Florida Workers' Compensation Joint Underwriting etc. et a v. American Residuals And Talent, Inc. etc. ( 2018 )

FIRST DISTRICT COURT OF APPEAL
STATE OF FLORIDA
_____________________________
No. 1D17-2801
_____________________________
FLORIDA WORKERS’
COMPENSATION JOINT
UNDERWRITING ASSOCIATION,
INC.,
Appellant,
v.
AMERICAN RESIDUALS AND
TALENT, INC., d/b/a Art Payroll,
Appellee.
___________________________
On appeal from an Order of the Office of Insurance Regulation.
David Altmaier, Commissioner.
April 30, 2018
WINOKUR, J.
Appellant, Florida Workers’ Compensation Joint
Underwriting Association, Inc. (FWCJUA), appeals a Final Order
of the Office of Insurance Regulation (OIR) reversing FWCJUA’s
denial of workers’ compensation coverage to Appellee, American
Residuals and Talent, Inc. (ART). We affirm, but write to address
FWCJUA’s claim that ART is not an employer under Florida law.
I.
FWCJUA is a self-funding, residual-market insurer created
by the Legislature in order to provide workers’ compensation
insurance to employers who are statutorily required to maintain
such insurance, but who are unable to obtain coverage from
private insurers in the voluntary market. § 627.311(5)(a), Fla.
Stat. FWCJUA operates under the supervision of a nine-member
Board of Governors appointed by the Financial Services
Commission. § 627.311(5)(b), Fla. Stat. Additionally, FWCJUA
operates in accordance with a plan of operation adopted by the
Board of Governors and approved by OIR. § 627.311(5)(c), Fla.
Stat.
ART is a New Hampshire corporation authorized to do
business in Florida. ART specializes in talent payroll services for
the motion picture, television, and radio commercial production
industry. ART provides payroll and employer of record services to
clients in the advertisement and entertainment business for
short-term productions, such as paying wages to the talent,
obtaining and covering the talent for state unemployment
compensation and workers’ compensation coverage for each
production based on the location where the production is being
filmed or produced, and withholding, paying, and remitting taxes
due from the talent’s compensation, as well as filing state and
federal tax returns for the talent and providing W-2s to the
talent.
ART first obtained workers’ compensation coverage from
FWCJUA in 2002. After initially representing in its application
for coverage that it did not hire any of the employees for which it
sought coverage, ART subsequently changed its representation in
an August 2002 letter, stating that it entered into employment
contracts with workers and was a temporary employment service.
ART maintained coverage through FWCJUA until 2004. From
2005 through 2012, ART obtained workers’ compensation
coverage through the private market. In 2012, ART was unable to
maintain coverage in the private market and reapplied for
workers’ compensation coverage through FWCJUA. In its
application, ART described itself as a temporary employment
service. FWCJUA issued ART a coverage policy effective
September 2012.
In late 2014, FWCJUA received an application for workers’
compensation insurance from Stars of David Tours, LLC (Stars of
David). Stars of David is headquartered in New York and
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intended to bring its actors and staff into Florida for a travelling
theatrical performance. Stars of David was unable to obtain
coverage through FWCJUA, so it contracted with ART to provide
workers’ compensation insurance coverage until it could get its
own through FWCJUA. FWCJUA requested a copy of the Talent
Payroll Support Agreement that Stars of David had with ART
and determined that ART was an unlicensed employee leasing
company. FWCJUA then terminated ART’s workers’
compensation coverage and filed a complaint with the Florida
Division of Business and Professional Regulation (DBPR).
DBPR found insufficient evidence to establish probable cause
that ART operated as an unlicensed employee leasing company
and dismissed FWCJUA’s complaint. After DBPR closed its
investigation, ART reapplied to FWCJUA for coverage. FWCJUA,
however, again refused to issue ART workers’ compensation
coverage and initiated another complaint to DBPR claiming that
ART was an unlicensed employee leasing company. DBPR once
again found insufficient evidence to establish probable cause that
ART operated as an unlicensed employee leasing company.
In January 2016, FWCJUA again denied coverage to ART,
concluding that ART did not have any direct employees and, as a
result, was not an employer under Florida law. Thus, ART was
not eligible for coverage through FWCJUA. ART appealed
FWCJUA’s eligibility determination to OIR. Representatives for
FWCJUA and ART testified during the OIR hearing.
In February 2017, OIR issued its Written Report and
Recommendation reversing FWCJUA’s denial of workers’
compensation coverage to ART. OIR found that ART, while not
an employee leasing company, is an employer under Florida law,
because it is a “similar agent” under section 440.02(16)(a),
Florida Statutes. Additionally, OIR concluded that “the obligation
of the Production companies for the provision of workers’
compensation coverage is contractually transferred to ART by
virtue of the Talent Payroll Support Agreement which specifically
creates a co-employment relationship with the Talent selected by
the production companies.”
On June 13, 2017, OIR filed its Final Order adopting its
Written Report and Recommendation. FWCJUA appeals.
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II.
An agency’s final order may only be set aside “upon a finding
that it is not supported by substantial, competent evidence in the
record or that there are material errors in procedure, incorrect
interpretations of law, or an abuse of discretion.” Bollone v. Dep’t
of Mgmt. Servs., Div of Ret., 100 So. 3d 1276, 1279 (Fla. 1st DCA
2012) (quoting Hames v. City of Miami Firefighters’ & Police
Officers’ Tr., 980 So. 2d 1112, 1114 (Fla. 3d DCA 2008)).
Chapter 440, Florida Statutes, governs workers’
compensation insurance and defines “employer,” in pertinent
part, as “every person carrying on any employment . . . [and]
includes employment agencies, employee leasing companies, and
similar agents who provide employees to other persons.”
§ 440.02(16)(a), Fla. Stat. “Employment,” in turn, is defined as
“any service performed by an employee for the person employing
him or her.” § 440.02(17)(a), Fla. Stat. Additionally, “employee” is
defined as “any person who receives remuneration from an
employer for the performance of any work or service while
engaged in any employment under any appointment or contract
for hire.” § 440.02(15)(a), Fla. Stat.
An “employee leasing company” is defined as “a sole
proprietorship, partnership, corporation, or other form of
business entity engaged in employee leasing.” § 468.520(5) Fla.
Stat. Moreover, “employee leasing” is defined as “an arrangement
whereby a leasing company assigns its employees to a client and
allocates the direction of and control over the leased employees
between the leasing company and the client.” § 468.520(4), Fla.
Stat. Furthermore, Chapter 468, Florida Statutes, requires that
employee leasing companies be licensed.
ART conceded that it is not an employee leasing company.
Therefore, the question is whether competent substantial
evidence supports OIR’s conclusion that ART is an employer
under Florida law as a “similar agent.”
III.
FWCJUA claims that there is no competent substantial
evidence to support OIR’s finding that ART is a “similar agent”
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and relies on this Court’s decision in Bolanos v. Workforce
Alliance, 23 So. 3d 171 (Fla. 1st DCA 2009). Bolanos concerned a
petitioner appealing the dismissal of his petition for workers’
compensation benefits after the Judge of Compensation Claims
found that the organization that helped petitioner find
employment, Workforce Alliance, was not his employer. Id. at
171-72. The petitioner had gone to Workforce Alliance to find
employment as a tree trimmer. Id. at 172. Workforce Alliance
informed the petitioner that an individual had an employment
opportunity for him. Id. The petitioner then met with this
individual and agreed to a tree-trimming job. Id. The individual,
and not Workforce Alliance, paid the petitioner. Id. The
petitioner then suffered an injury on the job and claimed that
Workforce Alliance was his employer pursuant to language of
section 440.02(16)(a), Florida Statutes, specifically that
Workforce Alliance was a “similar agent” to an employment
agency or employment leasing company. Bolanos, 23 So. 3d at
172.
We rejected petitioner’s argument and held that the “key
features” of a “similar agent . . . include a financial arrangement
between the agency and either the end employer/client or the
employee, as seen in employment agencies, or the use of the
entity’s own employees by the end/employer/client, as seen in
employee leasing companies.” Id. at 173. Because Workforce
Alliance failed to satisfy either requirement, it was not
petitioner’s employer. Id.ART is different from Workplace Alliance in both form and
substance. While not in charge of interviewing, hiring, or firing
the talent of its clients, ART pays the talent for its services.
Moreover, ART ensures that its clients abide by local and federal
employment practices as well as comply with applicable union
guidelines. Additionally, ART tracks any residual payments or
royalties that are due to its clients. In contrast, Workforce
Alliance was essentially an employment referral service with no
contractual connection to the employers that used its services.
Indeed, Bolanos noted that Workforce Alliance was a federally
funded non-profit organization that did not charge any fees to
either employees looking for jobs or employers looking for
manpower. Id. at 172.
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Most importantly, ART entered into service contracts with
its clients. These Talent Payroll Support Agreements state that
ART is the “employer of record” for the talent. The contracts also
provide for ART’s compensation in the form of a percentage of the
talent’s wages and a handling fee. This is the sort of financial
arrangement we contemplated in Bolanos. As a result, ART can
be properly defined as a “similar agent” under Florida law.
Evidence in the record suggests that ART is a “co-employer”
of the talent. In the September 2016 hearing, FWCJUA’s senior
underwriter testified that FWCJUA considered ART to be an
“employer of record” or “co-employer” with its clients. FWCJUA
conceded that in a “co-employer” relationship, two companies can
be seen as an employer.
Furthermore, FWCJUA’s senior underwriter testified that
the reason for FWCJUA’s cancellation of ART’s coverage was that
ART was not the “direct employer” of the talent. Thus,
FWCJUA’s argument is not that ART is not an employer, but
rather based on the distinction between “direct” and “indirect”
employers. This distinction, however, is nowhere to be found in
Florida law or, for that matter, FWCJUA’s Operations Manual.
Based on the character of ART’s relationship to its clients, its
contractual financial arrangements with said clients, and this
Court’s own precedent, ART is a “similar agent” under
section 440.02(16)(a).
IV.
FWCJUA warns that workers’ compensation law would be
upended if companies such as ART are viewed as employers
under Florida law, that such a ruling would vitiate the licensing
requirement for employee leasing companies, and that run-of-the-
mill payroll companies would be seen as employers. This should
not occur. Employee leasing companies lease their own employees
to other employers. DBPR investigated ART twice and found that
ART did not operate as an unlicensed employee leasing company.
Companies that lease their employees to its clients will still be
required to obtain licensure pursuant to Florida law. In addition,
this ruling does not exempt ART from any applicable licensure
requirements if it changes its operating practices.
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Similarly, this ruling will not open the door for payroll
service companies to become employers under Florida law. As
mentioned earlier, ART is a unique service provider due to the
demands of entertainment companies who do short-term, out-of-
state production work. ART does more than just the ministerial
function of issuing paychecks to its client’s employees. ART
operates as the employer of record for the talent. ART assumes
an employer’s responsibility of paying talent and ensuring that
they are provided with the insurance required under the law of
the jurisdiction where they are employed, while its clients handle
the creative aspect of interviewing and hiring the right talent for
its productions. As conceded by FWCJUA, ART is effectively a
“co-employer” of the talent.
V.
ART’s contractual relationship with its clients falls within
the ambit of a “similar agent” pursuant to our precedent. As a
result, OIR based its ruling on competent, substantial evidence.
Therefore, we affirm OIR’s Final Order.
AFFIRMED.
RAY and BILBREY, JJ., concur.
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Not final until disposition of any timely and
authorized motion under Fla. R. App. P. 9.330 or
9.331.
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Thomas J. Maida, James A. McKee, Benjamin J. Grossman, and
Nicholas R. Paquette of Foley & Lardner LLP, Tallahassee, for
Appellant.
Fred F. Harris, Jr., David C. Ashburn, and M. Hope Keating of
Greenberg Traurig, P.A., Tallahassee, for Appellee.
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