This opinion was filed for record

### at~:oo 

### M1 on 

## tlvg. J. 

### 2Qt'{

# ~~**~upreme** Court Clerk 

### IN THE SUPREME COURT OF THE STATE OF WASHINGTON CAROLINABECERRABECERRA, ) JULIO CESARMARTINEZ ) MARTINEZ, ORLANDO VENTURA ) REYES, ALMAA. BECERRA, and ) ADELENE MENDOZA SOLORIO, ) Respondents, and ) ) ) ) ) 

### HERIBERTO VENTURA ) SATURNINO, JOSE LUIS ) CORONADO, and MOISES SANTOS ) GONZALEZ, ) Plaintiffs,



### v. EXPERT JANITORIAL, LLC dba Expert JMS, and FRED MEYER STORES, INC., Petitioners, and ) ) ) ) ) ) ) ) ) ) ) ) ) 

### ALL JANITORIAL, LLC, SERGEY ) CHABAN, ALL AMERICAN ) JANITORIAL LLC, RAUL CAMPOS,) and JANITORIAL MAINTENANCE ) & 

### SUPPLY, LLC, dba JMS, ) Defendants. ) )



# _______________________) No. 89534-1

EnBane

Filed 

### AUG 07 2014Becerra v. Expert, et al. (89534-1)
GONZALEZ, J.-The plaintiffs before us worked as nightjanitors for subcontractors in various Puget Sound FredMeyer grocery stores. They allege that theyregularly worked well over 40 hours perweekwithoutbeingpaid either minimum wage or overtime as requiredbyWashington's Minimum Wage Act (MWA), chapter 49.46 RCW. The merits oftheir action are not currently at issue. Rather, at issue is whether FredMeyer Stores Inc. and Expert Janitorial LLC arejoint employers ofthejanitors for purposes ofthe act. The MW A is based onthe federal FairLabor Standards Act of 1938 (FLSA), 29 U.S.C. §§ 201-219, and we look to FLSAjurispn1dence in interpreting it. While this courthas never specificallyheld that the "joint employer" doctrine is

a viable theoryunder the MW A, consistent with the interpretations ofthe FLSA, liabilityunder minimum wage laws may extend to 'joint employers"

· even whenthere is no formal employmentrelationship. The trial court

dismissed the plaintiffs'joint employer claims against Fred Meyer and Expert,

a middleman, at summaryjudgment. We find that summaryjudgmentwas improperly granted onthis record and remand for further proceedings consistent withthis opinion.
FACTS Theplaintiffs in this case, CarolinaBecerraBecerra, Julio Cesar Martinez Martinez, Orlando Ventura Reyes, AlmaA. Becerra, and Adelene Mendozo Solorio, all didjanitorialwork in Puget Sound Fred Meyer stores

2Becerra v.**Expert~** et al. (89534-1) 

### mostly while the stores were closed and locked at night. None ofthe plaintiffs

were formally employed by either Fred Meyer or Expert. Until 2004, Fred Meyerhad employed its own, mostly unionizedjanitors in its Pacific Northwest grocery stores. In 2004, Fred Meyer began to outsource much ofthis work.
In 2007, Expert acquired the management contract to provide Fred Meyer with outsourced facility maintenance services. Atthe time, Expert had
nojanitorial employees itselfbut would instead "typically subcontract with independentjanitorial companies, called 'Service Providers,' who provide, manage, and supervise the workers who clean the customers' stores." Clerk's Papers (CP) at 1924. 1 

### Expert and Fred Meyer agreed on the specific work the janitors would do and the specific price FredMeyer would payExpert "for completing the work to Fred Meyer's reasonable satisfaction." 

### !d. at 1925. Representatives from Expert would visit the stores about once every two weeks, typically during the daytime when Fred Meyer's store directors were at work. Between 2007 and 2010, Expert subcontracted with at least nine different second-tier subcontracting service providers, including All Janitorial LLC and All American Janitorial LLC,2 

### to fulfill its contract with Fred Meyer. All ofthe plaintiffs worked for one or both ofthese two second-tier service

1At oral argument, counsel for Expert said that Expert does have its ownjanitorial employees but did not assign error to the trial court order finding otherwise. 2 The record suggests that in 2010, All American formally reclassified thejanitors as employees.
3Becerra v. Expert, etal. (89534-1) 

### providers during the relevant time. It 

### appears that neither contractorhired janitors who were fluent in English. 

### !d. at 703; Resp'ts' Suppl. Br. at 2. All Janitorial was owned and principally managed by Sergey Chaban.3 

### By contract, the company was paid a flat fee per store by Expert. Chaban testified that All Janitorial could not afford to treat thejanitors who worked at the Fred Meyer stores like employees because the contractprice was insufficient. CP at 240-41 ("We ran the numbers, and the amount we were getting paid, we couldn't-wewould be-we would go negative ifwe would treat them as employees."). All Janitorial did not pay plaintiffs overtime, Social Security, or workers' compensation. Nor did it pay minimum wage. The plaintiffs made between $7.36 and $7.75 per hour during a time that the minimum wage in Washington went from $7.93 to $8.55 per hour. Chaban acknowledged that thejanitors began work no later than 11:00 p.m. each night and would often not be signed out by Fred Meyer employees, and thus not able to leave work, until after 8:00a.m. the next morning. 

### !d. at 1927. Thus, they regularly worked more than eight hours per night. According to plaintiffs' expert John Ezzo, it is common for such second-tier subcontractors to take the risk ofmisclassifying their employees and not meeting their legal obligations under minimum wage statutes "because they have relatively little to lose; they go out ofbusiness when their practices come to light." 

### Id. at 1060.4

3 Proceedings against Chaban have been stayed by bankruptcy proceedings. 4 According to plaintiffs' expert John Ezzo, many businesses use second-tier contractors who recruitjanitors, classify them as independent contractors, schedule them to work full shifts seven days a week, and do not comply with minimum wage laws. He testified that
4Becerra v. Expert, et al. (89534-1)


### The plaintiffs brought suit against the second-tier contractors, Fred Meyer Stores and Expert, for violation ofthe MWA, among other things. The plaintiffs contended that they were misclassified as independent contractors; that as a matter ofeconomic reality, they were Expert's and Fred Meyer's employees; and that both companies knew the plaintiffs were misclassified and improperly denied overtime wages. They submitted evidence that such practices were in accord with a common business model wherejanitorial work is outsourced to a company that in turn contracts with second-tier contractors who provide thejanitors. They also submitted evidence that second-tier contractors have been known to fail to abide by minimum wage statutes. Fred Meyer and Expert moved for partial summaryjudgment arguing that they were not, as a matter oflaw, the plaintiffs' employers. The trialjudge heard oral argument on both motions separately, starting with Expert's motion in May 2011 and Fred Meyer's motion in September ofthat year. In a later
this is sometimes referred to as the "Building One" model, based onthe company that pioneered it in the late 1990s. E.g., CP at 1063, 1073; Resp'ts' Suppl. Br. at 3. Building One went out ofbusiness "while it was being sued in a class action byjanitors who claimed they were being misclassified and working long hours ofovertime." CP at 1074. Ezzo testified that second-tier subcontractors can save "20% right away by classifying its janitors as independent contractors. Itdoes so by not having to pay payroll taxes (Social Security, Medicare, FUTA [Federal Unemployment Tax Act, Internal Revenue Code ch. 23], Unemployment Insurance and other taxes), industrial insurance and by not paying overtime and/or minimum wages." Id. at 1076. Ezzo, himselfa chiefexecutive officer ofajanitorial company, contended that these violations would not occur without the firsttier contractors "turning away from these problems." I d. at 1081. He submitted evidence that several suits for violation ofminimum wage laws had been filed by advocates for janitors, including the United States Labor Department and Justice Department, and settled for millions ofdollars. The petitioners challenged the admissibility ofmuch of Ezzo's declarations and renewtheir objections in their supplemental briefs, but they did not assign error to the trial court's decision not to exclude it or designate it as an issue for review. We decline to consider whether the declarations were properly before the trial court without prejudice to a new proper objection before the trial court on remand.
5Becerra v.**Expert~** etal. (89534-1)
written order that has.notbeen challenged, the trial court found that the plaintiffs "were scheduled 7 nights a week, with the exception ofChristmas Eve. The shift beganno later than 11:00 p.m. and was supposed to end at 7:00 a.m., butregularly ran over." CP at 1927. At least inpart, plaintiffs' shifts regularly ran overbecause they were not to leave until "FredMeyer supervision signed offon their daily Work Order sheet." 

### I d. The trial court also found that the plaintiffs were allowed to take a night offonlyifthey could find their own replacement. In the matterbeforeus, thejudge entered abriefwritten order dismissing the plaintiffs'joint employment claim against Expert "underthe test set forth in Bonnette v. California Health and WelfareAgency, 704 F.2d 1465, 1469 (9th Cir.1983)."5 CP at 1961. She later dismissed the plaintiffs'joint employer claims against Fred Meyer in a more detailed oral ruling. The parties proceeded to abench trial on third-partybeneficiary claims, which are not before us. Theplaintiffs appealed onlythe summaryjudgment orders, and the Court ofAppeals reversed. Becerra Becerra v. ExpertJanitorial, LLC, 176 Wn. App. 694, 699-700, 309 P.3d 711 (2013). Fred Meyer and Expert eachpetitioned for review. The Association of Washington Business, the National Federation ofIndependent Business, the National Federation ofIndependent Business Small Business Legal Center, the Washington Retail Association, and the International Franchise Association filed an amicus briefin support ofthe petition. We grantedreview. Becerra

5 Bonnette was abrogated on other grounds by Garcia v. SanAntonioMetropolitan Transit Authority, 469 U.S. 528, 539, 105 S. Ct. 1005, 83 L. Ed. 2d 1016 (1985).
6Becerra v. Expert, et al. (89534-1)

Becerra v. ExpertJanitorial, 

### 179 Wn.2d 1014, 318 P.3d 279 (2014). Centro de Ayuda Solidaria a los Amigos (CASA) Latina, the Faith ActionNetwork, the Latina/o BarAssociation ofWashington, the National Employment Law Project, the Service Employees International UnionLocal6, the Washington Employment Lawyers Association, and the Washington State Labor Council, AFL-CIO, have filed an amicus briefin support oftheplaintiffs. ANALYSIS 

### "Summaryjudgment entitles one party tojudgment as a matter oflaw and is reviewed de novo." Rivas v. Overtake Hosp. Med. Ctr., 

### 164 Wn.2d 261, 266, 189 P.3d 753 (2008) (citing Troxell v. RainierPub. Sch. Dist. No. 307, 

### 154 Wn.2d 345, 350, 111 P.3d 1173 (2005)). We view the evidence in the light most favorable to the nonmoving party, in this case, the plaintiffs. Owen v. BurlingtonN & Santa Fe R.R., 

### 153 Wn.2d 780,787, 108 P.3d 1220 (2005) (citing Ruffv. King County, 

### 125 Wn.2d 697,703, 887 P.2d 886 (1995)). Inthe joint employment context, summaryjudgmentmay be available even ifthe joint employment factors are split between finding and not finding the relationship exists. LingNan Zheng v. LibertyApparel Co., 

### 355 F.3d 61, 77 (2d Cir. 2003) ("[T]he Court need not decide that every factor weighs against joint employment." (emphasis omitted) (citing Moreau v. AirFrance, 

### 343 F.3d

1179, 1188-89 (9th Cir. 2003))). However, "[b]ecause ofthe fact-intensive character ofa determination of joint employment," the Second Circuit observed, "werarely have occasionto review determinations made as a matter oflaw on an award ofsummaryjudgment." Barfieldv. NY City Health &

7Becerra v. Expert, etal. (89534-1)
Hasps. Corp., 537 F.3d 132, 143-44 (2d Cir. 2008) (citing Zheng, 355 F.3d at 76n.13). Our State's "MWArequires employers to pay their employees (as the act defines 'employees') overtime pay for the hours they work over 40 hours per week," subjectto exceptions not raised here. Bostain v. FoodExpress, Inc., 159 Wn.2d 700, 709, 153 P.3d 846 (2007) (citing RCW49.46.130). "Employee" is broadly defined. "[U]nder the MW A, an employee includes any individual permittedto work by an employer. This is a broad definition." Anfinson v. FedEx GroundPackage Sys., Inc., 174 Wn.2d 851, 867, 281 P.3d 289 (2012) (citingStahlv. DelicorofPugetSound, Inc., 148 Wn.2d 876,884, 64 P.3d 10 (2003)). The MW A is remedial in nature and is liberally construed. 

### I d. at 870 (citingInt 'lAss 'n of Fire Fighters, Local 46v. City of Everett, 146 Wn.2d 29, 45, 42 P.3d 1265 (2002)). We look to the FLSAjurisprudence in interpreting
our act. Id. at 868-69. The FLSA itselfexpansively defines "employ" as including "to suffer orpermit to work." 29 U.S.C. § 203(g). Its definition of "employ" is far broader than that in common law and "encompasses 'working relationships, which prior to [the FLSA], were not deemed to fall within an employer-employee category."' Zheng, 355 F.3d at 69 (alteration in original) (quoting Walling v. Portland Terminal Co., 330 U.S. 148, 150-51,67 S. Ct. 639, 91 L. Ed. 809 (1947)). The parties' characterization oftheir employment relationship is not determinative. Realv. DriscollStrawberryAssocs., Inc., 603 F.2d 748, 755 (9th Cir. 1979) (citing Usery v. Pilgrim Equip. Co., 527 F.2d 1308, 1315 (5th Cir. 1976)). UnderFLSA regulations:
8Becerra v. Expert, et al. (89534-1)

ifthe facts establishthat the employee is employedjointly bytwo or more employers, i.e., that employment by one employer is not completely disassociated from employment by the other employer(s), all ofthe employee's work for all ofthejoint employers during the workweek is considered as one employment for purposes ofthe Act. In this event, alljoint employers are responsible, both individually and jointly, for compliance with all ofthe applicable provisions ofthe act, including the overtime provisions, withrespect to the entire employment for the particular workweek. 29 C.P.R. § 791.2; 

### see also Torres-Lopez v. May, 111 F.3d 633, 638 (9th Cir. 1997) (noting that "an employee may have more than one employer under the FLSA"). Over the years, federal courts have articulated many different factors that may berelevant to whether an entity is an employer orjoint employer ofa worker for the purposes ofFLSA. 

### E.g., Reyes, 495 F.3d at 407; 

### Bonnette, 704 F.2d at 1470, 

### abrogatedon other grounds by Garcia v. SanAntonio Metro. TransitAuth., 469 U.S. 528, 539, 105 S. Ct. 1005, 83 L. Ed. 2d 1016 (1985). 

### Bonnette is one ofthe leading cases and held that the factors include, but are not limited to, '"whetherthe alleged employer (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions ofemployment, (3) determined the rate and method ofpayment, and (4) maintained employmentrecords."' 704 F.2d at 1470 (quoting

### Bonnette v. Cal. Health & 

### Welfare Agency, 525 F. Supp. 128, 135 (D.C. Cal. 1981)). In 

### Bonnette, the Ninth Circuit found that home health workers were the employees ofthe State and local agencies given the four factors above and given the amount ofeconomic control the state and local agencies had overthe workers. 

### !d.

9Becerra v. Expert; eta!. (89534-1)

While we have never specifically held that the "joint employer" doctrine is a viable theory under the MW A, Expert and Fred Meyer do not dispute that if they are found to be thejoint employers ofthe plaintiffs, they are each responsible for compliance withthe MW A. This accords with federal FLSA jurisprudence. 

### See 29 C.P.R. § 791.2; 

### see also Torres-Lopez, 111 F.3d at 638. Every employer, including ajoint employer, has the same duties under the FLSA. 

### Reyes v. Remington HybridSeed Co., 495 F.3d 403, 408-09 (7th Cir. 2007).The parties agree that we use an "economicreality" test to determine whether ajointemploymentrelationship exists under minimum wage statutes. 6 We find the framework articulated by the Ninth Circuit in 

### Torres-Lopez, 111 F.3d 633, to be the most helpful. There, the court articulated 13 nonexclusive factors, beginning with 5 formal or regulatory factors: "(A) The nature and degree ofcontrol ofthe workers; "(B) The degree ofsupervision, direct or indirect, ofthe work; "(C) The powerto determine the payrates or the methods ofpayment of the workers; "(D) The right, directly or indirectly, to hire, fire, or modify the employment conditions ofthe workers; [and] "(E) Preparation ofpayroll and the payment ofwages."

6We note that we are not asked to review the subcontractor's characterization ofthe plaintiffs as independent contractors. Whether an employee is in fact an independent contractor is determined under a separate analysis. See generallyAnfinson, 174 Wn.2d 851. Thejointemployment test we articulate today is designed to determine obligations under the minimum wage act and does not otherwise govern a worker's employment status or employer's obligations.
10Becerra v. Expert, etal. (89534-1)

Id. at 639-40 (alteration in original) (quoting 29 C.F.R. § 500.20(h)(4)(ii)). The
court also articulated 8 common law (sometimes called "functional") factors: (1) whether the workwas a "specialtyjob on the production line," Rutherford [Food Corp. v. McComb], 331 U.S. [722,] 730, 67 S. Ct. [1473, 91 L. Ed. 1772 (1947)]; (2) whetherresponsibility underthe contracts between a labor contractor and an employerpass from one labor contractor to another without "material changes," id.; (3) whether the "premises and equipment'' ofthe employer are used for the work, id.; see also Real, 603 F.2d at 754 (considering the alleged employee's "investmentin equipment ormaterials required for his task, orhis employment ofhelpers"); (4) whether the employees had a "business organizationthat could ordid shift as a unit from one [worksite] to another,"Rutherford, 331 U.S. at 730

... ; (5) whether the workwas "piecework" and not workthat required "initiative,judgment or foresight," id.; see also Real, 603 F.2d at 754 (considering "whetherthe service renderedrequires a special skill"); (6) whether the employeehad an "opportunityfor profit orloss depending upon [the alleged employee's] managerial skill,"Real, 603 F.2d at 754; (7) whether there was "permanence [in] the working relationship," id.; and (8) whether "the service rendered is an integralpart ofthe alleged employer'sbusiness," id.
!d. at 640 (some alterations in original); see alsoMoreau v. AirFrance, 356 F.3d 942, 950 (9th Cir. 2003). Applying these factors in"Torres-Lopez, the Ninth Circuit concluded that fannworkers harvesting cucumbers werejointly

11Becerra v. Expert, et a!. (89534-1) employed by the farming partnership that operated the farm and notjustthe labor contractor that recruited them and thus the partnership was liable under FLSA. 111 F.3d at 644. These factors are not exclusive and are not to be applied mechanically or in a particular order. As the United States Supreme Courtnoted long ago, "[T]he determination ofthe relationship does not depend on such isolated factors butrather upon the circumstances ofthe whole activity." 

### Rutherford, 331 U.S. at 730; 

### see also Zheng, 355 F.3d at 71-72 ("The court is also free to consider any other factors it deems relevant to its assessment ofthe economic realities."). Indeed, as the inimitable Judge Easterbrook observed, the economic reality test "offers a way to think about the subject and not an algorithm. That's why toting up a score is not enough." 

### Reyes, 495 F.3d at 408. Here, our Court ofAppeals properly found that these factors may include whether the putativejoint employer knew ofthe wage and hour violation, whether it paid sufficient amounts to the subcontractors to allow for a lawful wage, and whether the subcontracting arrangement is a "'subterfuge or sham.'" 176 Wn. App. at 719 (quoting

### Barfieldv. NY. City Health & 

### Hasps. Corp., 537 F.3d 132, 145-46 (2d Cir. 2008)). 1. EXPERT The trialjudge articulated only the four 

### Bonnette factors in dismissing the employee'sjoint employer theory against Expert: There is no genuine issue ofmaterial fact onthe issue ofwhether Expert was Plaintiffs'jointemployer, and the Defendant is entitled tojudgment as a matter oflaw. Specifically, the Court concludes thatExpert was not Plaintiffs'joint employer under the test set forth in

### Bonnette v.
12Becerra v. Expert, eta!. (89534-1) CaliforniaHealth and WelfareAgency, 

### 704 F.2d 1465, 1469 (9th Cir. 1983). Expert was not involved in hiring or firing the plaintiffs, did not supervise their work schedules or conditions ofemployment, was not involved in determining the plaintiffs' rate ofpay and did not maintain their employment records. Plaintiffs admit that nobody from Expert ever told them what to do or how to do theirjobs. In fact, the plaintiffs could not even identify any employees who worked for Expert.
CP at 1961. Later, in the context ofruling on Fred Meyer's summaryjudgment motion, thejudgenoted that she had limited her analysis in Expert's motion to the Bonnette 

### factors onthe theory that the nonregulatory factors "seemto apply
more to the Boeing[?] case and that type ofthing. The production line is one of the things they talk about. And also they seem to find more where the plaintiffs work is an integral part ofbusiness." Report ofProceedings (Sept. 2, 2011) at 36. The Court ofAppeals reversed, concluding that the trial court had erred in limiting its analysis to the Bonnette 

### factors, that many factors did weigh in favor offinding Expert was ajoint employer, and that material questions offact remained to be resolved. BecerraBecerra, 

### 176 Wn. App. at 712-13,723. We agree. Simply put, we find the trial court did not consider all the relevant factors at summaryjudgment or sufficiently identify why it deemed certain factors to be not relevant. While ourreview ofthe record suggests that summaryjudgmentwas improperly granted on the merits, we do not meanto bind the trial court's hands on remand. We remand for further proceedings,

7 It is not clear what case the trialjudge is referring to or ifthe court reporter misheard her. No case named Boeing was cited in the summaryjudgmentbriefing, raised on oral argument on the motion, or appears in FLSAjoint employment case law. We note that Expert urges us to find that the trial court did consider more factors than those she listed, but our review ofthe record persuades us otherwise.
13Becerra v.**Expert~** et al. (89534-1) including further discovery by the parties ifthey deem it necessary, and direct the trial court to consider any otherwiseproper summaryjudgmentmotions brought by the parties raising thejoint employment matter again. 2. FRED MEYER The trialjudge's written ruling granting FredMeyer's summary judgment did not identify any ofthe factors she considered. In her oral ruling, she effectively found that four factors, some formal and some functional, weighed in favor offinding FredMeyer was not thejoint employer ofthe janitors. Again, we believe it is unlikely summaryjudgment should have been granted onthis record, butwe leave it in the able hands ofthe trial court to reconsider the matter using the Torres-Lopez factors onremand. CONCLUSION We affirm the Court ofAppeals and remand for further proceedings on whether Fred Meyer and Expert functioned asjoint employers ofthejanitors under Washington's MW A.

14Becerra v. Expert; et al. (89534-1)

WE CONCUR: 

# otllzcXlez

# 0~62

# ---fftt"-------r+-~#-- - 

# /4r41/kCWl15