Court Opinion

ID: 4706593
Source: CourtListenerOpinion
Date Created: 2021-07-26 22:58:57.448177+00
Date Added: 2024-06-11T08:06:37.544155
License: Public Domain

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                                                          This    was
                                                              opinion            
                                                                           filed for record
                                                          at~:oo M1       on tlvg. J. 2Qt'{

                                                               ~~~upreme Court Clerk

                   IN THE SUPREME COURT OF THE STATE OF WASHINGTON

              CAROLINA BECERRA BECERRA,   )
              JULIO CESAR MARTINEZ        )
              MARTINEZ, ORLANDO VENTURA   )        No. 89534-1
              REYES, ALMA A. BECERRA, and )
              ADELENE MENDOZA SOLORIO,    )
                                          )
                          Respondents,    )
                                          )
                    and                   )
                                          )
              HERIBERTO VENTURA           )
              SATURNINO, JOSE LUIS        )
              CORONADO, and MOISES SANTOS )        En Bane
              GONZALEZ,                   )
                                          )
                          Plaintiffs,     )
                                          )
                    v.                    )
                                          )
              EXPERT JANITORIAL, LLC dba  )
              Expert JMS, and FRED MEYER  )
              STORES, INC.,               )
                                          )
                          Petitioners,    )
                                          )
                    and                   )
                                          )
              ALL JANITORIAL, LLC, SERGEY )
              CHABAN, ALL AMERICAN        )        Filed     AUG 0 7 2014
              JANITORIAL LLC, RAUL CAMPOS,)
              and JANITORIAL MAINTENANCE )
              & SUPPLY, LLC, dba JMS,      )
                                           )
                          Defendants.      )
              _______________________)
                                          
              Becerra v. Expert, et al. (89534-1)

                     GONZALEZ, J.-The plaintiffs before us worked as night janitors for

              subcontractors in various Puget Sound Fred Meyer grocery stores. They allege

              that they regularly worked well over 40 hours per week without being paid

              either minimum wage or overtime as required by Washington's Minimum

              Wage Act (MWA), chapter 49.46 RCW. The merits oftheir action are not

              currently at issue. Rather, at issue is whether Fred Meyer Stores Inc. and

              Expert Janitorial LLC are joint employers of the janitors for purposes of the act.

              The MWA is based on the federal Fair Labor Standards Act of 1938 (FLSA),

               29 U.S.C. §§ 201-219, and we look to FLSAjurispn1dence in interpreting it.

               While this court has never specifically held that the "joint employer" doctrine is

               a viable theory under the MWA, consistent with the interpretations of the

               FLSA, liability under minimum wage laws may extend to 'joint employers"

              · even when there is no formal employment relationship. The trial court

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

               a middleman, at summary judgment. We find that summary judgment was

               improperly granted on this record and remand for further proceedings

               consistent with this opinion.

                                                    FACTS

                      The plaintiffs in this case, Carolina Becerra Becerra, Julio Cesar

               Martinez Martinez, Orlando Ventura Reyes, Alma A. Becerra, and Adelene

               Mendozo Solorio, all did janitorial work in Puget Sound Fred Meyer stores

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

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

              were formally employed by either Fred Meyer or Expert. Until 2004, Fred

              Meyer had employed its own, mostly unionized janitors in its Pacific Northwest

              grocery stores. In 2004, Fred Meyer began to outsource much of this work.

                      In 2007, Expert acquired the management contract to provide Fred

              Meyer with outsourced facility maintenance services. At the time, Expert had

              no janitorial employees itself but would instead "typically subcontract with

              independent janitorial 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 Fred Meyer would pay Expert "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 Janito rial LLC, 2 to fulfill its contract with Fred Meyer.

              All of the plaintiffs worked for one or both of these two second-tier service

              1 At oral argument, counsel for Expert said that Expert does have its own janitorial
              employees but did not assign error to the trial court order finding otherwise.
              2
                The record suggests that in 2010, All American formally reclassified the janitors as
              employees.

                                                           3
                                                     
              Becerra v. Expert, et al. (89534-1)

              providers during the relevant time. It appears that neither contractor hired

              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 the janitors who worked at

              the Fred Meyer stores like employees because the contract price was

              insufficient. CP at 240-41 ("We ran the numbers, and the amount we were

              getting paid, we couldn't-we would be-we would go negative if we 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 the janitors 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 of misclassifying their employees and not

              meeting their legal obligations under minimum wage statutes "because they

              have relatively little to lose; they go out of business 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 recruit janitors, 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

                                                          4
                                                           
              Becerra v. Expert, et al. (89534-1)

                     The plaintiffs brought suit against the second-tier contractors, Fred

              Meyer Stores and Expert, for violation of the MWA, among other things. The

              plaintiffs contended that they were misclassified as independent contractors;

              that as a matter of economic 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 where janitorial work

              is outsourced to a company that in turn contracts with second-tier contractors

              who provide the janitors. 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 summary judgment arguing

              that they were not, as a matter of law, the plaintiffs' employers. The trial judge

              heard oral argument on both motions separately, starting with Expert's motion

              in May 2011 and Fred Meyer's motion in September of that year. In a later

              this is sometimes referred to as the "Building One" model, based on the company that
              pioneered it in the late 1990s. E.g., CP at 1063, 1073; Resp'ts' Suppl. Br. at 3. Building
              One went out of business "while it was being sued in a class action by janitors who
              claimed they were being misclassified and working long hours of overtime." CP at 1074.
              Ezzo testified that second-tier subcontractors can save "20% right away by classifying its
              janitors as independent contractors. It does 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, himself a chief executive officer
              of a janitorial company, contended that these violations would not occur without the first-
              tier contractors "turning away from these problems." Id. at 1081. He submitted evidence
              that several suits for violation of minimum wage laws had been filed by advocates for
              janitors, including the United States Labor Department and Justice Department, and
              settled for millions of dollars. The petitioners challenged the admissibility of much of
              Ezzo's declarations and renew their 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.

                                                             5
                                             
              Becerra v.   Expert~   et al. (89534-1)

              written order that has. not been challenged, the trial court found that the

              plaintiffs "were scheduled 7 nights a week, with the exception of Christmas

              Eve. The shift began no later than 11:00 p.m. and was supposed to end at 7:00

              a.m., but regularly ran over." CP at 1927. At least in part, plaintiffs' shifts

              regularly ran over because they were not to leave until "Fred Meyer supervision

              signed off on their daily Work Order sheet." Id. The trial court also found that

              the plaintiffs were allowed to take a night off only if they could find their own

              replacement.

                     In the matter before us, the judge entered a brief written order dismissing

              the plaintiffs' joint employment claim against Expert "under the test set forth in

              Bonnette v. California Health and Welfare Agency, 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 a bench trial on third-party beneficiary claims, which are not

              before us. The plaintiffs appealed only the summary judgment orders, and the

               Court of Appeals reversed. Becerra Becerra v. Expert Janitorial, LLC, 176

               Wn. App. 694, 699-700, 309 P.3d 711 (2013).

                      Fred Meyer and Expert each petitioned for review. The Association of

               Washington Business, the National Federation of Independent Business, the

               National Federation of Independent Business Small Business Legal Center, the

               Washington Retail Association, and the International Franchise Association

               filed an amicus brief in support of the petition. We granted review. Becerra

               Bonnette was abrogated on other grounds by Garcia v. San Antonio Metropolitan Transit
               5

               Authority, 469 U.S. 528, 539, 105 S. Ct. 1005, 83 L. Ed. 2d 1016 (1985).

                                                         6
                                        
              Becerra v. Expert, et al. (89534-1)

              Becerra v. Expert Janitorial, 179 Wn.2d 1014, 318 P.3d 279 (2014). Centro de

              Ayuda Solidaria a los Amigos (CASA) Latina, the Faith Action Network, the

              Latina/o Bar Association of Washington, the National Employment Law

              Project, the Service Employees International Union Local6, the Washington

              Employment Lawyers Association, and the Washington State Labor Council,

              AFL-CIO, have filed an amicus brief in support ofthe plaintiffs.

                                                    ANALYSIS

                     "Summary judgment entitles one party to judgment as a matter of law

              and is reviewed de novo." Rivas v. Overtake Hosp. Med. Ctr., 164 Wn.2d 261,

              266, 189 P.3d 753 (2008) (citing Troxell v. Rainier Pub. 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.

              Burlington N & 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)). In the

              joint employment context, summary judgment may be available even if the

              joint employment factors are split between finding and not finding the

              relationship exists. Ling Nan Zheng v. Liberty Apparel 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. Air France, 343 F.3d

              1179, 1188-89 (9th Cir. 2003))). However, "[b ]ecause of the fact-intensive

              character of a determination of joint employment," the Second Circuit

              observed, "we rarely have occasion to review determinations made as a matter

              of law on an award of summary judgment." Barfield v. NY City Health &

                                                       7
                                            
              Becerra v. Expert, et al. (89534-1)

              Hasps. Corp., 537 F.3d 132, 143-44 (2d Cir. 2008) (citing Zheng, 355 F.3d at

              76n.13).

                     Our State's "MWA requires employers to pay their employees (as the act

              defines 'employees') overtime pay for the hours they work over 40 hours per

              week," subject to exceptions not raised here. Bostain v. Food Express, Inc.,

              159 Wn.2d 700, 709, 153 P.3d 846 (2007) (citing RCW 49.46.130).

              "Employee" is broadly defined. "[U]nder the MWA, an employee includes any

              individual permitted to work by an employer. This is a broad definition."

              Anfinson v. FedEx Ground Package 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 MWA is remedial in nature and is liberally construed. Id. at 870

              (citing Int 'lAss 'n ofFire Fighters, Local 46 v. City ofEverett, 146 Wn.2d 29,

              45, 42 P.3d 1265 (2002)). We look to the FLSAjurisprudence in interpreting

              our act. I d. at 868-69. The FLSA itself expansively defines "employ" as

              including "to suffer or permit 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 of their employment

              relationship is not determinative. Real v. Driscoll Strawberry Assocs., Inc., 603

              F.2d 748, 755 (9th Cir. 1979) (citing Usery v. Pilgrim Equip. Co., 527 F.2d

               1308, 1315 (5th Cir. 1976)). Under FLSA regulations:

                                                      8
                                           
              Becerra v. Expert, et al. (89534-1)

                           if the facts establish that the employee is employed jointly by two
                    or more employers, i.e., that employment by one employer is not
                    completely disassociated from employment by the other employer(s), all
                    of the employee's work for all of the joint employers during the
                    workweek is considered as one employment for purposes of the Act. In
                    this event, all joint employers are responsible, both individually and
                    jointly, for compliance with all of the applicable provisions of the act,
                    including the overtime provisions, with respect 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 be relevant to whether an entity is an employer or joint employer of a

              worker for the purposes ofFLSA. E.g., Reyes, 495 F.3d at 407; Bonnette, 704

              F.2d at 1470, abrogated on other grounds by Garcia v. San Antonio Metro.

              Transit Auth., 469 U.S. 528, 539, 105 S. Ct. 1005, 83 L. Ed. 2d 1016 (1985).

              Bonnette is one of the leading cases and held that the factors include, but are

              not limited to, '"whether the alleged employer (1) had the power to hire and

              fire the employees, (2) supervised and controlled employee work schedules or

              conditions of employment, (3) determined the rate and method of payment, and

              (4) maintained employment records."' 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

              of the State and local agencies given the four factors above and given the

              amount of economic control the state and local agencies had over the workers.

              !d.

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

                       While we have never specifically held that the "joint employer" doctrine

              is a viable theory under the MWA, Expert and Fred Meyer do not dispute that if

              they are found to be the joint employers of the plaintiffs, they are each

              responsible for compliance with the MWA. 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 a joint employer, has the same duties under the

              FLSA. Reyes v. Remington Hybrid Seed Co., 495 F.3d 403, 408-09 (7th Cir.

              2007).

                       The parties agree that we use an "economic reality" test to determine

              whether a joint employment relationship 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 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."

              6
               We note that we are not asked to review the subcontractor's characterization of the
              plaintiffs as independent contractors. Whether an employee is in fact an independent
              contractor is determined under a separate analysis. See generally Anfinson, 174 Wn.2d
              851. The joint employment 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.

                                                         10
                                             
              Becerra v. Expert, et al. (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 work was a "specialty job on the production line,"
                     Rutherford [Food Corp. v. McComb], 331 U.S. [722,] 730, 67 S. Ct.
                     [1473, 91 L. Ed. 1772 (1947)];

                     (2) whether responsibility under the contracts between a labor contractor
                     and an employer pass from one labor contractor to another without
                     "material changes," id.;

                     (3) whether the "premises and equipment'' of the employer are used for
                     the work, id.; see also Real, 603 F .2d at 7 54 (considering the alleged
                     employee's "investment in equipment or materials required for his task,
                     or his employment of helpers");

                      (4) whether the employees had a "business organization that could or did
                      shift as a unit from one [worksite] to another," Rutherford, 331 U.S. at
                      730 ... ;

                      ( 5) whether the work was "piecework" and not work that required
                      "initiative, judgment or foresight," id.; see also Real, 603 F .2d at 7 54
                      (considering "whether the service rendered requires a special skill");

                      (6) whether the employee had an "opportunity for profit or loss
                      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 integral part of the alleged
                      employer's business," id.

               !d. at 640 (some alterations in original); see also Moreau v. Air France, 356

               F.3d 942, 950 (9th Cir. 2003). Applying these factors in"Torres-Lopez, the

               Ninth Circuit concluded that fannworkers harvesting cucumbers were jointly

                                                        11
                                            
              Becerra v. Expert, et a!. (89534-1)

              employed by the farming partnership that operated the farm and not just the

              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 Court noted long ago,

              "[T]he determination of the relationship does not depend on such isolated

              factors but rather upon the circumstances of the 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 of the 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 of Appeals properly found that these factors may include

              whether the putative joint employer knew of the 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 Barfield v. NY. City Health & Hasps. Corp., 537

              F.3d 132, 145-46 (2d Cir. 2008)).

                                                    1. EXPERT

                      The trial judge articulated only the four Bonnette factors in dismissing

              the employee's joint employer theory against Expert:

                      There is no genuine issue of material fact on the issue of whether Expert
                      was Plaintiffs' joint employer, and the Defendant is entitled to judgment
                      as a matter of law. Specifically, the Court concludes that Expert was not
                      Plaintiffs' joint employer under the test set forth in Bonnette v.

                                                       12
                                                        
              Becerra v. Expert, eta!. (89534-1)

                     California Health and Welfare Agency, 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 of employment, was not
                     involved in determining the plaintiffs' rate of pay and did not maintain
                     their employment records. Plaintiffs admit that nobody from Expert ever
                     told them what to do or how to do their jobs. In fact, the plaintiffs could
                     not even identify any employees who worked for Expert.

              CP at 1961. Later, in the context of ruling on Fred Meyer's summary judgment

              motion, the judge noted that she had limited her analysis in Expert's motion to

              the Bonnette factors on the theory that the nonregulatory factors "seem to apply

              more to the Boeing[?] case and that type of thing. 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 of business." Report of Proceedings (Sept. 2,

              2011) at 36. The Court of Appeals reversed, concluding that the trial court had

              erred in limiting its analysis to the Bonnette factors, that many factors did

              weigh in favor of finding Expert was a joint employer, and that material

              questions of fact remained to be resolved. Becerra Becerra, 176 Wn. App. at

              712-13,723. We agree.

                      Simply put, we find the trial court did not consider all the relevant

              factors at summary judgment or sufficiently identify why it deemed certain

              factors to be not relevant. While our review of the record suggests that

              summary judgment was improperly granted on the merits, we do not mean to

              bind the trial court's hands on remand. We remand for further proceedings,

              7
               It is not clear what case the trial judge is referring to or if the court reporter misheard
              her. No case named Boeing was cited in the summary judgment briefing, 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 of the record persuades us otherwise.

                                                            13
                                           
              Becerra v.   Expert~   et al. (89534-1)

              including further discovery by the parties if they deem it necessary, and direct

              the trial court to consider any otherwise proper summary judgment motions

              brought by the parties raising the joint employment matter again.

                                                        2. FRED MEYER

                     The trial judge's written ruling granting Fred Meyer's summary

              judgment did not identify any of the factors she considered. In her oral ruling,

              she effectively found that four factors, some formal and some functional,

              weighed in favor of finding Fred Meyer was not the joint employer of the

              janitors. Again, we believe it is unlikely summary judgment should have been

              granted on this record, but we leave it in the able hands of the trial court to

              reconsider the matter using the Torres-Lopez factors on remand.

                                                         CONCLUSION

                     We affirm the Court of Appeals and remand for further proceedings on

              whether Fred Meyer and Expert functioned as joint employers of the janitors

              under Washington's MWA.

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

                                                          otllzcX lez

              WE CONCUR:

                                                         0~62
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