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B&R Sales, Inc. v. The Department of Labor and Industries

Court of Appeals of Washington, Division 2

March 10, 2015

B& R Sales, Inc., Appellant ,
v.
The Department of Labor and Industries, Respondent

Oral Argument January 5, 2015.

Page 742

Appeal from Thurston Superior Court. Docket No: 12-2-01976-0. Judge signing: Honorable H Christopher Wickham. Judgment or order under review. Date filed: 12/06/2013.

Aaron K. Owada and Jennifer L. Truong (of AMS Law PC ), for appellant.

Robert W. Ferguson, Attorney General, and Katy J. Dixon, Assistant, for respondent.

Authored by Bradley A. Maxa. Concurring: Linda CJ Lee, Jill M Johanson.

OPINION

Page 743

[186 Wn.App. 370] Bradley A. Maxa, J.

[¶1] B& R Sales Inc. appeals the superior court's order affirming the decision of the Board of Industrial Insurance Appeals (Board) that B& R was required to pay industrial insurance premiums for the independent contractors B& R hired to install floor coverings for its customers. The Board's decision was based on a finding that

Page 744

the contractors were " workers" performing personal labor under RCW 51.08.180. B& R argues that the contractors did not qualify as " workers" because they could not perform the [186 Wn.App. 371] contracted work without the use of expensive specialized tools and customized vans, and therefore the essence of their contracts was not personal labor. B& R also argues that the contractors were excluded from mandatory workers' compensation coverage under RCW 51.12.020.

[¶2] We hold that the contractors were " workers" under RCW 51.08.180 because the primary object of their contracts was their personal labor despite their use of expensive specialized tools and equipment. We further hold that B& R waived its RCW 51.12.020 argument because it did not make that argument to the Board. Therefore, we affirm the Board and the superior court.[1]

FACTS

Premium Assessment

[¶3] B& R is a business that sells and installs floor coverings. In 2008, B& R contracted with 17 independent contractors to install materials sold to its clients. Fourteen of the contractors were sole proprietors, and the remaining three were a partnership, a corporation, and a limited liability company (LLC). B& R also employs an installer who does the same job as the contractor installers.

[¶4] The floor covering installation process requires the physical labor, skill, and expertise of a professional installer. And B& R's independent contractors were contractually required to provide the tools they needed for installations. Some of the contractors' tools were specialized, unique to the installation trade, and available only from specialty stores serving professional installers. These tools included large vinyl rollers, power stretchers for carpet, and a specialized saw with a diamond blade for cutting ceramic [186 Wn.App. 372] tile. The contractors' other tools included saws, trimmers, files, and nail guns. The aggregate value of each contractor's tools ranged from $7,000 to $20,000. In addition, the contractors were required under the contract to supply a customized van capable of transporting and storing their supplies and equipment as well as the materials to be installed.

[¶5] Each B& R contractor had the right under the contractor agreement to hire additional employees to perform the installation work. However, no evidence was presented that any of the contractors hired additional employees.

[¶6] In 2009, the Department of Labor and Industries (DLI) performed an audit on B& R and discovered that B& R had not paid industrial insurance premiums for any of its contract installers in 2008. DLI determined that each of the contract installers was a " worker" under RCW 51.08.180. An auditor assessed industrial insurance premiums, interest, and penalties against B& R in the amount of ...


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