Florida Talent Payroll Services Firm is “Similar Agent” Under “Employer” Statute

While Not an “Employee Leasing Company,” It Qualified as “Employer”

A Florida appellate court held that a talent payroll services firm, while not an “employee leasing company,” was nevertheless an “employer” under Florida law, since it was a “similar agent” within the meaning of § 440.02(16)(a), Fla. Stat. [Florida Workers’ Comp. Joint Underwriting Ass’n v. American Residuals & Talent, Inc., 2018 Fla. App. LEXIS 5915, 43 Fla. L. Weekly D 956 (Apr. 30, 2018)]. As an employer, it qualified for and should have been covered by workers’ compensation insurance through a self-funded residual-market insurer created by the Florida Legislature. The court added that its decision should not be problematic in that the state’s licensing rules related to employee leasing companies and their clients still fully applied.

Background

American Residuals and Talent, Inc. (ART), a New Hampshire corporation authorized to do business in Florida, specializes in talent payroll services for the motion picture, television, and radio commercial production industry. It sought workers’ compensation coverage from Florida Workers’ Compensation Joint Underwriting Association, Inc. (FWCJUA), a self-funding, residual-market insurer created by the Florida Legislature 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.

FWCJUA denied coverage to ART, concluding that ART did not have any direct employees and, therefore, was not an employer under Florida law. ART appealed FWCJUA’s eligibility determination to the Office of Insurance Regulation (OIR). OIR found that ART, while not an employee leasing company, was nevertheless an “employer” under Florida law since, pursuant to § 440.02(16)(a), Fla. Stat., the term “employer” included “employment agencies, employee leasing companies, and similar agents who provide employees to other persons” [emphasis added]. According to OIR, ART was a “similar agent.”

ART Admitted it was not Licensed Employee Leasing Company

On appeal, the appellate court noted that “employee leasing” was 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.]. The court also noted that ART conceded that it was not an employee leasing company. Therefore, the question was whether competent substantial evidence supports OIR’s conclusion that ART is an employer under Florida law as a “similar agent.”

Court’s Earlier Decision Distinguished

FWCJUA argued that the case was controlled byBolanos v. Workforce Alliance, 23 So. 3d 171 (Fla. 1st DCA 2009), in which the court determined that Workforce Alliance was not an employer. There, a worker went to Workforce Alliance (WA) to find employment as a tree trimmer. WA informed him that work might be available with a particular individual. The worker then met with that individual and agreed to a tree-trimming job. That individual—not WA—paid the worker. When the worker sustained an injury, he claimed that WA was his employer pursuant to the “similar agent” language in § 440.02(16)(a). The appellate court in Bolanos held WA was not such a similar agent.

In the instant case, the court distinguished the facts from those in Bolanos. While ART did not engage in interviewing, hiring, or firing the talent of its clients, ART paid the talent for the services. Moreover, ART ensured that its clients abided by local and federal employment practices as well as applicable union guidelines. Additionally, ART tracked any residual payments or royalties that were due to its clients. The court stressed that in Bolanos, WA was essentially an employment referral service with no contractual connection to the employers that used its services. Indeed, Bolanos conceded that WA was a federally funded non-profit organization that did not charge any fees to either employees looking for jobs or employers looking for manpower.

The court stressed that in the instant case, ART entered into service contracts with its clients. This was exactly the sort of financial arrangement the court had contemplated in Bolanos. As a result, ART could be properly defined as a “similar agent” under Florida law.

No License, No Problem (Yet)

The court was unconvinced by FWCJUA’s warning that workers’ compensation law would be upended if companies such as ART were 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. The court observed that employee leasing companies lease their own employees to other employers. The court noted that the Division of Business and Professional Regulation had investigated ART twice and found that ART did not operate as an unlicensed employee leasing company. After the court’s decision in the instant case, companies that lease their employees to its clients would still be required to obtain licensure pursuant to Florida law. In addition, the court’s ruling did not exempt ART from any applicable licensure requirements if it changed its operating practices.

ART’s contractual relationship with its clients fell within the ambit of a “similar agent” pursuant to Bolanos. As a result, OIR based its ruling on competent, substantial evidence.

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