Proposed Rule 69L-6.028, F.A.C., clarifies time periods of employer non-compliance for penalty calculation purposes and also provides that the Department may impute the employer’s payroll as early as 10 business days following the employer’s receipt ...

 

DEPARTMENT OF FINANCIAL SERVICES

Division of Worker's Compensation

RULE NOS.:RULE TITLES:

69L-6.028: Procedures for Imputing Payroll and Penalty Calculations

69L-6.035: Definition of Payroll for Calculating Penalty

PURPOSE AND EFFECT: Proposed Rule 69L-6.028, F.A.C., clarifies time periods of employer non-compliance for penalty calculation purposes and also provides that the Department may impute the employer’s payroll as early as 10 business days following the employer’s receipt of a request to produce business records and any time thereafter. The rule is also amended to reflect the statutory revision reducing the imputed payroll multiplier from 2 times to 1.5 times the statewide average weekly wage. Proposed Rule 69L-6.035, F.A.C., broadens the scope of remuneration to employees to include the validation of expense reimbursements; employee classification code assignments for payroll calculation purposes; and remuneration occurring on the day a stop-work order is issued. The proposed rule also provides guidance regarding the required documentation associated with the aforementioned forms of remuneration. The proposed rules discussed above include additional technical changes.

SUMMARY: Proposed Rule 69L-6.028, F.A.C., clarifies time periods for purposes of penalty calculation purposes and the imputation of payroll. Proposed Rule 69L-6.035, F.A.C., broadens the definition of remuneration to employees for purposes of payroll penalty calculation purposes.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: The proposed rules are amended to implement the statute, as revised.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

RULEMAKING AUTHORITY: 440.107(9), 40.591, FS.

LAW IMPLEMENTED: 440.107(7)(d)1., (e), FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE,TIME AND PLACE SHOWN BELOW(IF NOT REQUESTED, THIS HEARING WILL NOT BE HELD):

DATE AND TIME: Tuesday, November 1, 2016 @ 10:00 AM

PLACE: Room 102, Hartman Building, 2012 Capital Circle Southeast, Tallahassee, Florida.

Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 5 days before the workshop/meeting by contacting: Pamela Macon, telephone: [phone], email: [e-mail]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Pamela Macon, Chief, Bureau of Compliance, Division of Workers’ Compensation, Department of Financial Services, address: 200 E. Gaines Street, Tallahassee, Florida 32399-4228, telephone: [phone], email: [e-mail].

 

THE FULL TEXT OF THE PROPOSED RULE IS:

69L-6.028 Procedures for Imputing Payroll and Penalty Calculations.

(1) In the event an employer fails to provide business records sufficient for the Department department to determine the employer’s payroll for the time period requested in the business records request for the calculation of the penalty pursuant to paragraph Section 440.107(7)(e), F.S., the Department may department shall impute the employer’s payroll at any time after ten, but before the expiration of twenty-eight business days after receipt by the employer of a written request to produce such business records.

(2) The employer’s time period or periods period of non-compliance means the time period(s) within the two years preceding the date the stop-work order was issued to the employer within which the employer failed to secure the payment of compensation pursuant to Chapter 440, F.S., and must shall be either the same time period as set forth as the time period requested in the business records request for the calculation of penalty or an alternative time period or period(s) of non-compliance as determined by the Department department, whichever is less. The employer may provide the Department with department shall determine an alternative period of non-compliance by obtaining records from other sources, including, but not limited to, the Department of State, Division of Corporations, the Department of Business and Professional Regulation, licensing offices, and building permitting offices to show an alternative time period or period(s) of non-compliance. and contracts, that evidence a period of non-compliance different than the time period requested in the business records request for the calculation of penalty. For purposes of this rule, “non-compliance” means the employer’s failure to secure the payment of workers’ compensation pursuant to Chapter 440, F.S.

(3) When an employer fails to provide business records sufficient to enable the Department department to determine the employer’s payroll for the time period requested in the business records request for purposes of calculating the penalty pursuant to paragraph provided for in Section 440.107(7)(d), F.S., the imputed weekly payroll for each current and former employee, corporate officer, sole proprietor or partner identified by the Department during its investigation will be the statewide average weekly wage as defined in subsection 440.12(2), F.S., that is in effect at the time the stop-work order was issued to the employer, multiplied by 1.5. shall be calculated as follows:

(a) For each employee, other than corporate officers, identified by the department as an employee of such employer at any time during the period of the employer’s non-compliance, the imputed weekly payroll for each week of the employer’s non-compliance for each such employee shall be the statewide average weekly wage as defined in Section 440.12(2), F.S., that is in effect at the time the stop-work order was issued to the employer, multiplied by 2. Employees include sole proprietors and partners in a partnership.

(b) If the employer is a corporation, for each corporate officer of such employer identified as such on the records of the Division of Corporations at the time of issuance of the stop-work order, the imputed weekly payroll for each week of the employer’s non-compliance for each such corporate officer shall be the statewide average weekly wage as defined in Section 440.12(2), F.S., that is in effect at the time the stop-work order was issued to the employer, multiplied by 2.

(a)(c) If a portion of the period of non-compliance includes a partial week of non-compliance, the imputed weekly payroll for such partial week of non-compliance will shall be prorated from the imputed weekly payroll for a full week.

(b)(d) The imputed weekly payroll for each employee, corporate officer, sole proprietor, and or partner will shall be assigned to the highest rated workers’ compensation classification code for an employee based upon records or the investigator’s physical observation of any that employee’s activities.

(4) If the Department department imputes the employer’s payroll, the employer will shall have twenty business days after service of the first amended order of penalty assessment to provide business records sufficient for the Department department to determine the employer’s payroll for the period requested in the business records request for the calculation of the penalty or for the alternative time period(s) of non-compliance. The employer’s penalty will be recalculated pursuant to paragraph Section 440.107(7)(d), F.S., only if the employer provides all such business records within the twenty days after the service of the first amended order of penalty assessment. Otherwise, the first amended order of penalty assessment will remain in effect.

Rulemaking Authority 440.107(9), 440.591 FS. Law Implemented 440.107(7)(e) FS. History–New 7-12-05, Amended 8-31-06, 8-30-09, 4-12-15, ___________.

 

69L-6.035 Definition of Payroll for Calculating Penalty.

(1) For purposes of determining payroll for calculating a penalty pursuant to subparagraph Section 440.107(7)(d)1., F.S., the Department must, shall when applicable, include any one or more of the following as remuneration to employees based upon evidence received in its investigation:

(a) through (e) No change.

(f) Expense reimbursements, including reimbursements for travel, made to employees by or on behalf of the employer, to the extent that the employer’s business records and receipts do not confirm that the expense was incurred as a valid business expense;

(g) and (h) No change.

(i) Total contract price of a service provided by the employer, excluding the cost for materials as evidenced in the employer’s business records or contract. In the event the costs for materials is included in the total contract price and cannot be separately identified in the total contract price, eighty percent of the total contract price will be deemed to shall be the employer’s payroll; and,

(j) Income listed on in “Form 1099 Miscellaneous Income” issued to a person, excluding the cost of materials as evidenced by business records from the person to whom the Form 1099 Miscellaneous Income was issued. The entire amount of the income listed on the “Form 1099 Miscellaneous Income” will be included in the employer’s payroll; In the event such records are not provided to the Department to determine the cost of such materials, the entire amount of the income listed on the “Form 1099 Miscellaneous Income” shall be included in the employer’s payroll.

(k) Unless the employer’s business records and receipts provided to the Department validate the payroll and expenses that correspond with the cash withdrawal amounts, eighty percent of the cash withdrawal amounts from an employer’s bank account must be included as wages or salaries paid to employees by or on behalf of the employer. These amounts will be identified as “uninsured labor” in Form DFS-F4-1595, Penalty Calculation Worksheet, as adopted in Rule 69L-6.027, F.A.C.;

(l) Unless the employer’s business records and receipts provided to the Department validate that the reimbursements paid directly to a leased employee from an employer are a business expense, 50% of such reimbursements will be included as remuneration to the leased employee; and

(m) For the day that a stop-work order was issued to an employer, remuneration for an employee may be evidenced by a signed, written statement from the employee containing the employee’s name, address, phone number, and rate of pay based upon the number of hours worked that day.

(2) For the purposes of calculating a penalty pursuant to subparagraph Section 440.107(7)(d)1., F.S., payroll for an officer of a corporation as defined in subsection Section 440.02(9), F.S., will shall be based on remuneration factors listed in paragraphs (1)(a) through (m) (j) of this rule, where applicable, or the state average weekly wage as defined in subsection Section 440.12(2), F.S., that is in effect at the time the stop-work order was issued to the employer, multiplied by 1.5 2, whichever is less.

(3) For purposes of calculating a penalty pursuant to subparagraph Section 440.107(7)(d)1., F.S., payroll for a sole proprietor or partner shall be based on remuneration factors listed in paragraphs (1)(a) through (m) (j) of this rule, where applicable, or the state average weekly wage as defined in subsection Section 440.12(2), F.S., that is in effect at the time the stop-work order was issued to the employer, multiplied by 1.5 2, whichever is less.

(4) For purposes of calculating a penalty pursuant to subparagraph 440.107(7)(d)1., F.S., the payroll for every employee, corporate officer, sole proprietor, and partner will be assigned to the workers’ compensation classification code that corresponds to their respective job duties as evidenced in the employer’s business records, or, if the business records are not sufficient for such assignment, to the highest rated workers’ compensation classification code associated with any employee’s activities based on the investigator’s actual physical observation of work activities.

Rulemaking Authority 440.107(9), 440.591 FS. Law Implemented 440.107(7)(d)1. FS. History–New 10-10-07, Amended 4-12-15, ___________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Pamela Macon, Assistant Chief, Bureau of Compliance, Division of Workers’ Compensation, Department of Financial Services

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Jeff Atwater, Chief Financial Officer, Department of Financial Services

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: October 7, 2016

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: May 13, 2016.