Maria Espinoza v. Fred Meyer

CourtCourt of Appeals of Washington
DecidedNovember 4, 2019
Docket76752-6
StatusUnpublished

This text of Maria Espinoza v. Fred Meyer (Maria Espinoza v. Fred Meyer) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Maria Espinoza v. Fred Meyer, (Wash. Ct. App. 2019).

Opinion

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

MARIA ESPINOZA and JUAN FRANCISCO HERNANDEZ TORRES, DIVISION ONE

Appellants, No. 76752-6-I

UNPUBLISHED OPINION V.

MH JANITORIAL SERVICES LLC, EXPERT JANITORIAL, LLC, ALL AMERICAN JANITORIAL LLC, ESTEBAN HERNANDEZ, and RAUL CAMPOS,

Defendants,

FRED MEYER STORES, INC., FILED: November 4, 2019 Respondent.

DWYER, J. —This appeal is a continuation of the long-running dispute

between Fred Meyer Stores, Inc. and a group of janitors who cleaned Fred

Meyer stores from September 16, 2011 through September 23, 2014. Fred

Meyer contracted out its janitorial work to Expert Janitorial, LLC (Expert). Expert,

in turn, subcontracted the work to All American Janitorial LLC (AAJ) and M. H.

Janitorial LLC (MHJ), who directly employed the appellant janitors. No. 76752-6-1/2

The janitors brought suit against their direct employers and against Expert

and Fred Meyer, alleging violations of Washington’s Minimum Wage Act (MWA),

chapter 49.46 RCW. The janitors alleged that both Expert and Fred Meyer were

their joint employers under the MWA and were liable for their unpaid wages.

Employing the “economic reality” test adopted by our Supreme Court in Becerra

Becerra v. Expert Janitorial, LLC, 181 Wn.2d 186, 332 P.3d 415 (2014), the trial

court concluded that Expert, AAJ, and MHJ were liable to the janitors for

violations of the MWA but that Fred Meyer was not the janitors’ joint employer

and was, therefore, not liable. The janitors appeal, asserting that the trial court

misapplied the “economic reality” test and made findings of fact that are

unsupported by substantial evidence. Because the trial court properly applied

the “economic reality” test and its factual findings are supported by substantial

evidence, we affirm.

Prior to 2004, Fred Meyer employed full time janitors to clean its stores at

night. But in 2004, in an effort to reduce the time store managers had to spend

focusing on building maintenance and to reduce costs, Fred Meyer decided to

outsource its janitorial work. Fred Meyer contracted with a company eventually

purchased by Expert to clean some of its retail stores in the Puget Sound area.1

From September 2011 through September 2014, Fred Meyer paid Expert

approximately $4,000,000 annually for cleaning services.

During that time period, Expert was a nationwide janitorial services

1Fred Meyer first contracted with Industrial Cleaning Management LLC, which later became Janitorial Management Services LLC, which was then acquired by Expert.

2 No. 76752-6-1/3

company that provided over 500,000 separate cleaning services a year to

various clients. However, rather than directly perform cleaning services, Expert

subcontracted 100 percent of its janitorial work. As part of its service to

customers, Expert promised to monitor the quality of its subcontractors’ work as

well as its subcontractors’ compliance with wage and hour and immigration laws.

Under its contract with Fred Meyer,2 Expert was explicitly tasked with

ensuring that its subcontractors complied with labor laws. The contract set forth

a detailed scope of daily work, and, until May 2014, required Fred Meyer

personnel to formally inspect and approve the janitors’ work each day.

Starting in late 2009 or early 2010, Expert subcontracted a portion of the

Fred Meyer janitorial work to AAJ. Initially, AAJ did not classify any of its janitors

as employees. This changed when a group of its janitors filed a class action

lawsuit against AAJ, Expert, and Fred Meyer in 2010 (the Beccera lawsuit). At

that time, AAJ began converting the janitors from independent contractor status

to employee status. However, by the time AAJ’s owner gave deposition

testimony in the Becerra lawsuit in August 2011, he had only converted

approximately half of his janitors to employee status.

Meanwhile, the Becerra lawsuit prompted Expert to perform an audit of its

Washington subcontractors to determine whether the subcontractors were

violating wage and hour laws. This audit revealed to Expert that the

subcontractors it hired to work on the Fred Meyer contract were, in fact, violating

wage and hour laws. Expert did not share the results of this audit with Fred

2 Expert’s contract with Fred Meyer went unchanged from Fred Meyer’s original contract with Industrial Cleaning Management LLC in 2004 through May 2014.

3 No. 76752-6-1/4

Meyer.

Expert, concerned about the misclassification of janitors atAAJ and its

other subcontractors’ labor law violations, looked for a new janitorial company to

take over the Fred Meyer work. Expert’s solution was to have a manager of one

of its other janitorial subcontractors start a new janitorial business to which

Expert could then subcontract all of the Fred Meyer contract work. This new

company was MHJ. Expert began transitioning the Fred Meyer contract work to

MHJ in early December2011.

In mid-December 2011, the owner of AAJ disappeared. He left with all of

AAJ’s cleaning equipment and without paying any of the AAJ janitors for their

work in the most recent pay period. Expert quickly moved to transfer all of the

stores for which AAJ was responsible to MHJ, which assumed responsibility for

AAJ’s contract. Expert further assisted in transferring all of AAJ’s janitors to

MHJ. Additionally, Expert offered to pay the AAJ janitors their unpaid wages in

exchange for a release of liability. Expert ultimately paid $97,550 to MHJ so that

it could then issue paychecks to 48 former AAJ janitors for the work they

performed while employed by AAJ.

Subsequently, in May 2012, following an audit by the Department of Labor

and Industries Workers’ Compensation Division, MHJ administrators came to

mistakenly believe that they could pay janitors on a salary basis and stop

tracking janitor hours. As a result, MHJ immediately stopped tracking its janitors’

hours and paid them a salary.

In late July 2012, a community organization calling itself the “Stop Wage

4 No. 76752-6-1/5

Theft Coalition” sent Fred Meyer a letter raising questions about whether the

janitors working in its stores were being paid in accordance with labor laws. Fred

Meyer forwarded this letter to Expert, who sent a response letter to both Fred

Meyer and the community organization. Therein, Expert asserted that it was

regularly auditing its subcontractors to ensure that they complied with all labor

laws, that a Department of Labor and Industries audit had found that MHJ was in

full compliance with labor laws, that any prior problems regarding AAJ were firmly

in the past, and that Expert had ensured that none of the compliance issues of

past subcontractors carried over to MHJ. As it turned out, these assertions were

either completely false or at best very misleading. Expert was not regularly

auditing MHJ, and the Department of Labor and Industries audit had not been a

wage and hour audit but, rather, a workers’ compensation audit.

Shortly thereafter, MHJ learned that it was under investigation by the

United States Department of Labor for its classification of the janitors as salaried

employees. Immediately upon learning that such a practice was impermissible,

MHJ began classifying the majority of its janitors as hourly wage employees and

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