case requires us to decide whether the wage rebate act
(WRA), authorizes exemplary damages against an
employer who fails to pay wages pursuant to a contract when
the employee has not performed the actual work. David G.
Essig stopped working for Michael Lai when Lai failed to pay
him as required in their employment contract. Because the WRA
is construed liberally to protect workers, the pay to which
Essig was entitled under the contract constituted wages. We
hold Essig is entitled to exemplary damages. Affirmed.
Essig began working for the Rainier Valley Community
Development Fund (CDF) in 2006. Essig managed the real estate
investment portion of the fund to create revolving loans and
attract development and funds to the Rainier Valley. Through
his work with the CDF, Essig met Michael Lai. Lai managed a
real estate brokerage. Essig worked with Lai's firm on
two successful loan transactions. From the first time they
met, Lai periodically approached Essig about working for him.
Initially, Lai spoke to Essig about becoming a real estate
agent, but Essig was not interested.
fall of 2014, Essig and Lai began to talk about Essig working
for Lai in a development capacity. Lai wanted to know if
Essig would be willing to partner with him on the
developments, but Essig did not have the financial capacity
to partner on large scale developments. Lai then asked Essig
to consider working as a consultant or independent
contractor, but Essig was not interested in working as an
independent contractor. Essig stated that his interest was in
working as a key employee to build the development
organization. Lai asked Essig to draft a proposal for Essig
to begin working for him.
29, 2015, Essig entered into an employment agreement with Lai
and a number of business entities under Lai's control.
Lai agreed to employ Essig for a minimum of two years, with
an annual salary of $114, 000, health and dental benefits for
Essig and his spouse, an expense account, office space,
office support, and a $5, 000 signing bonus. Lai gave Essig a
$5, 000 check, which Essig successfully deposited. Essig was
to start work on July 13, 2015. He resigned from the Rainier
Valley Community Development Fund in reliance on the
began performing his duties under the employment agreement on
July 13, 2015. Over several weeks, he worked in the field
reviewing projects, attending meetings and site visits with
Lai, meeting with Lai, and engaging in phone, email, and text
message communication with Lai regarding the business. At no
point did Lai indicate that Essig was not employed by Lai.
30, Essig emailed Lai requesting medical insurance and
benefits for Essig and his wife, as provided in the
employment agreement. On August 18, Essig sent Lai a letter
demanding payment of his wages and benefits to that date.
Essig continued to work for Lai until August 26.
August, Lai suggested changes to the employment agreement,
but did not deny the existence of the employment agreement or
employment relationship. Lai continued to involve Essig in
meetings, phone calls, and communications regarding the
August 27, Essig notified Lai that he considered Lai in
breach, he was stopping work on Lai's behalf, and would
seek other employment. Lai sent the following text message on
August 28: "I can take care $120, 000, 000 per year next
12 months. Then become employees after that." Essig
interpreted that message as an offer to work as an
independent contractor. Essig engaged in efforts to find
comparable replacement employment, searching in Seattle,
Oklahoma City, and other locations nationwide. Essig filed
court found Lai in breach of contract, and awarded Essig lost
wages of $228, 000, exemplary damages of $228, 000 under the
WRA, $13, 263 in medical benefits, attorney fees of $85, 890,
and $708.28 in costs. Lai appeals the award of exemplary
damages and the court's finding that Essig reasonably
mitigated his damages.
is liable for exemplary damages under the WRA
RCW 49.52.050 and .070, employers who pay any employee a
lower wage than the employer is obligated to pay, are liable
for exemplary damages equal to the unpaid wages. Hill v.
Garda CL NW, Inc., 191 Wn.2d 553, 561, 424 P.3d 207
(2018). The employer must withhold the wages willfully,
intend to deprive the employee of ...