Employers Liable for Wage Claims of Contractors and Subcontractors
Wage and Hour
An employer using contractors and subcontractors may be liable for wage claims if they are found to be a joint employer, the Washington Supreme Court recently decided. Fred Meyer contracted with Expert Janitorial to provide cleaning services for its Washington store locations. Expert Janitorial did not staff the employees themselves; instead, they contracted with various subcontractors to perform the work.
The cleaning took place during the evening, typically around 11 p.m. when the stores were closed. The employees were not able to leave until their work was signed off in the morning, usually around 8 a.m. Unfortunately, the subcontractors failed to pay their employees minimum wage and overtime, while they also neglected to pay various taxes including Social Security and workers’ compensation.
The court decided that an employee can have more than one employer under Washington’s Minimum Wage Act and the Fair Labor Standards Act. Each employer bears responsibility for complying with the law. The court did not actually determine whether Fred Meyer was a joint employer of these individuals; that decision will be made by a lower court. However, the Washington Supreme Court did identify a variety of factors to consider when determining whether a company is a joint employer. These factors include the nature and degree of control, the degree of supervision, and the power to determine the pay rates or the methods of payment, among others (Becerra v. Expert Janitorial, Wash, Aug. 2014).
Tips: This is yet another reminder that employers must be mindful of the employment practices of their contractors and subcontractors. You should investigate if the contractors and sub-contractors are able to pay their obligations as well as the history of a company before enlisting their services. If there is any indication that laws are being circumvented, you should be ready to cut ties. It’s also crucial to determine if an individual is truly an independent contractor or an employee. The decisions will always be determined based on individual facts and circumstances, so contact your Vigilant staff representative for legal advice and assistance if you are unsure.
Wage and hour issues have different outcomes depending on the state in which the claims are reported. For further information, including state-by-state examples of wage and hour cases, review our wage and hour blogs.
For more information regarding independent contractors and subcontractors, reference our Legal Guide, “Independent Contractor or Employee?”.