Washington Staffing Firm Was Not Employer For Purposes of Safety Violations
A Washington appellate court reversed a determination by a state superior court that had determined that a staffing firm, which assigned temporary workers to a specific entity, could be liable for violations of the Washington Industrial Safety and Health Act (WISHA) [Department of Labor & Indus. v. Laborworks Indus. Staffing Specialists, Inc., 2020 Wash. App. LEXIS 2304 (Aug. 17, 2020)]. Utilizing the so-called “economics realities” test, the appellate court concluded the borrowing employer exerted sufficient control over the temporary workers to be considered their employer and under these circumstances, it was not appropriate to hold the staffing company liable under WISHA.
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.
Laborworks 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 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 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.
The Board vacated the CNR, however, finding (in a 2-1 determination) that Laborworks was not an “employer” for purposes of WISHA. The Department appealed and the superior court reversed the Board’s findings.
Economic Realities Test
By way of background, the appellate court noted that 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 [see Potelco, Inc. v. Department of Labor & Indus., 191 Wn. App. 9, 361 P.3d 767 (2015)]. The test involves seven factors:
- who the workers consider their employer;
- who pays the workers’ wages;
- who has the responsibility to control the workers;
- whether the alleged employer has the power to control the workers;
- whether the alleged employer has the power to fire, hire, or modify the employment condition of the workers;
- whether the workers’ ability to increase their income depends on efficiency rather than initiative, judgment, and foresight; and
- how the workers’ wages are established.
Appellate Court Decision
Noting that the record lacked evidence concerning the first and sixth factors, the appellate court examined the evidence concerning the remaining five. As to the first issue, the court noted that under the staffing agreement, Laborworks paid the workers their wages. As to the third factor, control, the court noted that both employers could not be cited under WISHA unless both had substantial control over the workers and the work environment involved in the violations. Under the contract, Strategic Materials bore the responsibility of controlling the workers and the job site. This factor, therefore, weighed against citing Laborworks as an employer.
As to factor number 4, the court indicated Laborworks did not have the power to control the temporary workers in most regards. Although it assigned temporary employees to Strategic Materials, its control over them basically ended afterward. This factor also weighed against citing Laborworks as an employer.
As to the fifth factor, the right to fire, hire, and modify the employment condition, Laborworks had the right to hire temporary workers and fire them from the staffing company. But Strategic Materials had the authority to fire a temporary worker from its work assignment. Yet, Laborworks lacked the authority to change a worker’s job conditions while on the assignment. Viewing the evidence and reasonable inferences therefore in the light most favorable to Laborworks, this factor weighed against citing Laborworks as an employer.
As to the seventh factor, the establishment of the worker’s wages, the court noted that Laborworks issued paychecks to the temporary workers at the end of each day. Strategic Materials communicated the number of hours each worker had worked. The court stressed that 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 its commission payment. Because Laborworks calculated the amount of the temporary workers’ wages based on the number of hours Strategic Materials reported and the base wage rate Strategic Materials set, this factor weighed against citing Laborworks as an employer.
Summary by the Court
Summarizing the situation, the court noted that only one factor — who paid the workers’ wages — supported holding Laborworks liable as an employer for the citations. Four factors, including the two related to control, weighed to the contrary. Thus, the economic realities test dictated that Laborworks was not an employer with respect to the violations. Because substantial evidence supported the Board’s determination that Strategic Materials exerted daily control over the temporary workers, its finding that Laborworks was not an employer for purposes of WISHA should have been affirmed by the superior court.