Docket No. 2007-54512L 9 of 9
PETITIONER:Employer Account No. – 2476703
LIQUOR GROUP FLORIDA LLC
830 A1A N STE 155
PONTE VEDRA BEACH FL 32082-3287
PROTEST OF LIABILITY
DOCKET NO. 2007-54512LRESPONDENT:
State of Florida
Agency for Workforce Innovation
c/o Department of Revenue
O R D E R
This matter comes before me for final Agency Order.
Having fully considered the Special Deputy’s Recommended Order and the record of the case and in the absence of any exceptions to the Recommended Order, I adopt the Findings of Fact and Conclusions of Law as set forth therein. A copy of the Recommended Order is attached and incorporated in this Final Order.
In consideration thereof, it is ORDERED that the determination dated August 27, 2007, is AFFIRMED.
DONE and ORDERED at Tallahassee, Florida, this ______day of December, 2007.
Cynthia R. LorenzoDeputy Director
Agency for Workforce Innovation
AGENCY FOR WORKFORCE INNOVATION
Office of Appeals
MSC 347 Caldwell Building
107 East Madison Street
Tallahassee, FL 32399-4143
PETITIONER:Employer Account No. - 2476703
LIQUOR GROUP FLORIDA LLC
830 A1A N STE 155
PONTE VEDRA BEACH FL 32082-3287
PROTEST OF LIABILITY
DOCKET NO. 2007-54512LRESPONDENT:
State of Florida
Agency for Workforce Innovation
c/o Department of Revenue
RECOMMENDED ORDER OF SPECIAL DEPUTY
TO: Cynthia R. Lorenzo, Deputy Director
Agency for Workforce Innovation
This matter comes before the undersigned Special Deputy pursuant to the Petitioner’s protest of the Respondent’s determination dated August 27, 2007.
After due notice to the parties, a telephone hearing was held on October 11, 2007. The Petitioner, represented by the Chief Executive Officer, appeared and testified. The Respondent was represented by a Revenue Administrator with the Department of Revenue. A Tax Specialist appeared and testified. The Joined Party appeared and testified.
The record of the case, including the recording of the hearing and any exhibits submitted in evidence, is herewith transmitted. Proposed Findings of Fact and Conclusions of Law were not received.
Issue: Whether services performed for the Petitioner by the Joined Party and other individuals as warehouse/delivery drivers constitute insured employment pursuant to Sections 443.036(19), 443.036(21); 443.1216, Florida Statutes, and if so, the effective date of the liability.
Whether the Petitioner's corporate officers received remuneration for employment which constitutes wages, pursuant to Sections 443.036(21), (44), Florida Statutes; Rule 60BB-2.025, Florida Administrative Code.
Findings of Fact:
1. The Petitioner is a limited liability company which was formed January 1, 2002, for the purpose of conducting a wholesale wine and liquor distribution business. The Petitioner leases space in a bonded liquor warehouse. The liquor stored in the warehouse is the property of various suppliers. When the Petitioner receives an order from one of the Petitioner’s customers, a warehouse worker paid by the Petitioner pulls the product, moves the product to the area of the warehouse leased by the Petitioner, and packs the product for delivery to the Petitioner’s customer. The Petitioner has approximately three or four warehouse workers and also has individuals performing sales. When the merchandise leaves the bonded warehouse it becomes the Petitioner’s property. The Petitioner leases vans to transport the product to the locations of the Petitioner’s customers. The Petitioner has several drivers who transport the product using the leased vans. Sometimes the warehouse workers are instructed to make the deliveries using the leased vans. The warehouse only allows authorized individuals in the warehouse and the Petitioner informs the warehouse which of the Petitioner’s workers are authorized to be in the warehouse. The Petitioner’s Chief Executive Officer, as well as its managing member, is active in the operation of the Petitioner’s business. The Petitioner considers all of its workers to be independent contractors.
2. In March 2006, the Joined Party was told by a friend that the Petitioner had product that needed to be relabeled. The Joined Party contacted the Petitioner’s Chief Executive Officer and was informed that the job was forty hours per week, that the work was to be performed at the warehouse, and that the rate of pay was $10 per hour. The Joined Party accepted the Petitioner’s offer of work and began work in March 2006. There was no written agreement and the Joined Party believed that he was hired to be an employee of the Petitioner.
3. The hours of operation of the warehouse are from 8:00 AM until 4:30 PM, Monday through Friday. The Joined Party’s work hours were limited to the operating hours of the warehouse in which the Petitioner leased space. The Petitioner required the Joined Party to work Monday through Friday from 8:00 AM until 4:30 PM each day.
4. Initially, the Joined Party was required to remove the corks from bottles, replace them with different corks, replace the shrink sleeves on the bottles, and re-box the bottles. The Joined Party was trained by another warehouse worker to perform the task. The assigned task was simple to perform and did not require extensive training.
5. After the Joined Party worked for approximately a month or two, he completed the task of re-labeling and re-boxing the bottles. The Petitioner then assigned the Joined Party to pull product from the warehouse and to prepare the product for delivery to the Petitioner’s customers. One of the Petitioner’s warehouse workers trained the Joined Party to retrieve the customers’ orders from the Petitioner’s computer and fill the orders for delivery. The new task was simple and did not require substantial training. The Joined Party’s work location, days of work, work hours, and rate of pay remained the same.
6. The Petitioner provided on-going supervision over the Joined Party’s work. The Petitioner directed the Joined Party as to what needed to be done, including providing additional training concerning any new duties or work techniques. The Petitioner’s Chief Executive Officer “chewed out” the Joined Party on a few occasions because the Joined Party did not fill the orders fast enough to satisfy the Chief Executive Officer.
7. The Joined Party was not required to provide any tools, equipment, or supplies to perform the work. The Joined Party did not have any work expenses.
8. After the Joined Party developed experience pulling customer orders and preparing them for delivery, the Petitioner required the Joined Party to make deliveries on a couple days per month. The Joined Party was assigned to drive one of the vans leased by the Petitioner. His hourly rate of pay remained the same while making deliveries.
9. While making deliveries, the Joined Party was required to report the progress of the deliveries to the Petitioner. The Joined Party was required to report any problems with the deliveries. The Joined Party was also required to be in contact with the Petitioner’s sales representatives to let the sales representatives know when the deliveries were made.
10. The Petitioner provided the Joined Party with a gas card to be used for purchasing fuel for the van. On one occasion the Joined Party had a flat tire while driving the van and he paid a mechanic to replace the tire. The Petitioner reimbursed the Joined Party for the expense. On a few occasions, the deliveries required overnight travel and the Joined Party was reimbursed by the Petitioner for the travel expenses.
11. On August 8, 2006, the Petitioner required the Joined Party to sign a Liability Release and an Independent Contractor’s Agreement.
12. The Liability Release states that the Joined Party’s participation as a representative of the Petitioner, its parent, its parent’s affiliates and subsidiaries, and their respective shareholders, directors, officers, agents and employees, as well as any and all affiliated organizations shall be subject to all applicable federal, state, county, and local laws, statutes, rulings and regulations as well as the rules and regulations of the Petitioner. The Liability Release further states that the Joined Party gives the Petitioner, its licensees and successors, the right to use the Joined Party’s name, voice, and any and all photographs, drawings and likenesses, and biographical data, for the purpose of advertising, publicity and trade, in any medium or forum throughout the world in perpetuity, without further compensation to the Joined Party.
13. The Independent Contractor’s Agreement states that the Joined Party is retained as a representative of the Petitioner, that the Joined Party’s relationship to the Petitioner is that of independent contractor and that the Petitioner is not liable for any expenses attributable to an employer-employee relationship. The Independent Contractor’s Agreement states that the agreement may be terminated by either party upon presentation of a two week written notice delivered in person or by certified mail. The Independent Contractor’s Agreement states “For a period of one (1) year commencing with the termination of this agreement, regardless of how terminated, subcontractor agrees not to directly, or indirectly, as owner, partner, stockholder, agent, employee, consultant, independent contractor, or otherwise, carry on, be engaged/concerned in, or render services to any business, organization, or other enterprises, which are engaged in a business similar to or in competition with the business carried on by contractor within the geographical area of the State(s) of Florida.”
14. The Joined Party was required to send an email to the Chief Executive Officer on Thursday of each week, reporting the Joined Party’s time worked during the week. The Petitioner paid the Joined Party each Monday for the work performed during the prior workweek. If the Joined Party worked more than forty hours during the week, he was paid for the overtime work at straight time. No taxes were withheld from the Joined Party’s pay. None of the Petitioner’s workers receive any fringe benefits.
15. In September 2006 the Chief Executive Officer informed the Joined Party that the Petitioner had increased the Joined Party’s hourly rate of pay to $11 per hour. He also informed the Joined Party that the Petitioner was attempting to obtain health insurance for the Joined Party and the other workers.
16. The Chief Executive Officer told the Joined Party not to use a forklift to pull the Petitioner’s orders from the warehouse. On or about November 4, 2006, the Joined Party disregarded that instruction and used a forklift to pull an order. The Joined Party had an accident with the forklift and numerous bottles were broken. As a result the Chief Executive Officer discharged the Joined Party immediately, without providing a two week written notice as required in the Independent Contractor’s Agreement.
17. At the end of the calendar year the Joined Party did not receive any type of report concerning the earnings he received from the Petitioner during the year. The Joined Party did not receive a Form W-2 or a Form 1099-MISC.
18. Prior to 2004, the Petitioner was registered with the Florida Department of Revenue and paid unemployment compensation taxes to the Department of Revenue on the wages of the Petitioner’s employees. Effective January 1, 2004, the Petitioner discontinued reporting wages, or paying taxes, to the Department of Revenue.
19. The Joined Party filed a claim for unemployment compensation benefits. Since the Petitioner did not report the Joined Party’s earnings, the Agency for Workforce Innovation issued an investigation to the Florida Department of Revenue. On August 27, 2007, a Department of Revenue Tax Specialist issued a determination holding that the Joined Party and any other persons performing services for the Petitioner as warehouse/delivery drivers are employees of the Petitioner retroactive to January 1, 2004. In addition, the determination holds that corporate officers performing services are employees of the corporation.
Conclusions of Law:
20. The issue in this case, whether services performed for the Petitioner constitute employment subject to the Florida Unemployment Compensation Law, is governed by Chapter 443, Florida Statutes. Section 443.1216(1)(a)2., Florida Statutes, provides that employment subject to the chapter includes service performed by individuals under the usual common law rules applicable in determining an employer-employee relationship.
21. The Supreme Court of the United States held that the term "usual common law rules" is to be used in a generic sense to mean the "standards developed by the courts through the years of adjudication." United States v. W.M. Webb, Inc., 397 U.S. 179 (1970).
22. The Supreme Court of Florida adopted and approved the tests in 1 Restatement of Law, Agency 2d Section 220 (1958), for use to determine if an employment relationship exists. See Cantor v. Cochran, 184 So.2d 173 (Fla. 1966); Miami Herald Publishing Co. v. Kendall, 88 So.2d 276 (Fla. 1956); Mangarian v. Southern Fruit Distributors, 1 So.2d 858 (Fla. 1941); see also Kane Furniture Corp. v. R. Miranda, 506 So2d 1061 (Fla. 2d DCA 1987).
23. Restatement of Law is a publication, prepared under the auspices of the American Law Institute, which explains the meaning of the law with regard to various court rulings. The Restatement sets forth a nonexclusive list of factors that are to be considered when judging whether a relationship is an employment relationship or an independent contractor relationship.
24. 1 Restatement of Law, Agency 2d Section 220 (1958) provides:
(1) A servant is a person employed to perform services for another and who, in the performance of the services, is subject to the other's control or right of control.
(2) The following matters of fact, among others, are to be considered:
(a) the extent of control which, by the agreement, the business may exercise over the details of the work;
(b) whether or not the one employed is engaged in a distinct occupation or business;
(c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
(d) the skill required in the particular occupation;
(e) whether the employer or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work;
(f) the length of time for which the person is employed;
(g) the method of payment, whether by the time or by the job;
(h) whether or not the work is a part of the regular business of the employer;
(i) whether or not the parties believe they are creating the relation of master and servant;
(j) whether the principal is or is not in business.