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.
Recommended Order on Wednesday, January 24, 2018.
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.
- Date
- Proceedings
- 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: 10/12/2017
- 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: 09/05/2017
- 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: 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 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).
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
-
Joaquin Alvarez, Esquire
Department of Financial Services
200 East Gaines Street
Tallahassee, FL 323994229
(850) 413-1679 -
Gary Lee Printy, Esquire
Gary Lee Printy, Attorney at Law
Suite 200
1804 Miccosukee Commons Drive
Tallahassee, FL 32308
(850) 877-7299 -
Leon Melnicoff, Esquire
Address of Record -
Gary Lee Printy, Esquire
Address of Record