Florida Board of Employee Leasing Companies to Hire Outside Consultant to Review Change of Ownership Notifications for Statutory Compliance
Feb 23, 2012
The Florida Board of Employee Leasing Companies (“Board”) met via teleconference on February 15, 2012. During the meeting, the Board passed a motion to hire an outside consultant to review employee leasing company change of ownership notifications for compliance under Section 468.5245(2), F.S., and to initiate investigations if necessary. Board members expressed concerns that acquired companies’ financial liabilities are going unpaid in the midst of these transactions.
Following is a report of the meeting proceedings:
Controlling Person Applications
The Board approved the following controlling person applications without discussion:
- Neal Bibeau, Controlling Person Applicant
- AlphaStaff, Inc. – GL 49
- Alpha FLA 6, Inc. – GM 292
- AlphaStaff 3, Inc. – GM 234
- AlphaStaff Systems V, Inc. – GL 125
- AlphaNY2, Inc. – GM 317
- Alpha NYPEO, Inc. – GM 319
- Equity Leasing-Finance II, Inc. – GM 239
- AlphaGA 2, Inc. – GM 386
- ASI Resources, Inc. – GM 387
- Jason Alaric Morgan, Controlling Person Applicant
- AlphaStaff, Inc. – GL 49
- Alpha FLA 6, Inc. – GM 292
- AlphaStaff 3, Inc. – GM 234
- AlphaStaff Systems V, Inc. – GL 125
- AlphaNY2, Inc. – GM 317
- Alpha NYPEO, Inc. – GM 319
- Equity Leasing-Finance II, Inc. – GM 239
- AlphaGA 2, Inc. – GM 386
- ASI Resources, Inc. – GM 387
Employee Leasing Company Name Change Applications
The following applications for employee leasing company name changes were approved without discussion:
- NELCO Three, Inc. – GM 286
- TO: CoAdvantage Resources 17, Inc. d/b/a CoAdvantage 174
- NELCO Seven, Inc. – GM 142
- TO: CoAdvantage Resources 18, Inc. d/b/a CoAdvantage 187
- NELCO Eight, Inc. – GM 141
- TO: CoAdvantage Resources 19, Inc. d/b/a CoAdvantage 200
- NELCO Two, Inc. – GM 285
- TO: CoAdvantage Resources 20, Inc. d/b/a CoAdvantage 213
- Global Employment Solutions PEO, Inc. – GL 8
- TO: CoAdvantage Resources 24, Inc. d/b/a CoAdvantage 226
- Global Employment Solutions PEO II, Inc. – GM 293
- TO: CoAdvantage Resources 25, Inc. d/b/a CoAdvantage 237
- Global Employment Solutions PEO III, Inc. – GM 279
- TO: CoAdvantage Resources 26, Inc. d/b/a CoAdvantage 250
- Global Employment Solutions PEO V, Inc. – GM 27
- TO: CoAdvantage Resources 27, Inc. d/b/a CoAdvantage 263
- Global Employment Solutions PEO VI, Inc. – GM 294
- TO: CoAdvantage Resources 28, Inc. d/b/a CoAdvantage 276
- Global Employment Solutions PEO VII, Inc. – GL 147
- TO: CoAdvantage Resources 29, Inc. d/b/a CoAdvantage 289
- Global Employment Solutions PEO VIII, Inc. – GM 365
- TO: CoAdvantage Resources 30, Inc. d/b/a CoAdvantage 300
- Global Employment Solutions PEO IX, Inc. – GM 367
- TO: CoAdvantage Resources 31, Inc. d/b/a CoAdvantage 312
- Co-Advantage Resources, Inc. – GL 82
- TO: adding d/b/a CoAdvantage 324
- CoAdvantage Resources 11, Inc. – GL 69
- TO: adding d/b/a CoAdvantage 334
- CoAdvantage Resources 13, Inc. – GL 36
- TO: adding d/b/a CoAdvantage 344
- CoAdvantage Resources 14, Inc. – GM 75
- TO: adding d/b/a CoAdvantage 354
- CoAdvantage Resources 16, Inc. – GM 74
- TO: adding d/b/a CoAdvantage 364
- Co-Advantage Resources IV, Inc. – GM 280
- TO: adding d/b/a CoAdvantage 374
- Co-Advantage Resources-Florida, Inc. – GM 260
- TO: adding d/b/a CoAdvantage 384
Controlling Person Relinquishment Applications
The following three controlling person relinquishment applications also were approved without discussion:
- Joseph W. Cole, II – CO 833
- Sequent, Inc. – EL 357
- John Bradley Gibson, Jr. – CO 942
- AlphaStaff, Inc. – GL 49
- Alpha FLA 6, Inc. – GM 292
- AlphaStaff 3, Inc. – GM 234
- AlphaStaff Systems V, Inc. – GL 125
- AlphaNY2, Inc. – GM 317
- Alpha NYPEO, Inc. – GM 319
- Equity Leasing-Finance II, Inc. – GM 239
- AlphaGA 2, Inc. – GM 386
- ASI Resources, Inc. – GM 387
- Carl Miserendino, CO 960
- AlphaStaff, Inc. – GL 49
- Alpha FLA 6, Inc. – GM 292
- AlphaStaff 3, Inc. – GM 234
- AlphaStaff Systems V, Inc. – GL 125
- AlphaNY2, Inc. – GM 317
- Alpha NYPEO, Inc. – GM 319
- Equity Leasing-Finance II, Inc. – GM 239
- AlphaGA 2, Inc. – GM 386
- ASI Resources, Inc. – GM 387
Termination of Employee Leasing Company Operations
Board Chairperson John Jones stated that the following terminations of employee leasing company operations would be considered at the March 2012 meeting:
- Employee Leasing Solutions Two, Inc. – GL 96
- Employee Leasing Solutions, Inc. – GM 228
- Employee Leasing Solutions Three, Inc. – GM 229
- Employee Leasing Solutions Four, Inc. – GM 230
- Employee Leasing Solutions Holding Company, Inc. – GM 290
Notification of Change in Ownership Applications
The Board discussed notifications of change in ownership for the following employee leasing companies:
- Administrative Concepts Corporation – GL 108
- Administrative Concepts 2000 Corporation – GM 268
- Administrative Concepts 2003, Inc. – GM 359
- 21st Century Concepts LLC d/b/a Administrative Concepts – GM 333
- Simple Employer Solutions, Inc. – GL 126
- Administrative Concepts 2010, Inc. – GM 320
- Thrive HR FL 1, LLC – EL 387
A discussion regarding Section 468.5245(2), F.S. ensued among Board members and an attorney representing Steven Groulx, the applicant purchasing the entities that are the subjects of the applications.
The Section reads:
(2) A person or entity that seeks to purchase or acquire control of an employee leasing company or group licensed or registered under this part must first apply to the board for a certificate of approval for the proposed change of ownership. However, prior approval is not required if, at the time the purchase or acquisition occurs, a controlling person of the employee leasing company or group maintains a controlling person license under this part. Notification must be provided to the board within 30 days after the purchase or acquisition of such company in the manner prescribed by the board.
A Board member said he interpreted the law to mean that if there is “no continuing controlling person from one company to the next company,” approval by the Board is required, as opposed to just the required provision of notification to the Board. He stated that, based on this application, it appeared that the current controlling persons would not be staying on after Mr. Groulx takes control of these companies.
The attorney representing Mr. Groulx expressed his view that, under Section 468.5245(2), a controlling person from an entity whose assets or stock are being purchased does not have to be hired as long as a controlling person is in place, generally.
Board Member Celeste Dockery disagreed, saying that might apply to a total stock purchase, but not an asset purchase.
Another Board member said, “I don’t think it was the [legislative] intent to do asset-only deals and leave liabilities with no way to be paid.”
Board Member Abram Finkelstein added, “The intent was to ensure that transactions could occur in a way where the public is not harmed.” He said that the public could be harmed if there is no oversight on who is taking a company’s assets.
Explaining that Section 468.5245(2) does not specifically mention asset purchases, Mr. Groulx’s attorney said, “With someone coming in in an emergency situation and solving a problem, as has occurred here, the [legislative] intent is that sales should go ahead.”
At this point, Board Counsel Mary Ellen Clark interjected her opinion that, while the term “asset purchase” is not in the statute, the statutory language “purchase or acquired control of an employee leasing company or group” might address it. She said that she interpreted Section 468.5245(2) to require controlling person consistency prior to, and subsequent to the purchase in order to avoid prior Board approval of the transaction.
Board members continued to express concerns about liabilities going unpaid and “piling up” as a result of transactions like the one at hand.
Referencing the last sentence of Section 468.5245(2), one Board member said that, even a situation involving just a notification (as opposed to Board approval) would not preclude the Board from asking about a company’s liabilities.
Mr. Groulx’s attorney again said that he did not believe the legislative intent of Section 468.5245(2) was to require the hiring of a controlling person from the predecessor company.
In response, a Board member said “We’re not saying they have to do anything. We’re saying if there is no continuity of controlling persons, then [the company] has a higher level of scrutiny. If there is, they have a lower level. Don’t mistake that to mean that we have no ability to question the transaction even in the event of mere notification. We as a Board have the right to investigate circumstances of transactions.”
Ms. Dockery suggested that the Board hire an outside consultant to look into this matter and rumors, such as unpaid liabilities, that have been heard. Board members discussed the hiring of someone who is familiar with the Professional Employer Organization (“PEO”) industry. Ms. Dockery said that Dan McHenry has been approved as an expert by the Florida Department of Business and Professional Regulation (“DBPR”).
A Board member said that it could be expensive to have each change of ownership application examined by an outside person.
DBPR Executive Director Rick Morrison said he would look into these costs.
Mr. Groulx’s attorney asked whether the Board will allow sales to take place, or if “a potential catastrophe would happen if people like Mr. Groulx are not allowed to step in and help.”
Using examples, both Mr. Groulx and his attorney stated that Mr. Groulx is working to clear up any employee- and employment-related financial deficiencies that he has found in Administrative Concepts Corporation and that they did not believe a “complaint”-the term used by Board members during the discussion-should be filed against Mr. Groulx.
Board Member Eric Arfons said that there needs to be a way for the Board to check transactions to make sure “we’re not passing on a hot potato and waiting for it to pop.” Addressing Mr. Groulx, he said that “complaint” is merely the lingo used, and that no one is threatening him in terms of a literal complaint.
Another Board member asked how a pertinent motion could be made in such a way to avoid the application of a complaint, but still be able to look further into this matter.
Ms. Clark suggested that the Board establish a process for examining notifications pertaining to change of ownership applications, and that an outside consultant, if the Board chooses to hire one, could decide whether an investigation needs to be opened.
Mr. Finkelstein mentioned setting parameters for when these types of reviews would be done. Another Board member said that any process should be applied evenly, not just when “we think we’ve heard a rumor.”
By a unanimous vote, the Board then passed a motion to hire an expert to review notifications for statutory compliance and to initiate complaints if necessary.
The Board then moved onto the next change of ownership application:
- Employee Leasing Solutions Two, Inc. – GL 96
- Employee Leasing Solutions, Inc. – GM 228
- Employee Leasing Solutions Three, Inc. – GM 229
- Employee Leasing Solutions Four, Inc. – GM 230
Board members agreed that under the motion they just passed, this notification should be reviewed by the outside consultant to be hired.
Ms. Clark clarified that the consultant will determine whether liabilities exist and, if so, who is responsible for them. Whether a complaint should be opened will then be decided.
Reports
Office of the Attorney General
Ms. Clark presented the Office of the Attorney General report. She said that Rule 61G7-5.002, entitled “Annual Assessment on Gross Florida Payroll,” should take effect by the end of February. This Rule pertains to the annual fee assessed by the DBPR to each employee leasing company or group based upon the preceding calendar year’s gross Florida payroll. According to Ms. Clark, the Board voted to cut the annual assessment rate by 50 percent in October 2011.
DBPR Executive Director
Mr. Morrison provided an update on the Board’s projected revenue, expenses, and changes in account balance. He also confirmed that he would look into the cost of an outside consultant on the change of ownership notifications.
No reports were made by the Office of the General Counsel or the Board Chairperson.
Public Records Act
It was discussed that legislation is currently pending that would provide that a PEO is always considered an applicant during both initial and renewal licensure processes for purposes of confidentiality of financial statements filed with the application. The Board’s August meeting included conversation on 455.229, F.S., which refers to the confidentiality of applicants’ financial statements, but makes no mention of similar protection for companies once they become licensees.
An update was provided to the Board on hearings held on February 14 pertaining to the Public Records Act. It was said that the judge in this matter has a “difficult decision” in terms of weighing the Public Records Act versus financial information filed by PEOs with the belief that it is confidential.
The meeting was then adjourned.
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