Superior Court County: King. Superior Court Cause No: 10-2-11852-7 SEA. Superior Court Judge Signing: Marianne Spearman.
William J. Rutzick (of Schroeter Goldmark & Bender ) ; David N. Mark; and Ian M. Messerle (of Miller Nash LLP), for appellants.
Melissa K. Mordy and Jeffrey B. Youmans (of Davis Wright Tremaine LLP ); and Ian M. Messerle and Francis L. Van Dusen, Jr. (of Miller Nash LLP ), for respondents.
Written by: Cox, J. Concurred by: Dwyer, J., Grosse, J.
[176 Wn.App. 699] Cox, J. --
¶ 1 The primary issue in this case of first impression is whether either Fred Meyer Stores Inc. or Expert Janitorial LLC is a " joint employer" of the appellant janitors under Washington's Minimum Wage Act (MWA), chapter 49.46 RCW. We hold that the proper test to determine this legal question is the " economic reality" test. That test requires examination of all factors relevant to the particular employment situation to determine the economic reality of the relationship. We also
hold that there are genuine issues of material fact regarding the existence and degree of some of the relevant factors used to determine the [176 Wn.App. 700] economic reality of the plaintiff janitors' relationship with Fred Meyer and Expert, respectively. Accordingly, we reverse the summary judgment orders granting dismissal and remand for further proceedings.
¶ 2 In 2004, Fred Meyer, a large retail company with stores in Washington and other areas of the Pacific Northwest, began to outsource janitorial work that had previously been done by employees of the company. Several years later, the Puget Sound area Fred Meyer contracted with Janitorial Management Services, a company that later merged with Expert Janitorial, to provide janitorial services.
¶ 3 In the contract between Fred Meyer and Expert, Fred Meyer included a detailed outline of the cleaning tasks to be completed by the janitors working in Fred Meyer stores. Expert, in turn, subcontracted with a variety of janitorial companies. These companies hired the janitors who cleaned the various stores with which Expert contracted.
¶ 4 One of the companies with which Expert contracted was All Janitorial LLC, owned by Sergey Chaban. All Janitorial contracted with Expert to clean Washington Fred Meyer stores. All Janitorial's employees also cleaned Rite Aid stores in Washington for Expert, and it contracted with other companies like Expert to clean other stores in the area. During the janitors' employment, about half of All Janitorial's total revenues came from its contract to clean Fred Meyer stores. Marcos Flores was the principal supervisor for All Janitorial's workers. Carolina Becerra Becerra, Julio Cesar Martinez Martinez, Orlando Ventura Reyes, Alma A. Becerra, and Adelene Mendoza Solorio (collectively janitors) all worked directly for All Janitorial.
¶ 5 All Janitorial hired the janitors and assigned them each to clean a particular Fred Meyer store in the Puget Sound region. The janitors signed contracts with All Janitorial that stated that they were " independent contractors."
¶ 6 Most janitors worked seven days a week. If they needed a night off, Flores directed them to find their own replacement.
[176 Wn.App. 701] ¶ 7 The janitors worked overnight at Fred Meyer stores. Contractually, they were to work from 10:30 p.m. until 7:00 a.m. But the actual hours worked was a disputed issue in the trial court. The janitors testified that they typically worked from around 10:30 or 11:00 p.m. until 7:30, 8:00, or 8:30 a.m. They also stated that in order to leave the stores in the morning, they were required to have a Fred Meyer employee sign off on an Expert-created checklist. This checklist was based on the contractual requirements outlined in the Fred Meyer-Expert contract.
¶ 8 In January 2010, All American Janitorial LLC contracted with Expert to take over the janitorial work that All Janitorial had provided. All American was owned by Raul Campos, but he maintained Flores as the area supervisor. All American's only cleaning contract was with Expert for the Puget Sound Fred Meyer stores. Most of the janitors who worked for All Janitorial became All American employees. Only one of the janitors in this appeal continued to work for All American.
¶ 9 The janitors commenced this action against Expert, Fred Meyer, All Janitorial,
Sergey Chaban, All American, and Raul Campos. They claim that the defendants violated the state MWA by failing to pay them the state minimum wage, failing to pay overtime for all hours worked in excess of 40 hours a week, and failing to provide rest and meal breaks. All Janitorial and its successor, All American, were their direct employers. The janitors claim that Expert and Fred Meyer were each their joint employers. The janitors seek amounts owed under the MWA, together with reasonable attorney fees, from Fred Meyer and Expert.
¶ 10 Both Expert and Fred Meyer moved separately for summary judgment. The trial court granted their respective motions.
¶ 11 The janitors appeal.
[176 Wn.App. 702] JOINT EMPLOYERS
¶ 12 The janitors argue that the proper test to determine joint employer status under the MWA is the " economic reality" test that applies to the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. § § 201-219. They also argue that there are genuine issues of material fact regarding the existence and degree of some of the relevant economic reality factors determinative of joint employment that should have precluded the trial court's dismissal. We agree with both assertions.
¶ 13 A motion for summary judgment may be granted where there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. A material fact is one on which the outcome of the litigation depends. " In a summary judgment motion, the moving party bears the initial burden of showing the absence of an issue of material fact."  If the moving party meets this burden, " the inquiry shifts to the party with the burden of proof at trial ... ."  The nonmoving party must " 'make a showing sufficient to establish the existence of an element essential to that party's case ... .'"  To make a sufficient showing, " [t]he nonmoving party must set forth specific facts showing a genuine issue and cannot rest on mere allegations."  Once the nonmoving party has made such a showing, " the evidence and all reasonable inferences therefrom [176 Wn.App. 703] is considered in the light most favorable to the plaintiff ... ." 
¶ 14 An appellate court reviews an order granting a motion for summary judgment de novo, deciding " whether the affidavits, facts, and record have created an issue of fact and, if so, whether such issue of fact is material to the cause of action." 
¶ 15 Whether a joint employer relationship exists is a question of statutory interpretation. " The court's 'fundamental objective when interpreting a statute is to discern and implement the intent of the legislature.'" 
¶ 16 Our state supreme court has repeatedly held that our courts may look to the federal courts' interpretation of the FLSA for guidance in interpreting the state MWA. Most recently, in Anfinson v. FedEx Ground Package System, Inc., the supreme court reiterated that directive, stating, " The MWA was adopted in 1959. We have repeatedly recognized that the 'MWA is based
on the Fair Labor Standards Act of 1938.'"  Thus, we look to the federal courts' application of the FLSA to the question of what constitutes joint employment to determine what constitutes such employment under the MWA, chapter 49.46 RCW.
¶ 17 Under former RCW 49.46.010(3) (2010), to " '[e]mploy' includes to permit to work ... ." Moreover, " An '[e]mployer' is any individual or entity 'acting directly or indirectly in the interest of an employer in relation to an [176 Wn.App. 704] employee.'"  And, an " employee" includes any individual employed by an employer.
¶ 18 The FLSA provides that to " '[e]mploy' includes to suffer or permit to work."  As the supreme court recognized in Anfinson, " [t]he definitions of 'employee' and 'employ' are functionally identical under [the MWA and the FLSA.]" 
¶ 19 " The definition of 'employer' under the FLSA is not limited by the common law concept of 'employer,' and is to be given an expansive interpretation in order to effectuate the FLSA's broad remedial purposes."  Indeed, " [t]he FLSA's definition of employee has been called the 'broadest definition that has ever been included in any one act.'"  As the United States Supreme Court has recognized, the FLSA " 'contains its own definitions, comprehensive enough to require its application to many persons and working relationships, which prior to this Act, were not deemed to fall within an employer-employee category.'"  Thus, " [t]he determination of whether an employer-employee relationship exists does not depend on 'isolated factors but rather upon the circumstances of the whole activity.'" 
¶ 20 Further, as our supreme court noted in Anfinson, both the MWA and the FLSA are remedial legislation. [176 Wn.App. 705] " As remedial legislation, the MWA is given a liberal construction; exemptions from its coverage 'are narrowly construed and applied only to situations which are plainly and unmistakably consistent with the terms and spirit of the legislation.'"  As the United States Supreme Court said of the FLSA, " 'the Act concerns itself with the correction of economic evils through remedies which were unknown at common law ... .'" 
¶ 21 Under the FLSA, two or more employers may jointly employ someone. A joint employment relationship exists
[w]here the employers are not completely disassociated with respect to the employment of a particular employee and may be deemed to share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer.
¶ 22 Each joint employer is individually responsible for compliance with the requirements of the FLSA. To comply with the FLSA an employer must pay its employees
minimum wage and pay an increased salary for any hours of overtime worked.
¶ 23 Whether an entity is a joint employer under the FLSA is a question of law. We conclude that the same question under the MWA is also a question of law.
[176 Wn.App. 706] ¶ 24 But, in determining whether an entity is a joint employer, " [t]he existence and degree of each factor is a question of fact ..." under the FLSA. Likewise, we conclude that the same rule applies to the existence and degree of the relevant factors under the MWA.
¶ 25 Here, Expert and Fred Meyer both agree that the economic reality test governs whether a joint employer relationship exists under the MWA. But primary disputes between them and the janitors includes what factors comprise this test and which are relevant to determining the " economic reality" of the alleged joint employment relationships in this case. Also at issue is whether there are genuine issues of material fact regarding the existence and degree of each such factor here.
¶ 26 All parties draw from the different factors applied by the United States Supreme Court and various federal circuit courts in arguing their respective positions in this case. Despite the variety of factors enunciated by different federal circuit courts, all the federal courts as well as the [176 Wn.App. 707] federal Department of Labor agree that any one list of factors is not exclusive. Rather, " [t]he determination of an employment relationship '[depends] upon the circumstances of the whole activity.'"  This point is central to our disposition of this case.
¶ 27 We start with consideration of the seminal United States Supreme Court case addressing the question of joint employment under the FLSA, Rutherford Food Corp. v. McComb. There, Kaiser Packing Company, a slaughterhouse, hired an experienced meat boner to " assemble a group of skilled [meat] boners to do the boning at the slaughterhouse."  " The terms of the contract were that [the meat boner supervisor] should be paid for the work of [meat] boning ..., that Kaiser would furnish a room in its plant
for the work, [and] that Kaiser would also furnish [the] barrels for the boned meat ... ." 
¶ 28 The original supervisor eventually left and the work was first taken over under an oral contract by another meat boner followed by two other individuals over the course of a year. The meat boners owned their own tools. The court also noted that the " slaughterhouse operations, of which the [meat] boning is a part, are carried on in a series of interdependent [176 Wn.App. 708] steps."  It was also " undisputed that the president and manager of Kaiser" observed the meat boning process several times a day and corrected the meat boners' cuts frequently.
¶ 29 The United States Supreme Court held that the meat boners were joint employees of Kaiser, who owned the slaughterhouse. In so holding, the court identified six relevant factors:
[T]he workers did a specialty job on the production line. The responsibility under the [meat] boning contracts without material changes passed from one [meat] boner to another. The premises and equipment of Kaiser were used for the work. The group had no business organization that could or did shift as a unit from one slaughterhouse to another. The managing official of the plant kept close touch on the operation. While profits to the [meat] boners depended upon the efficiency of their work, it was more like piecework than an enterprise that actually depended for success upon the initiative, judgment or foresight of the typical independent contractor.
The Court also made clear that the evaluation of whether an employment relationship existed rested " upon the circumstances of the whole activity."  This wording indicates that the test is flexible and depends on the totality of the circumstances of each case.
¶ 30 In Torres-Lopez v. May, the Ninth Circuit examined all six of the Rutherford factors, as well as others it determined were relevant to assessing the economic reality of the employment relationship in that case. Thus, [176 Wn.App. 709] central to the Torres-Lopez test is the doctrine that " [a] court should consider all those factors which are 'relevant to [the] particular situation' in evaluating the 'economic reality' of an alleged joint employment relationship under the FLSA." 
¶ 31 There, the Ninth Circuit considered joint employment in the agricultural setting, examining the FLSA and the Migrant and Seasonal Agricultural Worker Protection Act (AWPA), 29 U.S.C. § § 1801-1872. The court pointed out that " 'employ' has the same meaning under the AWPA as under the FLSA."  The court then looked to five factors expressed in the AWPA regulations to help it assess joint employment for farm workers. These factors are:
" (A) The nature and degree of control of the workers;
" (B) The degree of supervision, direct or indirect, of the work;
" (C) The power to determine the pay rates or the methods of payment of the workers;
" (D) The right, directly or indirectly, to hire, fire, or modify the employment conditions of the workers; [and]
" (E) Preparation of payroll and the payment of wages." 
¶ 32 The Torres-Lopez court also examined eight other factors it deemed ...