Court Opinion

ID: 4444064
Source: CourtListenerOpinion
Date Created: 2019-10-03 19:03:10.283784+00
Date Added: 2024-06-11T14:02:30.786830
License: Public Domain

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.

                         October 3, 2019

                   ON MOTION FOR REHEARING

WINOKUR, J.

     We grant Appellant’s motion for rehearing to the extent that
we withdraw our prior opinion, and substitute the following in its
place. 1 Appellant, Florida Workers’ Compensation Joint
Underwriting Association, Inc. (FWCJUA), appeals a Final Order
of the Office of Insurance Regulation (OIR) reversing FWCJUA’s

    1 We deny Appellant’s motion for certification of questions of
great public importance and motion for rehearing en banc.
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 section
440.02(16)(a), Florida Statutes and to clarify the scope of the
Final Order under review.

                                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 that desires to do
business in Florida. ART specializes in the industry for the
motion picture, television, and radio commercial production
industry. ART provides payroll and other 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. However, ART does
not hire or fire the employees of the client companies and limits
additional liability in its client contracts.

     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.
Under this operating description, ART maintained coverage

                                2
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 2012 application, ART again 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
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.
Upon review of the Agreement, FWCJUA concluded ART was not
operating as a temporary employment service but as 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 make a determination
as to ART’s operational status 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 make a determination.

    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 the Written Report and Recommendation, OIR
specifically limited the issues as follows:

                                 3
     A.     Whether [OIR] should affirm or reverse FWCJUA’s
decision to deny ART’s application for workers’ compensation
insurance coverage.

       B.   Whether ART is an “employer” as defined by Florida
law.

    C.     Whether ART is required by Florida law to obtain
workers’ compensation insurance.

       D.   Whether ART has employees as defined by Florida
law.

   E.     Whether ART is required to be licensed as an
Employee Leasing Company as required by section 468.526, F.S.

    In the Written Report and Recommendation, OIR reversed
FWCJUA’s denial of workers’ compensation coverage to ART.
Specifically, OIR found that ART, while not operating as an
employee leasing company, is an employer under section
440.02(16)(a), Florida Statutes, as a “similar agent.” Additionally,
OIR concluded that the contracts between ART and its client
production companies created 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.

                                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, establishes Florida’s workers’
compensation law. The definitional section of Chapter 440 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

                                 4
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. As
recognized by OIR, this is a broad definition.

     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 and OIR
agreed that, under its current operational status, it does not meet
the elements of section 468.520(4), Florida Statutes.

     In satisfying its duty under section 627.311, Florida
Statutes, to provide workers’ compensation insurance to
“employers” who are statutorily required to maintain such
insurance, FWCJUA is governed by its Operations Manual. The
FWCJUA Operation Manual defines “employers” as “the
applicant or policyholder desiring or receiving coverage from the
FWCJUA.” An employer can be a sole proprietor, partnership,
corporation or other legally recognized entity subject to the
Florida Workers’ Compensation Law.” (Emphasis added.) Here,
the narrow question is whether competent substantial evidence
supports OIR’s conclusion that ART is an “employer” under
section 440.02 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”
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

                                5
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.

     The distinguishing factor here is that ART entered into
service contracts with its clients unlike those of an employee
leasing company or temporary services company. ART’s Talent
Payroll Support Agreements provide for ART’s compensation in
                                6
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, in this case ART can be defined as a “similar
agent” under Florida law. However, the Agreement went further
to create a contractual relationship falling between that of a
temporary services company and an employee leasing company.
Although ART set up what appeared to be an employee leasing
company (paying wages, taxes and providing workers’
compensation coverage as the listed employer) it then
contractually limited its liability as only an “employer of record”
with no control or involvement in the hiring and firing of
employees. However, the legality of this “employer of record”
relationship created by ART’s Agreement was not under review
below and, is therefore, not before this court.

     Based on the character of ART’s relationship to its clients, its
contractual financial arrangements with those clients, and this
Court’s own precedent, OIR did not err in concluding that ART is
an “employer” under section 440.02(16)(a). However, we note that
the scope of the Final Order on appeal and of this opinion is
limited to ART’s satisfaction of the “employer” definition of
section 440.02. The issue of whether FWCJUA is required, under
section 627.311 and by its Operational Manual, to provide
coverage to entities satisfying the definition of “employer” under
440.02(16)(a) is not before us. 2 This ruling does not define ART as
an “employer” under any Florida law other than section
440.02(16)(a).

                                IV.

    Because competent substantial evidence supports OIR’s
determination that ART qualifies as an “employer,” the Final
Order is affirmed.

    AFFIRMED.

    2  FWCJUA’s Operations Manual requires provision of
coverage to employers who can be “a sole proprietor, partnership,
corporation or other legally recognized entity subject to Workers’
Compensation Law.” This contemplates existence of an insurable
interest for which FWCJUA can write coverage.

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BILBREY, J., concurs; RAY, C.J., dissents with opinion.

                 _____________________________

    Not final until disposition of any timely and
    authorized motion under Fla. R. App. P. 9.330 or
    9.331.
               _____________________________

RAY, C.J., dissenting.

     Because the individuals for whom ART seeks to obtain
workers’ compensation insurance are not ART’s employees, but
are instead the employees of ART’s clients, I respectfully dissent.
I would reverse OIR’s final order and hold that ART is not an
employer entitled to workers’ compensation insurance from the
FWCJUA.

     An “employer” for workers’ compensation purposes includes
“every person carrying on any employment . . . [as well as]
employment agencies, employee leasing companies, and similar
agents who provide employees to other persons.” § 440.02(16)(a),
Fla. Stat. The parties concede that ART is neither an
employment agency nor an employee leasing company. Yet OIR
and the majority conclude that ART meets the statutory
definition of an employer because it is a “similar agent” to an
employment agency or employee leasing company. I believe such
an interpretation sweeps too broadly because it fails to consider
that section 440.02(16)(a) includes within the definition of the
term “employer” only “similar agents who provide employees to
other persons.”

    In Bolanos v. Workforce Alliance, 23 So. 3d 171 (Fla. 1st DCA
2009), this Court laid the groundwork for an analysis of whether
an entity constitutes a “similar agent” required to obtain workers’
compensation insurance under Florida law. Since the term
“similar agent” is not defined by statute, we determined that its
meaning could be gleaned from the terms that precede it—
“employment agency” and “employee leasing company.” 23 So. 3d
at 172. We relied on dictionary definitions to define “employment
agency” as a “[b]usiness that procures, for a fee, employment for
others and employees for employers.” Id. at 173. And we

                                 8
recognized that an “employee leasing company,” which is defined
and regulated by law, is a company engaged in “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.” Id. (quoting §§
468.520(4), (5), Fla. Stat.).

    From these definitions, we explained that the key features
necessary to constitute a “similar agent” under section
440.02(16)(a) 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. (emphasis added). Neither feature is present
here.

     ART is unlike an employment agency because it does not
connect employees with employers for a fee. The hearing officer’s
findings of fact indicate that ART’s services to its clients do not
include procuring employees for the clients—ART neither
interviews nor hires employees for its clients. Additionally, the
financial arrangement that exists between ART and its clients for
contractually assuming payroll and other services is different in
kind from that contemplated for an employment agency.

     Nor is ART like an employee leasing company. ART does not
provide its “own employees” to its clients. Instead, the employees
for whom ART seeks to obtain workers’ compensation coverage
are interviewed, hired, and fired only by ART’s clients; perform
work only for ART’s clients; are directed, controlled, and
supervised in their jobs only by ART’s clients; and are paid by
ART only in the amount provided by the clients. The fact that
ART may perform some services that are “similar” to those of an
employee leasing company does not make it a “similar agent”
under section 440.02(16)(a) because ART does not “provide
employees to other persons”—a requirement explicit in the
statutory text.

     Because ART is not the employer of the employees for whom
it seeks to obtain workers’ compensation coverage, and because
ART may not, by contract, assume its clients’ statutory obligation
to provide workers’ compensation coverage for its clients’

                                9
employees, see Deen v. Quantum Resources, Inc., 750 So. 2d 616,
621 (Fla. 1999), I would reverse the order on review.

                _____________________________

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.

William H. Rogner of Hurley, Rogner, Miller, Cox & Waranch,
P.A., Winter Park, for Amici Curiae Florida Insurance Council,
Florida Roofing & Sheet Metal Contractors Association, FRSA
Self Insurers Fund, and the Florida Association of Insurance
Agents.

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