr. Hansel owned a dumpster rental

2378business, now owned by his father. Mr. Hansel also owned an

2389independe nt landscaping company with which Respondent

2396occasionally transacted busines s.

240046. When Respondent expanded business into the Panama City

2409area, Ms. Fisher hired Mr. Hansel as a crew chief to supervise

2421new crews in the area. The job on May 4, 2016, was his first

2435roofing job.

243747. A review of RespondentÓs records reveals Responden t

2446issued the following checks to Mr. Hansel during the audit

2456period: December 4, 2015 , in the amount of $360, $300 of which

2468was for Ðdumpster rentalÑ and the remaining $60 for ÐsodÑ;

2478May 4, 2016 , in the amount of $200 for Ðsod repairÑ; May 6,

24912016 , in the amount of $925 as reimbur sement for travel

2502expenses; May 9, 2016 , in the amount of $ 1,011.50 (with no

2515memo); and May 21, 2016 , in the amount of $100 for

2526Ð7845 Preservation.Ñ

252848. Mr. Hansel was included on RespondentÓs PMI leasing

2537roster beginning on May 13, 2016.

254349. Petitioner proved that Mr. Hansel was RespondentÓs

2551employee at times during the audit period.

255850. Petitioner did not prove that RespondentÓs records

2566were insufficient to determine payroll to Mr. Hansel during the

2576audit period, which would h ave required an imputed penalty.

258651. Petitioner did not correctly calculate the penalty of

2595$14,970.42 against Respondent for failure to secure workersÓ

2604compensation insurance coverage for Mr. Hansel during the audit

2613period.

261452. Sod repair by Mr. Hansel i s a service performed for

2626Respondent during the audit period.

263153. Reimbursement of travel expenses is specifically

2638included in the definition of payroll for purposes of

2647calculating the penalty. See Fla. Admin. Code R. 69L -

26576.035(1)(f) (ÐExpense reimbursem ents, including reimbursements

2663for travelÑ are included as remuneration to employees Ðto the

2673extent that the employerÓs business records and receipts do not

2683confirm that the expense incurred as a valid business

2692expense.Ñ) .

269454. Dumpster rental is neither w ork performed on behalf

2704of, nor service provided to, Respondent during the audit period.

271455. The correct uninsured payroll amount attributable to

2722Mr. Hansel is $2,296.50.

272756. Petitioner correctly applied NCCI class code 5551,

2735Roofing, to work performed b y Mr. Hansel based on the

2746observation of Mr. Holman at the worksite on May 4, 2016.

275757. With respect to Mr. HanselÓs services for sod and sod

2768repair, Petitioner did not correctly apply NCCI class code 5551.

277858. Petitioner did not introduce competent subs tantial

2786evidence of the applicable NCCI class code and premium amount

2796for landscaping services performed during the audit period. 3/

280559. Uninsured payroll attributable to Mr. Hansel for

2813roofing services during the audit period is $2,036.50.

282260 . The approv ed manual rate for workersÓ compensation

2832insurance for NCCI class code 5551 during the period of non -

2844compliance -- May 9 and 21, 2016 -- is $ 18.60.

285561 . The premium amount Respondent would have paid to

2865provide workersÓ compensation insurance for Mr. Hansel is

2873$378.79 (One percent of Mr. HanselÓs gross payroll during the

2883non - compliance period -- $20.36 -- multiplied by $ 18.60).

289462 . The penalty for RespondentÓs failure to secure

2903workerÓs compensation coverage insurance for Mr. Hansel during

2911the period of non - complia nce is calculated as two times the

2924amount Respondent would have paid in premium for the non -

2935compliance period.

293763. The correct penalty for RespondentÓs failure to

2945maintain workersÓ compensation coverage for Mr. Hansel during

2953the period of non - compliance i s $757.58.

2962Penalty Calculation for Salesmen

296664. Independent contractors not engaged in the

2973construction industry are not employees for purposes of

2981enforcing workersÓ compensation insurance requirements. See

2987§ 440.02(15)(d)1., Fla. Stat.

299165. Sales is a n on - construction industry occupation.

300166. The Department calculated a penalty associated with

3009payroll attributable to the following persons identified by

3017Ms. Fisher as independent salesmen: Dylan Robinson, Kevin

3025Miller, Marc Medley, Mike Rucke r, Colby Fis her, David Jones,

3036Ja rod Bell, Matt Flynn, and Todd Zulauf.

304467. Section 440.02(15)(d)1. provides that an individual

3051may be an independent contractor, rather than an employee, as

3061follows:

3062a. In order to meet the definition of

3070independent contractor, at l east four of the

3078following criteria must be met:

3083(I) The independent contractor maintains a

3089separate business with his or her own work

3097facility, truck, equipment, materials, or

3102similar accommodations;

3104(II) The independent contractor holds or

3110has applie d for a federal employer

3117identification number, unless the

3121independent contractor is a sole proprietor

3127who is not required to obtain a federal

3135employer identification number under state

3140or federal regulations;

3143(III) The independent contractor receives

3148co mpensation for services rendered or work

3155performed and such compensation is paid to a

3163business rather than to an individual;

3169(IV) The independent contractor holds one

3175or more bank accounts in the name of the

3184business entity for purposes of paying

3190busines s expenses or other expenses related

3197to services rendered or work performed for

3204compensation;

3205(V) The independent contractor performs

3210work or is able to perform work for any

3219entity in addition to or besides the

3226employer at his or her own election without

3234the necessity of completing an employment

3240application or process; or

3244(VI) The independent contractor receives

3249compensation for work or services rendered

3255on a competitive - bid basis or completion of

3264a task or a set of tasks as defined by a

3275contractual agr eement, unless such

3280contractual agreement expressly states that

3285an employment relationship exists.

3289b. If four of the criteria listed in sub -

3299subparagraph a. do not exist, an individual

3306may still be presumed to be an independent

3314contractor and not an emplo yee based on full

3323consideration of the nature of the

3329individual situation with regard to

3334satisfying any of the following conditions:

3340(I) The independent contractor performs or

3346agrees to perform specific services or work

3353for a specific amount of money and controls

3361the means of performing the services or

3368work.

3369(II) The independent contractor incurs the

3375principal expenses related to the service or

3382work that he or she performs or agrees to

3391perform.

3392(III) The independent contractor is

3397responsible for the s atisfactory completion

3403of the work or services that he or she

3412performs or agrees to perform.

3417(IV) The independent contractor receives

3422compensation for work or services performed

3428for a commission or on a per - job basis and

3439not on any other basis.

3444( V) The independent contractor may realize

3451a profit or suffer a loss in connection with

3460performing work or services.

3464(VI) The independent contractor has

3469continuing or recurring business liabilities

3474or obligations.

3476(VII) The success or failure of the

3483independen t contractorÓs business depends on

3489the relationship of business receipts to

3495expenditures.

349668. Ms. Fisher testified that each of the above - named

3507salesmen sold roofing jobs for her at various times during the

3518audit period on a commission - only basis. The c ontractors

3529inspect homeowner roofs, draft schematics, use their own

3537equipment (e.g., drones), incur all of their own expenses, and

3547handle the insurance filing for the homeownerÓs insurance to pay

3557on the claim.

356069. Ms. Fisher further testified that each of the salesmen

3570also sells for other roofing contractors in the Tallahassee

3579area. She pays the salesmen on a per - job basis. Ms. Fisher

3592does not compensate the salesmen for the time involved in

3602inspecting a roof, preparing schematics, or making the sale.

3611N or does Ms. Fisher reimburse the salesmen for travel to sales

3623jobsites.

362470. Ms. FisherÓs testimony was credible, persuasive, and

3632uncontroverted.

363371. Respondent introduced in evidence four ÐIndependent

3640Contractor ChecklistsÑ allegedly completed by Mr. Rob inson,

3648Mr. Medley, Mr. Fisher, and Mr. Flynn. Each form checklist

3658follows the format of section 440.02(15)(d)1., listing the

3666criteria set forth in subparagraphs a. and b. The forms

3676indicate that they each meet all the criteria listed in

3686subparagraph b.: they perform, or agree to perform services for

3696a specific amount of money and control the means of performing

3707the service; they incur the principal expenses related to the

3717service performed; they are responsible for satisfactory

3724completion of the services performed; they receive compensation

3732for the services performed on a per - job or commission basis;

3744they may realize a profit or suffer a loss in connection with

3756performing the services; they have continuing and recurring

3764business liabilities or obligations ; and the success or failure

3773of their business depends on the relationship of business

3782receipts to expenditures. 4/

378672. In its Proposed Recommended Order, Petitioner conceded

3794the nine men identified by Respondent as independent sales

3803contractors Ðwould not be considered employees of RespondentÑ

3811because the Ðsalesmen would seem to meet the majority of [the]

3822requirements [of section 440.02(15)(d)1.b.].Ñ

382673. Respondent issued Dylan Robinson, Mark Medley, Colby

3834Fisher, Matt Flynn, Kevin Miller, Mike Rucker, Ja rod Bell, David

3845Jones, and Todd Zulauf an IRS FORM 1099 - MISC for income paid

3858during the 2016 tax year.

386374. Respondent did not prove by clear and convincing

3872evidence that the above - named salesmen were RespondentÓs

3881employees during the audit period.

388675. Fo r SWO 16 - 148 - 1A, Respondent did not correctly

3899calculate the penalty because Respondent included a penalty

3907associated with PetitionerÓs failure to provide workersÓ

3914compensation insurance coverage for Dylan Robinson and Jarod

3922Bell.

392376. Penalty in the amount of $20.70 associated with Dylan

3933Robinson and Jarod Bell should not be included in the total

3944penalty.

394577. The correct penalty amount for SWO 16 - 148 - 1A, based on

3959records submitted by Respondent on or before March 20, 2016,

3969is $929.16.

3971Draft Revised Second Amended Order of Penalty Assessment

397978. The additional records submitted by Respondent

3986revealed payments made to persons during the audit period who

3996were not included in the Department Ós Second Amended Order of

4007Penalty Assessment. The Department and Resp ondent disagreed at

4016hearing whether the payments qualified as payroll.

402379. At hearing, Petitioner submitted a draft revised

4031second amended penalty calculation for SWO 16 - 148 - 1A based on

4044all records received from Respondent. The revised penalty is in

4054the amount of $61,453.50.

405980. Ms. Jackson populated the spreadsheet with the name of

4069every individual to whom a check was written on RespondentÓs

4079business bank account during the audit period, removing only

4088those payments to individuals and entities which, t o

4097PetitionerÓs knowledge, were not RespondentÓs employees.

410381. RespondentÓs calculations in the revis ed penalty

4111suffer from some of the same errors as in the second amended

4123penalty calculation -- they include individuals Petitioner did not

4132prove were Respon dentÓs employees , as well as payments which

4142were not uninsured payroll.

414682. For the reasons explained herein, Petitioner did not

4155prove that salesmen David Jones, Dylan Robinson, Jarod Bell,

4164Kevin Miller, Mark Medley, Matt Flynn, Mike Rucker, Tim Fischer,

4174and Colby Fisher were RespondentÓs employees during the audit

4183period.

418483. Respondent did not accurately calculate the penalty

4192associated with those persons.

419684. Respondent made payments to David Shields during the

4205audit period, which the Department argue s should be included as

4216payroll. The Department included payments to Mr. Shields in its

4226draft revised second amended order of penalty assessment and

4235assigned NCCI class code Ð8810Ñ for clerical work.

424385. Mr. Shields is a licensed professional roofing

4251con tractor who acts as ÐqualifierÑ for RespondentÓs business. A

4261qualifier is a licensed professional who certifies plans for

4270permit applications submitted by another business.

427686. Respondent pays Mr. Shields a flat fee per permit

4286application qualified by hi m.

429187. The record evidence does not support a finding that

4301Mr. Shields provides clerical services to Respondent.

4308Mr. Shields provides some sort of professional services to

4317Respondent, and is likely an independent contractor providing

4325his own materials an d supplies, maintaining his own business

4335accounts, and liable for his own business success.

434388. Assuming Mr. Shields were RespondentÓs employee, the

4351Department introduced no evidence of an appropriate NCCI class

4360code for Mr. ShieldsÓ services.

436589. The Department did not prove that payments to

4374Mr. Shields should be included as RespondentÓs uninsured payroll

4383during the audit period.

438790. Respondent paid Susan Swain a total of $258 during the

4398audit period for clerical work. Ms. Fisher maintained

4406Ms. Swain Ós work was casual at first, and the payments reflect a

4419time when she worked on - again, off - again, handling the paperwork

4432for restoration insurance claims. Later, Ms. Swain came to work

4442for Respondent full - time and was added to the PMI leasing

4454roster.

445591. Section 440.02(15)(d)5. provides that a person Ðwhose

4463employment is both casual and not in the course of the trade,

4475business, profession or occupation of the employerÑ is not an

4485employee. The statute defines ÐcasualÑ employment as work that

4494is anticipate d to be completed in 10 working days or less and at

4508a total labor cost of less than $500. See § 440.02(5), Fla.

4520Stat.

452192. In its Proposed Recommended Order, the Department

4529argues Ms. SwainÓs wages should be included as payroll because

4539the Ðtestimony rega rding Ms. Swain does not suggest that she was

4551employed for less than 10 days[.]Ñ However, it was the

4561DepartmentÓs burden to prove that Ms. Swain was a statutory

4571employee.

457293. The Department did not prove that Ms. SwainÓs wages

4582should be included within R espondentÓs uninsured payroll.

459094. The largest portion of the penalty assessed by the

4600Department, as well as in the draft revised second amended

4610penalty assessment, against Respondent is in connection with

4618various roofers who were employed by Respondent a t times during

4629the audit period.

463295. Each of the roofers was included on RespondentÓs PMI

4642leasing roster, but received checks directly from Respondent in

4651addition to PMI payroll checks. The Department included all the

4661direct payments to those roofers a s payroll for purposes of

4672calculating a penalty in this case.

467896. As Ms. Fisher explained, the company bids a reroof on

4689a per job basis -- usually a per square foot price. Ms. Fisher

4702adds each roofing contractorÓs name to the PMI leasing roster to

4713ensure t hat each roofer is covered by workersÓ compensation

4723insurance for the duration of the job. When the job is

4734completed (which is a matter of just a few days), the contractor

4746reports to Ms. Fisher what amount of the contract price was

4757spent on materials, sup plies, or other non - labor costs.

4768Ms. Fisher cuts a check to the contractor for that amount and

4780authorizes PMI to issue payroll checks for the Ðlabor costÑ (the

4791difference between the contract price and the non - labor costs ).

4803Ms. Fisher refers to this proc ess as Ðback - chargingÑ the

4815contractors for their materials, maintenance, tools, and other

4823non - labor costs.

482797. The Department is correct that the direct payments are

4837payroll to the roofing contractors. See Fla. Admin. Code R.

484769L - 6.035(1)(b) and (h) (rem uneration includes Ðpayments,

4856including cash payments, made to employees by or on behalf of

4867the employerÑ and Ðpayments or allowances made by or on behalf

4878of the employer for tools or equipment used by employees in

4889their work or operations for the employer .Ñ) .

489898. The Department would be correct to include these

4907payments in the penalty calculation if they represented

4915uninsured payroll. However, the evidence supports a finding

4923that the direct payments to the roofing contractors were made

4933for the same jobs on which Respondent secured workersÓ

4942compensation coverage through PMI. The roofing contractors were

4950covered for workersÓ compensation throughout the job, even

4958though they may have received partial payment for the job

4968outside of the PMI payroll checks. 5/

497599. The direct payments were not for separate reroofs on

4985which the roofers were not otherwise insured.

4992100. The Department did not correctly calculate penalties

5000associated with the following roofing contractors: Donald

5007Tontigh, Joseph Howard, Keith Mi lls, Aaron Kilpatrick, Gustavo

5016Tobias, Jose Mejia, and Tommy Miller.

5022101. Ms. Fisher also received cash payments from

5030Respondent during the audit period. These payments were made in

5040addition to her payroll through PMI.

5046102. Ms. Fisher described these pa yments as Ðcash

5055tickets , Ñ which were paid outside of her PMI payroll to

5066reimburse her for investments made in the company.

5074103. For purposes of calculating the penalty in this case,

5084these Ðcash ticketsÑ are clearly payroll, as that term is to be

5096calculate d pursuant to rule 69L - 6.035.

5104104. Similar to the issue with the roofing contractors,

5113the question is whether the payments represent uninsured

5121payroll.

5122105. Ms. Fisher did not hold a corporate officer exemption

5132at any time relevant hereto. Ms. Fishe r testified that she was

5144covered through PMI payroll leasing.

5149106. In contrast to the roofing contractors, Ms. FisherÓs

5158direct payments do not directly coincide with any particular job

5168or specific time frame during which Ms. Fisher was covered for

5179workers Ó compensation insurance through PMI. The evidence was

5188insufficient to determine that the amounts were insured payroll.

5197107. The Department properly calculated a penalty

5204associated with payroll attributable to Ms. Fisher.

5211108. Respondent made one paymen t of $75 to Donald Martin

5222during the audit period. The Dep artment calculated a penalty

5232of $27.90 associated with t his payment to Mr. Martin.

5242Ms. Fisher explained that Mr. Martin was a down - on - his - luck guy

5258who came by the office one day complaining that M r. Hansel owed

5271him some money. Ms. Fisher offered to put him on a roofing crew

5284and wrote him the $75 check to help him out.

5294109. Ms. FisherÓs testimony was both credible and

5302unrefuted.

5303110. Mr. Martin was never hired by Respondent, put on any

5314roofing cr ew, or added to the PMI leasing roster.

5324111. Mr. Martin was not RespondentÓs employee because he

5333did not receive remuneration for the Ðperformance of any work or

5344service while engaged in any employment under any appointment or

5354contract for hireÑ with Resp ondent. § 440.02(15)(a), Fla. Stat.

5364112. Cale Dierking works for Respondent full - time in a

5375clerical position. During the audit period, Respondent paid

5383Mr. Dierking directly by check for $1,306.14. This payment was

5394made outside of Mr. DierkingÓs PMI pay roll checks.

5403113. Ms. Fisher testified that she paid Mr. Dierking

5412directly on one occasion when ÐPMIÓs payroll got stuck in

5422Memphis, I believe it was a snow - in situation where payroll

5434checks didnÓt come.Ñ Rather than ask her employee to go without

5445a time ly paycheck, she advanced his payroll.

5453114. Ms. FisherÓs testimony was both credible and

5461unrefuted.

5462115. The payment to Mr. Dierking is clearly payroll.

5471However, Mr. Dierking was covered for workersÓ compensation

5479through PMI for the period during which the check was issued.

5490Thus, there is no evidence that it was uninsured payroll.

5500116. The Department did not correctly calculate a penalty

5509associated with payments to Mr. Dierking.

5515117. The correct penalty to be assessed against Respondent

5524for failure to secure workersÓ compensation coverage for its

5533employees during the audit period in connection with SWO 16 - 148 -

55461A is $770.60.

5549Penalty Calculation for SWO 16 - 198 - 1A

5558118. Ms. Jackson calculated a total penalty against

5566Respondent in connection with SWO 16 - 19 8 - 1A in the amount of

5581$19,115.84, as reflected in the Second Amended Order of Penalty

5592Assessment.

5593119. The Department correctly imputed penalty against

5600Respondent in the amount of $91.68 each for uninsured payroll to

5611Mr. Gonzalez and Mr. Lopez. The evide nce supported a finding

5622that these workers were Responden tÓs statutory employees on

5631June 8, 2016, and were not enrolled on the PMI leasing roster.

5643120. The Department did not correctly calculate the

5651penalty associated with salesmen Dylan Robinson, Jarod B ell,

5660Kevin Miller, Mark Medley, Matt Flynn , and Todd Zulauf.

5669121. The Department did not correctly calculate the

5677penalty associated with roofing contractors Abraham Martinez -

5685Antonio, Edwin Kinsey, Dustin Hansel, Efrian Molina - Agustin,

5694Jose Mejia, Joseph Howard, Keith Mills, Samuel Pedro, and Tommy

5704Miller.

5705122. The Department did not correctly calculate the

5713penalty against Respondent associated with Mr. Shields,

5720RespondentÓs qualifier.

5722123. Based on a review of RespondentÓs complete ÐuntimelyÑ

5731records, the Department discovered direct payments made to

5739additional employees not included on the Second Amended Order of

5749Penalty Assessment.

5751124. Respondent made a direct payment to Ethan Burch in

5761the amount of $602.50 during the audit period.

5769125. Ethan Burch is one of RespondentÓs full - time clerical

5780employees. The evidence is insufficient to determine whether

5788the payment of $602.50 was insured or uninsured payroll. As

5798such, the Department did not prove it correctly calculated the

5808penalty associated with Mr. Burch.

5813126. Respondent also made a direct payment to Chelsea

5822Hansel in the amount of $965 during the audit period.

5832Ms. Hansel is another clerical employee. Ms. Hansel Ós PMI

5842enrollment was delayed due to some background investigation.

5850Respondent paid M s. Hansel for work she completed prior to

5861enrollment.

5862127. The direct payment to Ms. Hansel constitutes

5870uninsured payroll.

5872128. The Department correctly calculated the penalty

5879associated with the payment to Chelsea Hansel .

5887129. The correct penalty amoun t to be imposed against

5897Respondent for failure to secure payment of workersÓ

5905compensation coverage for its employees (Gonzalez, Lopez, and

5913Chelsea Hansel ) during the audit period in connection with

5923SWO 16 - 198 - 1A is $187.80.

5931CONCLUSIONS OF LAW

5934130. The Div ision of Administrative Hearings has

5942jurisdiction of the subject matter of and the parties to this

5953proceeding. See §§ 120.569 and 120.57(1), Fla. Stat.

5961131. Employers are required to secure payment of workersÓ

5970compensation for their employees unless exem pted or excluded.

5979See §§ 440.10(1)(a) and 440.38(1), Fla. Stat.

5986132. ÐEmployerÑ includes Ðevery person carrying on any

5994employment.Ñ £ 440.02(16)(a), Fla. Stat.

5999133. ÐEmploymentÑ means Ðany service performed by an

6007employee for the person employing him o r her.Ñ £ 440.02(17)(a),

6018Fla. Stat.

6020134. Respondent is an ÐemployerÑ subject to the statutory

6029requirement to provide workersÓ compensation insurance coverage

6036for its employees.

6039135. Strict compliance with the WorkersÓ Compensation Law

6047is required by the employer. See C&L Trucking v. Corbett ,

6057546 So. 2d 1185, 1187 (Fla. 5th DCA 1989).

6066136. The Department has the burden of proof in this case

6077and must show by clear and convincing evidence that the employer

6088violated the WorkersÓ Compensation Law and that t he penalty

6098assessments were correct under the Law. See DepÓt of Banking

6108and Fin. v. Osborne Stern and Co. , 670 So. 2d 932 (Fla. 1996);

6121and Ferris v. Turlington , 510 So. 2d 292 (Fla. 1987).

6131137. In Evans Packing Co. v. Department of Agriculture and

6141Consu mer Services , 550 So. 2d 112, 116 n.5 (Fla. 1st DCA 1989),

6154the Court defined clear and convincing evidence as follows:

6163[C]lear and convincing evidence requires

6168that the evidence must be found to be

6176credible; the facts to which the witnesses

6183testify must be distinctly remembered; the

6189evidence must be precise and explicit and

6196the witnesses must be lacking in confusion

6203as to the facts in issue. The evidence must

6212be of such weight that it produces in the

6221mind of the trier of fact the firm belief

6230or conviction, without hesitancy, as to

6236the truth of the allegations sought to be

6244established. Slomowitz v. Walker ,

6248429 So. 2d 797, 800 (Fla. 4th DCA 1983).

6257138. The Department proved by clear and convincing

6265evidence that Respondent is an employer subject to the Work ersÓ

6276Compensation statute.

6278139. For SWO 16 - 148 - 1A, the Department proved by clear and

6292convincing evidence that Mr. Hansel and Ms. Fisher were

6301RespondentÓs employees required to be covered by, or obtain an

6311exemption from, workersÓ compensation insurance du ring the audit

6320period, and that such coverage was not secured for specified

6330periods of non - compliance.

6335140. The Department did not demonstrate by clear and

6344convincing evidence that it correctly calculated the penalty to

6353be imposed under the law.

6358141. The correct penalty to be assessed against Respondent

6367for failure to secure workersÓ compensation coverage for its

6376employees during the audit period in connection with SWO 16 - 148 -

63891A is $770.60.

6392142. For SWO 16 - 198 - 1A, the Department proved by clear and

6406convi ncing evidence that M r. Lopez, Mr. Gonzalez, and Ms. Hansel

6418were RespondentÓs employees required to be covered by, or obtain

6428an exemption from, workersÓ compensation insurance during the

6436audit period, and that such coverage was not secured for

6446specified pe riods of non - compliance.

6453143. The Department did not demonstrate by clear and

6462convincing evidence that it correctly calculated the penalty to

6471be imposed under the law.

6476144. The correct penalty amount to be imposed against

6485Respondent for failure to secure payment of workersÓ

6493compensation coverage for its employees (Gonzalez, Lopez, and

6501Chelsea Hansel ) during the audit period in connection with

6511SWO 16 - 198 - 1A is $187.80.

6519RECOMMENDATION

6520Based on the foregoing Findings of Fact and Conclusions of

6530Law, it is REC OMMENDED that a final order be entered by the

6543Department of Financial Services, Division of WorkersÓ

6550Compensation, finding that Royal Roofing and Restoration, Inc.,

6558violated the workersÓ compensation insurance law and, in DOAH

6567Case No. 17 - 0879, assessing a penalty of $770.60; and in DOAH

6580Case No. 17 - 1558, assessing a penalty of $187.80.

6590DONE AND ENTERED this 24th day of January , 2018 , in

6600Tallahassee, Leon County, Florida.

6604S

6605SUZANNE VAN WYK

6608Administrative Law Judge

6611Division of Administrative Hearings

6615The DeSoto Building

66181230 Apalachee Parkway

6621Tallahassee, Florida 32399 - 3060

6626(850) 488 - 9675

6630Fax Filing (850) 921 - 6847

6636www.doah.state.fl.us

6637Filed with the Clerk of the

6643Division of Administrative Hearings

6647this 24th day of January , 2018 .

6654ENDNOTE S

66561/ The penalties referred to herein are from the DepartmentÓs

6666Second Amended Order of Penalty Assessment, which are the

6675DepartmentÓs final calculations and the subject of the instant

6684Petition.

66852/ Ms. JacksonÓs calculations were also i nformed by the

6695deposition testimony of Ms. Fisher taken on April 6, 2017.

67053/ Department Exhibit 35 is a draft revised second amended

6715penalty calculation spreadsheet prepared by Ms. Jackson based on

6724records received from Respondent which were deemed by th e

6734Department as Ðuntimely.Ñ For some of the payments issued to

6744Mr. Hansel, Ms. Jackson assigned NCCI class code 0042, but she

6755did not testify as to what type of work corresponded with that

6767NCCI class code or from what source she obtained the NCCI class

6779co de.

67814/ While the checklists are pure hearsay, they were admissible

6791to corroborate Ms. FisherÓs testimony regarding the nature of

6800work performed by the salesmen and the payment arrangement

6809between the salesmen and Respondent. See Fla. Admin. Code R.

681928 - 1 06.213(3).

68235/ While this payment method may have payroll tax implications,

6833that issue is beyond the scope of the instant proceeding.

6843COPIES FURNISHED:

6845Traci Fisher

6847Royal Roofing & Restoration, Inc.

6852616 North Bronough Street

6856Tallahassee, Florida 32301

6859Gary Lee Printy, Esquire

6863Gary Lee Printy, Attorney at Law

6869Suite 200

68711804 Miccosukee Commons Drive

6875Tallahassee, Florida 32308

6878(eServed)

6879Leon Melnicoff, Esquire

6882Department of Financial Services

6886200 East Gaines Street

6890Tallahassee, Florida 32399 - 4229

6895(eSe rved)

6897Julie Jones, CP, FRP, Agency Clerk

6903Division of Legal Services

6907Department of Financial Services

6911200 East Gaines Street

6915Tallahassee, Florida 32399 - 0390

6920(eServed)

6921NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

6927All parties have the right to submit written ex ceptions within

693815 days from the date of this Recommended Order. Any exceptions

6949to this Recommended Order should be filed with the agency that

6960will issue the Final Order in this case.

Select the PDF icon to view the document.
PDF
Date
Proceedings
PDF:
Date: 07/03/2018
Proceedings: Agency Final Order filed.
PDF:
Date: 06/25/2018
Proceedings: Agency Final Order
PDF:
Date: 01/24/2018
Proceedings: Recommended Order
PDF:
Date: 01/24/2018
Proceedings: Recommended Order cover letter identifying the hearing record referred to the Agency.
PDF:
Date: 01/24/2018
Proceedings: Recommended Order (hearing held September 14, 2017). CASE CLOSED.
PDF:
Date: 10/17/2017
Proceedings: Order Granting Extension of Time.
PDF:
Date: 10/16/2017
Proceedings: Department's Proposed Recommended Order filed.
PDF:
Date: 10/12/2017
Proceedings: Unopposed Motion for Extension of Time to File Respondent's Proposed Recommended Order (filed in Case No. 17-001558).
PDF:
Date: 10/12/2017
Proceedings: Unopposed Motion for Extension of Time to File Respondent's Proposed Recommended Order filed.
Date: 10/04/2017
Proceedings: Transcript of Proceedings (not available for viewing) filed.
Date: 09/15/2017
Proceedings: Department's Exhibits filed (5 binders, exhibits not available for viewing).
Date: 09/14/2017
Proceedings: CASE STATUS: Hearing Held.
PDF:
Date: 09/14/2017
Proceedings: Joint Pre-Hearing Stipulation (filed in Case No. 17-001558).
PDF:
Date: 09/05/2017
Proceedings: Department's Notice of Intent to Use Summaries (filed in Case No. 17-001558).
PDF:
Date: 08/31/2017
Proceedings: Order Granting Motion for Leave to Amend Order of Penalty Assessment.
PDF:
Date: 08/30/2017
Proceedings: Department's Motion for Leave to Amend Order of Penalty Assessment (filed in Case No. 17-001558).
PDF:
Date: 08/08/2017
Proceedings: Order Allowing Testimony by Telephone.
PDF:
Date: 07/25/2017
Proceedings: Order Granting Continuance and Rescheduling Hearing (hearing set for September 14, 2017; 9:30 a.m.; Tallahassee, FL).
PDF:
Date: 07/25/2017
Proceedings: Department's Amended Second Agreed Motion to Continue Final Hearing (filed in Case No. 17-001558).
PDF:
Date: 07/25/2017
Proceedings: Department's Motion to Allow Testimony by Telephone (filed in Case No. 17-001558).
PDF:
Date: 07/24/2017
Proceedings: Department's Second Agreed Motion to Continue Final Hearing (filed in Case No. 17-001558).
PDF:
Date: 06/08/2017
Proceedings: Order Rescheduling Hearing (hearing set for August 2, 2017; 9:30 a.m.; Tallahassee, FL).
PDF:
Date: 06/06/2017
Proceedings: Department's Agreed Response to Order Granting Continuance (filed in Case No. 17-001558).
PDF:
Date: 05/22/2017
Proceedings: Order Granting Continuance (parties to advise status by June 7, 2017).
PDF:
Date: 05/22/2017
Proceedings: Department's Agreed Motion to Continue Final Hearing (filed in Case No. 17-001558).
PDF:
Date: 05/19/2017
Proceedings: Notice of Substitution of Counsel (Leon Melnicoff) filed.
PDF:
Date: 05/19/2017
Proceedings: Notice of Substitution of Counsel (Leon Melnicoff; filed in Case No. 17-001558).
PDF:
Date: 05/17/2017
Proceedings: Department's Notice of Intent to Use Summaries (filed in Case No. 17-001558).
PDF:
Date: 03/22/2017
Proceedings: Department's Notice of Cancellation and Taking Deposition (of Traci Fisher; filed in case no. 17-001558).
PDF:
Date: 03/21/2017
Proceedings: Order Granting Continuance and Re-scheduling Hearing (hearing set for May 31, 2017; 9:30 a.m.; Tallahassee, FL).
PDF:
Date: 03/21/2017
Proceedings: Order of Consolidation (DOAH Case Nos. 17-0879 and 17-1558).
PDF:
Date: 03/21/2017
Proceedings: Notice of Transfer.
PDF:
Date: 03/16/2017
Proceedings: Department's Agreed Response to Initial Order and Motion to Consolidate Proceeding filed.
PDF:
Date: 03/16/2017
Proceedings: Initial Order.
PDF:
Date: 03/15/2017
Proceedings: Petition for Formal Hearing filed.
PDF:
Date: 03/15/2017
Proceedings: Stop-Work Order filed.
PDF:
Date: 03/15/2017
Proceedings: Amended Order of Penalty Assessment filed.
PDF:
Date: 03/15/2017
Proceedings: Agency referral filed.

Case Information

Judge:
SUZANNE VAN WYK
Date Filed:
03/15/2017
Date Assignment:
03/21/2017
Last Docket Entry:
07/03/2018
Location:
Tallahassee, Florida
District:
Northern
Agency:
ADOPTED IN PART OR MODIFIED
 

Counsels

Related Florida Statute(s) (7):