IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DEPARTMENT OF LABOR AND
INDUSTRIES OF THE STATE OF No. 79717-4-I
WASHINGTON,
DIVISION ONE
Respondent,
v. UNPUBLISHED OPINION
LABORWORKS INDUSTRIAL
STAFFING SPECIALISTS, INC.,
Appellant.
CHUN, J. — Laborworks Industrial Staffing Specialists, Inc., assigned
temporary workers to Strategic Materials, which operated a recycling plant. The
Department of Labor and Industries cited Laborworks for violations of the
Washington Industrial Safety and Health Act (WISHA) at the plant. Laborworks
appealed to an industrial appeals judge and then to the Board of Industrial
Insurance Appeals, arguing that, as a staffing company, with respect to the
violations, it was not an employer subject to WISHA. The Board agreed and
vacated the citation. The Department then appealed to the superior court, which
reversed the Board’s decision. Laborworks appeals. We conclude that, under
the economic realities test, Laborworks did not constitute an employer for
purposes of the citation and reverse the superior court’s decision.
Citations and pin cites are based on the Westlaw online version of the cited material.
No. 79717-4-I/2
I. BACKGROUND
Laborworks, a staffing company, assigns temporary workers to clients in
the light industrial sector.
In June 2014, Laborworks signed a General Staffing Agreement to assign
temporary workers to Strategic Materials, which operates a facility that recycles
and sorts waste including glass and used hypodermic needles. In the
Agreement, Strategic Materials agreed to supervise the workers and to provide a
safe job site:
CLIENT’s Duties and Responsibilities
2. CLIENT will
a. Properly supervise Assigned Employees performing its work
and be responsible for its business operations, products,
services, and intellectual property;
b. Properly supervise, control, and safeguard its premises,
processes, or systems, and not permit Assigned Employees
to operate any vehicle or mobile equipment, or entrust them
with unattended premises, cash, checks, keys, credit cards,
merchandise, confidential or trade secret information,
negotiable instruments, or other valuables without STAFFING
FIRM’s express prior written approval or as strictly required by
the job description provided to STAFFING FIRM;
c. Provide Assigned Employees with a safe work site, comply
with all governmental laws as they may apply, including but
not limited to the Occupational Safety and Health Act of 1970
(OSHA), United States Longshoremen’s and Harborworker’s
Compensation Act, Jones Act, Equal Opportunity Act (EEO),
and Immigration laws, and provide appropriate information,
training, and safety equipment with respect to any hazardous
substances or conditions to which they may be exposed at the
work site;
d. Not change Assigned Employees’ job duties without
STAFFING FIRM’s express prior written approval.
2
No. 79717-4-I/3
Laborworks then conducted a safety walk through at the Strategic
Materials job site and completed a Job Site Safety Evaluation Report. In the
Report, Laborworks verified that Strategic Materials had a written safety program
and hazard communication program, and would provide safety gear to the
temporary workers. Strategic Materials also agreed to allow Laborworks to
conduct site investigations of injuries and accidents. Laborworks provided its
temporary workers assigned to the site with the Department’s online blood-borne
pathogens training and offered Hepatitis B vaccinations to some of the workers.
Laborworks paid the temporary workers daily based on the number of
hours worked. Strategic Materials kept track of the hours worked and reported
the hours to Laborworks. Strategic Materials set the base rate of pay, which
Laborworks then used to determine the amount for workers’ compensation
premiums, unemployment compensation premiums, and commission payments.
Strategic Materials also directed the temporary workers’ activities and could
terminate temporary workers from the job site. Laborworks could terminate the
workers’ employment from its staffing agency.
Laborworks learned about a February 2016 incident where a temporary
worker “was poked in some way” at Strategic Materials. Another temporary
worker suffered an injury in a “needle-stick incident” in July 2016.
In 2017, the Department cited Laborworks with three serious and two
general violations of the Washington Administrative Code (WAC) section 296-
823, which concerns occupational exposure to blood-borne pathogens. The
3
No. 79717-4-I/4
Department later issued a Corrective Notice of Redetermination (CNR) affirming
the violations issued in the citation.
Laborworks appealed the CNR to an industrial appeals judge. Laborworks
argued that it was not an employer for purposes of the WISHA and that “the
Department failed to establish that any employees were exposed to blood or any
other, potentially-infectious material.” The industrial appeals judge affirmed the
CNR.
Laborworks appealed to the Board. The Board issued a Decision and
Order vacating the CNR. The Board made two findings of fact on the issue of
whether Laborworks was an employer in relation to the citation:
4. LaborWorks, a temporary staffing company, contracted with
Strategic to provider workers to work at a Strategic recycling
facility. LaborWorks paid workers’ compensation, unemployment
insurance, and wages for workers it provided to Strategic, but
Strategic determined the base wage rate. LaborWorks also
provided initial training to workers it sent to Strategic but
performed no random site checks at the premises.
5. Both LaborWorks and Strategic maintained the right to terminate
workers. However, Strategic exerted daily control over the
employees by assigning work and providing supervision over the
LaborWorks workers.
Based on these findings, the Board concluded (2-1) that Laborworks was not an
“employer” for WISHA purposes.1
The Department then appealed the Decision and Order to the superior
court. Though the superior court determined that substantial evidence supported
1
One board member dissented from the Board’s decision, concluding that—
under the economic realities test—Laborworks was an employer in connection with the
violations. The dissenting member did not apply the knowledge standard from the
Department’s Dual Employer Directive, which this analysis addresses briefly below.
4
No. 79717-4-I/5
the Board’s findings, it concluded that Laborworks was an employer and
reversed the Board’s decision.
Laborworks appeals.
II. ANALYSIS
In WISHA appeals, this court reviews the Board’s decision based on the
record before the agency. Erection Co. v. Dep’t of Labor & Indus., 160 Wn. App.
194, 201, 248 P.3d 1085 (2011). We review the Board’s findings of fact to
determine whether substantial evidence supports them. Potelco, Inc. v. Dep’t of
Labor & Indus., 191 Wn. App. 9, 21, 361 P.3d 767 (2015). Substantial evidence
is what “would persuade a fair-minded person of the truth or correctness of the
matter.” Erection Co., 160 Wn. App. at 202. If substantial evidence supports the
factual findings, then the findings are conclusive and the panel next determines
whether the findings support the conclusions of law. Erection Co., 160 Wn. App.
at 202. We view the evidence and its reasonable inferences in the light most
favorable to the prevailing party in the highest forum that exercised fact finding
authority. See id. at 202. Here, we do so in the light most favorable to
Laborworks, which prevailed before the Board.
“The legislature enacted [WISHA] ‘to assure, insofar as may reasonably
be possible, safe and healthful working conditions for every [worker] in the state
of Washington.’” Erection Co., 160 Wn. App. at 201 (quoting RCW 49.17.010).
We liberally interpret WISHA statutes and regulations to achieve their purpose of
providing safe working conditions for every Washington worker. Erection Co.,
160 Wn. App. at 202.
5
No. 79717-4-I/6
WISHA renders employers responsible for the health and safety of their
employees. Potelco, 191 Wn. App. at 30. “Any entity that engages in any
business and employs one or more employees is an employer for WISHA
purposes.” Martinez Melgoza & Assocs. Inc. v. Dep’t of Labor & Indus., 125 Wn.
App. 843, 848, 106 P.3d 776 (2005) (citing RCW 49.17.020(4)). To promote
WISHA’s safety objectives, if two or more employers share responsibility for the
same employee, “the Department may cite multiple employers for violating
workplace safety standards.” Potelco, 191 Wn. App. at 30.
The Department argues that Laborworks is a liable employer under the
economic realities test.2 Laborworks responds that it is not so liable because it
lacked control over the Strategic Materials job site. We conclude that, under the
economic realities test, Laborworks is not an employer with respect to the
violations.
“When there is a WISHA violation involving leased or temporary
employees, the Board uses the ‘economic realities test’ to determine which
employer should be issued the WISHA citation.” Potelco, 191 Wn. App. at 30-31.
The test involves seven factors:
1) who the workers consider their employer;
2) who pays the workers’ wages;
3) who has the responsibility to control the workers;
4) whether the alleged employer has the power to control the
workers;
2
The Department also argues that we should apply a standard from its Dual
Employers Directive, which would make Laborworks liable as an employer for the
WISHA citations if they “knew or clearly should have known” of the violations. We
recently rejected this argument in Department of Labor and Industries v. Tradesmen
International, LLC, No. 79634-8 (Wash. Ct. App. Aug. 17, 2020).
6
No. 79717-4-I/7
5) whether the alleged employer has the power to fire, hire, or
modify the employment condition of the workers;
6) whether the workers’ ability to increase their income depends on
efficiency rather than initiative, judgment, and foresight; and
7) how the workers’ wages are established.
Potelco, Inc., 191 Wn. App. at 31. Under this test, “[t]he key question is whether
the employer has the right to control the worker.” Potelco, Inc., 191 Wn. App.
at 31.
The record lacks evidence about the first and sixth factors. We address
the other factors in turn and, in doing so, we view the evidence and reasonable
inferences therefrom in the light most favorable to Laborworks.
Payment of Wages
In the Agreement, Laborworks agreed to “[p]ay Assigned Employees’
wages and provide them with the benefits that [Laborworks] offers to them.” And
Laborworks paid the workers their wages. Thus, this factor supports citing
Laborworks as an employer in connection with the violations.
Responsibility to Control the Workers
The Department argues that Laborworks had the responsibility to control
the temporary workers and that this “is demonstrated by [Laborworks] hiring,
assigning to sites, paying the workers, covering workers’ compensation and
unemployment, training, inspecting sites, directing compliance with safety rules,
monitoring the provision of safety equipment, and by the company’s ability to
discipline, terminate, or remove it [sic] workers from unsafe situations.” The
Department says, “[I]n almost all temporary leasing situations[] both employers
7
No. 79717-4-I/8
control[] the workers.” (Emphasis added.) But its argument fails to apply
properly the economic realities test.
“[I]n leased employment situations, whether the lessor or the lessee
should be cited for WISHA violations depends on the economic realities of who
controls the workplace. Both employers cannot be cited unless they both have
substantial control over the workers and the work environment involved in the
violations.” In re Skills Res. Training Ctr., No. 95 W253 at 3 (Wash. Bd. of Indus.
Ins. App. Aug. 5, 1997) (emphasis added). Under the Agreement, Strategic
Materials had the responsibility to “[p]roperly supervise Assigned Employees
performing its work” and to “[p]roperly supervise, safeguard, and control its
premises.” Strategic Materials also took on the responsibility to “[p]provide
Assigned Employees with a safe work site.” Thus, under the contract, Strategic
Materials bore the responsibility of controlling the workers and the job site. This
factor weighs against citing Laborworks as an employer.
Power to Control the Workers
Laborworks did not have the power to control the temporary workers in
most regards. Though Laborworks could assign temporary employees to
Strategic Materials, its control over the temporary employees basically ended
afterward. After assignment, Strategic Materials gave the daily job assignments,
determined what processes the temporary workers would work on, and ensured
that appropriate controls were being used. Following an initial safety inspection
to determine what programs were in place and what personal protective
equipment was required or provided, Laborworks did not conduct other safety
8
No. 79717-4-I/9
inspections. Laborworks also did not send any supervisors to the job site to
accompany its temporary workers.
“[T]he [Occupational Safety and Health Commission (OSHC)] has held
companies that pay employees (including employee lease-back situations) are
not employers unless they control the jobsite and the employees’ activities.”
Skills Res. Training Ctr., slip op. at 9. Though Laborworks had some general
control over the workers through its power to assign the workers and the terms
laid out in the Agreement,3 it lacked the power to control the job site and the
temporary workers’ activities there. This factor also weighs against citing
Laborworks as an employer.
Power to Fire, Hire, or Modify the Employment Condition of the Workers
Laborworks had the power to hire temporary workers and to fire them from
their staffing company. Strategic Materials had the authority to fire a temporary
worker from its work assignment. While the Agreement required Laborworks’
approval before Strategic Materials permitted temporary workers to perform
certain tasks or made changes to their job duties, Laborworks lacked the
authority to change their job conditions while on the assignment. Viewing the
evidence and reasonable inferences therefore in the light most favorable to
Laborworks, this factor weighs against citing Laborworks as an employer.
3
Sections 2b and 2d of the Agreement provided that Strategic Materials could
not assign certain tasks to temporary workers or change their job duties without
Laborworks’ permission.
9
No. 79717-4-I/10
Establishment of the Workers’ Wages
Laborworks assigned employees to Strategic Materials daily, and so it
issued paychecks to the temporary workers at the end of each day. Strategic
Materials would communicate to Laborworks how many hours each temporary
worker worked. Strategic Materials set the base rate of pay, which Laborworks
then used to determine the amount for workers’ compensation premiums, the
unemployment compensation premiums, and their commission payment.
Because Laborworks calculated the amount of the temporary workers’ wages
based on how many hours Strategic Materials reported and the base wage rate
Strategic Materials set, this factor weighs against citing Laborworks as an
employer.
Only one factor—who pays the workers’ wages—supports holding
Laborworks liable as an employer for the citations. Four factors, including the
two relating the control, weigh to the contrary. Thus, the economic realities test
dictates that Laborworks is not an employer with respect to the violations.
We determine that substantial evidence supports the Board’s findings that
Strategic Materials exerted daily control over the temporary workers by assigning
work and providing supervision. Substantial evidence also supports the Board’s
findings that Laborworks paid the workers based on a base wage rate set by
Strategic Materials, Laborworks provided initial training to temporary workers but
did not perform random site checks, and both parties maintained their respective
right to terminate workers’ employment. These findings, and application of the
10
No. 79717-4-I/11
economic realities test, support the conclusion that Laborworks was not an
employer under WISHA with respect to the violations at issue.
We reverse.
WE CONCUR:
11