Staffmark Investment Llc v. Dept. Of L & I ( 2020 )

Filed
Washington State
Court of Appeals
Division Two
February 19, 2020
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
STAFFMARK INVESTMENT, LLC, No. 52837-1-II
Respondent,
v.
WASHINGTON STATE DEPARTMENT UNPUBLISHED OPINION
OF LABOR & INDUSTRIES,
Appellant.
SUTTON, J. — Staffmark Investment, LLC appeals from the superior court’s judgment and
order affirming the Board of Industrial Insurance Appeals’ (Board) decision and order. Braden
Strumsky, a worker hired by Staffmark, crushed his foot working at a warehouse operated by
Expeditors International of Washington. The Department of Labor and Industries (Department)
cited Staffmark, as a joint employer, for safety violations under the Washington Industrial Safety
and Health Act of 1973 (WISHA).1 Staffmark argues that (1) substantial evidence does not support
the Board’s determination that Staffmark was an employer under the economic realities test, and
(2) substantial evidence does not support the Board’s determination that Staffmark had
constructive knowledge about the violations. We disagree and affirm.
1
Ch. 49.17 RCW.
No. 52837-1-II
FACTS
I. JOB SITE CITATION
Staffmark is an employment agency that provides employees to Expeditors2 under a service
providers’ agreement. Staffmark provided onsite general labor, such as forklift drivers, along with
leads and quality control management. Staffmark provided onsite supervision through a manager
and granted supervisory responsibilities to some of the leads. Both Staffmark and Expeditors
maintained onsite managers and both designated employees as leads for each team. Expeditors
directly employs a warehouse supervisor.
As part of the contract with Expeditors, Staffmark charged Expeditors for the employees’
wages, plus a negotiated markup. Staffmark paid the employees’ wages including workers’
compensation insurance and health care benefits. Staffmark passed these costs to Expeditors
through the markup charge for each employee. Expeditors requested additional labor from
Staffmark according to the volume of business and Staffmark hired additional employees to fill
those needs.
Staffmark employees filled two roles for Expeditors: (1) unloading containers, and (2)
putting away cargo at the warehouse. CP at 921. Under the service provider’s agreement,
Expeditors paid Staffmark a 39 percent markup for general workers, and a 42 percent markup for
forklift operators.
Staffmark hired Strumsky and then leased him to Expeditors as a general worker. Andy
Johnson, Staffmark’s onsite manager, interviewed and hired Strumsky to fill the position at the
2
Expeditors International of Washington is a shipping and receiving facility that employs workers
via Staffmark. Expeditors is not a party in this litigation.
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No. 52837-1-II
Expeditors warehouse where Strumsky was injured. Johnson oversaw Staffmark employees at
four of Expeditors’ facilities. He worked on a daily basis and also maintained a permanent
workstation at the facility where Strumsky was injured. Johnson conducted daily walkthroughs of
the facility.
Johnson provided Strumsky’s new-hire orientation, which consisted of a tour of the
warehouse and an explanation of the types of freight that Strumsky would be handling. Johnson
also reviewed Staffmark employee timesheets and administered payroll.
Johnson had the ultimate authority to discipline or terminate Staffmark employees,
including Strumsky, who were not meeting client standards. Johnson could also reassign
employees who did not “fit in with [a] particular work group” to another client. Clerk’s Papers
(CP) at 1081. On occasion, Johnson would terminate a Staffmark employee for “no-call, no-
show,” or gross negligence. CP at 1073.
Expeditors divided the work into teams that typically consisted of two general workers and
one forklift operator. The general workers worked with a forklift operator to unload goods from
the container onto pallets. The Staffmark leads were general workers or forklift operators who
Staffmark paid a higher wage to take on more responsibility. If Expeditors needed a Staffmark
employee to assume a lead position, Johnson–Staffmark’s onsite manager–arranged for Expeditors
to interview prospective leads. The Staffmark leads still reported to Staffmark even after being
promoted by Expeditors.
Johnson and the Staffmark leads helped ensure that Staffmark employees followed safety
standards. Johnson attended monthly safety meetings along with Staffmark and Expeditors leads
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No. 52837-1-II
and Expeditors supervisors. In his daily walkthroughs of the facility, Johnson looked for safety
issues and ensured that Staffmark workers wore personal protective equipment.
Both Staffmark and Expeditors leads were assigned to Strumsky’s shift. Staffmark leads
ensured that their team followed the client’s dress code and wore the appropriate protective
equipment. Both leads were responsible for immediate discipline of Staffmark workers. Both
leads referred more serious or on-going issues to Johnson because Staffmark leads could only
reassign a Staffmark worker with Johnson’s approval.
Both Staffmark and Expeditors leads attended daily shift meetings with Expeditors
supervisors to discuss staffing and safety issues and to receive work orders. Johnson often
participated in these meetings. The Staffmark lead during Strumsky’s shift, Jeffrey Thysell, told
Strumsky when to report to work. Ricky Maghanoy was the Expeditors lead during Strumsky’s
shift. If Strumsky ever ran late, he would contact the Staffmark lead, Thysell. Maghanoy and
Thysell distributed the workload among the teams before the start of each shift.
Staffmark and Expeditors shared responsibility for training and certifying forklift
operators. Staffmark assigned employees to the position of forklift operator if that employee had
experience operating powered industrial trucks. Staffmark verified each employee’s experience
by providing a written test to prospective forklift operators. After the employee passed the test,
Staffmark approved the employee for practical training.
Staffmark’s onsite manager or lead traditionally administered and scored the test.
Staffmark’s staff gave Expeditors a blank copy of the test, and Johnson knew that Expeditors’
employees provided the test to forklift trainees while Strumsky worked there. After an employee
passed the test, Expeditors provided practical training on the site-specific equipment. Expeditors
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No. 52837-1-II
then certified the employee as a forklift operator and notified Staffmark of the change in position
so that the employee could receive higher pay.
Neither Staffmark nor Expeditors gave Strumsky the written test or certified him before he
began operating a forklift. The only information Strumsky received regarding the operation of
forklifts before he operated one was (1) an employee handbook that mentioned that a worker
should not operate a forklift without Staffmark’s permission, and (2) a short video that described
general safety topics.
Strumsky believed he was following the appropriate process for becoming a forklift
operator. He asked Maghanoy, the Expeditors’ lead during his shift, about becoming a forklift
operator. Maghanoy discussed the possibility of training Strumsky with Thysell, the Staffmark
lead assigned to Strumsky’s shift. Maghanoy asked for approval from the Expeditors supervisor
before training Strumsky to drive a forklift. Maghanoy knew that Strumsky was not “signed off
completely” because “Staffmark wasn’t really following up” when Expeditors asked to train
forklift operators. CP at 1044.
Maghanoy allowed Strumsky to operate the Expeditors forklifts in five or six sessions over
a period of a month. Each session lasted about an hour. While most of the driving took place
away from the main work area, the activity was still visible to the other employees in the
warehouse. Other forklift operators often drove by the space where Strumsky was operating the
forklift. Strumsky twice drove in a circle around the other workers.
On October 1, 2015, Strumsky suffered serious injuries when he lost control of the stand-
up forklift he was operating. Strumsky spent an hour unloading freight using a forklift. When he
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No. 52837-1-II
finished, he drove the forklift 100 feet across the warehouse, lost control of the forklift, and crushed
his left foot against a support beam.
After conducting an investigation, the Department cited Staffmark for the following two
WISHA violations:
1-1a. Serious. [WAC] 296-863-60005. Employer did not ensure employee
successfully completed an operator training program before operating PITs
(Powered Industrial Trucks).
1-1b. Serious. [WAC] 296-863-40010. Employer did not ensure operator
operated PITs (Powered Industrial Trucks) according to the manufacturer’s
instructions and kept PITs under control at all times.
CP at 1329. Both violations were characterized as “serious.” CP at 1329, 865.
II. STAFFMARK APPEALS TO THE BOARD
Staffmark appealed to the Board, arguing that Staffmark was not an employer for the
purposes of WISHA. The Board rejected Staffmark’s argument, deciding that the Department
properly cited Staffmark for safety violations at a joint employer work site because both employers
exercised substantial control over the injured forklift driver and both were responsible for the
safety violations. The Board affirmed the citations.
The Board found that “Staffmark at least had constructive knowledge that Mr. Strumsky
was operating the forklift in plain view on numerous occasions, and a Staffmark lead was aware
he was being trained as a forklift driver.” CP at 68. The Board made the following relevant
findings of fact:3
3
Although Staffmark assigns error to findings of fact 2 through 8, Staffmark only provides
argument to challenge findings of fact 3 and 6.
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No. 52837-1-II
3. During at least the month of October 2015, Staffmark and Expeditors both
exercised substantial control over the workforce and workplace conditions at the
Expeditors’ 24th Street Sumner facility. Both companies had lead workers and
managers/supervisors assigned to the jobsite. Both companies provided substantial
control of the work at the Expeditors’ 24th Street Sumner facility, and both could
discipline Staffmark employees. Staffmark employees’ wages were established
based on the companies negotiated Service Providers’ Agreement.
....
6. On October 1, 2015, Staffmark and Expeditors jointly controlled the worksite
and Staffmark employees at the Expeditors’ 24th Street Sumner facility at the time
of the forklift accident at issue.
CP at 69-70.
The Board made the following relevant conclusions of law:4
2. On October 1, 2015, Staffmark and Expeditors were joint employers at the time
of the forklift accident and both had control of the worksite and Staffmark
employees at the joint employer worksite at the Expeditors’ 24th Street Sumner
facility; therefore, Staffmark was properly cited for safety violations on February
17, 2016, pursuant to In Re Skills Resource Training Center, BIIA Dec., 95 253
(1997).
CP at 70-71.
III. STAFFMARK APPEALS TO THE SUPERIOR COURT
Staffmark appealed to the superior court, which also rejected its argument that it was not
an employer for WISHA purposes. The superior court affirmed the Board’s decision and order.
Staffmark now appeals to this court.
4
Although Staffmark assigns error to conclusions of law 2 through 6, Staffmark only provides
argument to challenge conclusion of law 2.
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No. 52837-1-II
ANALYSIS
Staffmark argues that the Board erred by determining that Staffmark was an employer for
the purposes of WISHA because Staffmark lacked sufficient control over the workers and the
worksite and did not create or control the hazard. Staffmark further argues that the Board erred by
determining that Staffmark had constructive knowledge of Strumsky operating the forklift in plain
view because the forklift trainings were for short periods of time and away from where workers
customarily worked. The Department argues that substantial evidence supports the Board’s
determination that Staffmark was an employer under the economic realities test. The Department
further argues that substantial evidence shows that Staffmark knew or should have known that the
worker was operating a forklift without being trained because he operated the forklift in plain view.
We agree with the Department.
I. STANDARD OF REVIEW
The purpose of WISHA is to assure, insofar as may be reasonably possible, safe and
healthful workplace conditions for every person in the state of Washington. RCW 49.17.010. “As
a remedial statute, WISHA and its regulations are liberally construed to carry out its purpose.”
Elder Demolition, Inc. v. Dep’t of Labor & Indus., 149 Wash. App. 799, 806, 207 P.3d 453 (2009).
“In a WISHA appeal, we review the Board’s decision directly based on the record before
the Board.” Potelco, Inc. v. Dep’t of Labor & Indus., 191 Wash. App. 9, 21, 361 P.3d 767 (2015).
“And we review the Board’s findings of fact to determine whether they are supported by
substantial evidence . . . as a whole and whether those findings support the conclusions of law.”
Potelco, 191 Wash. App. at 21. “The Board’s findings of fact are conclusive if substantial evidence
supports them.” Potelco, 191 Wash. App. at 21. “‘Substantial evidence is evidence in sufficient
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No. 52837-1-II
quantum to persuade a fair-minded person of the truth of the declared premises.’” Potelco, 191
Wash. App. at 21-22 (internal quotation marks omitted) (quoting Pilchuck Contractors, Inc. v. Dep’t
of Labor & Indus., 170 Wash. App. 514, 517, 286 P.3d 383 (2012)). “Under the substantial evidence
standard of review, our review is limited to the examination of the record and we will not reweigh
the evidence.” Potelco, 191 Wash. App. at 22. “Unchallenged findings of fact are verities on
appeal.” Potelco, 191 Wash. App. at 22.
“We give substantial weight to an agency’s interpretation within its area of expertise, and
we will uphold that interpretation if it is a plausible construction of the regulation and not contrary
to the legislative intent.” Potelco, 191 Wash. App. at 22.
II. NON-DELEGABLE DUTY
Staffmark argues that it did not create the hazard, control the hazard, or have any
responsibility to correct the hazard. The Department argues this this claim is not supported by the
facts. We hold that Staffmark, as an employer, owed Strumsky a non-delegable duty to comply
with WISHA regulations.
RCW 49.17.020(4) defines an “employer” as any firm that “engages in any business,
industry, profession, or activity in this state and employs one or more employees . . . .” All
employers have a non-delegable duty to protect their employers under both WISHA. RCW
49.17.060; Afoa v. Port of Seattle, 176 Wash. 2d 460, 470-71, 296 P.3d 800 (2013). “[I]t is settled
law that jobsite owners have a specific duty to comply with WISHA regulations if they retain
control over the manner and instrumentalities of work being done on the jobsite.” Afoa, 176 Wash. 2d
at 472. “[T]his duty extends to all workers on the jobsite that may be harmed by WISHA
violations.” Afoa, 176 Wash. 2d at 472.
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No. 52837-1-II
Here, Staffmark failed to protect Strumsky from the hazard of operating a forklift
improperly because it did not ensure that he understood and completed the process for forklift
operation certification before operating a forklift at the jobsite. Accordingly, Staffmark, as an
employer, owed Strumsky a non-delegable duty to comply with WISHA regulations.
III. STAFFMARK IS AN EMPLOYER UNDER WISHA
Staffmark argues that it was not an “employer” for purposes of WISHA and thus, it cannot
be held liable as a joint employer under the economic realities test for violations committed by
Strumsky because it lacked sufficient control over the workers and the worksite and did not create
or control the hazard. Thus, Staffmark claims that the Board’s decision is not supported by
substantial evidence and must be reversed. The Department responds that Staffmark is not excused
from complying with safety requirements because they were the primary employer who leased its
employee to Expeditors. Br. of Resp. at 14-15. We hold that the Board properly determined that
under the economic realities test, Staffmark is liable as a joint employer under WISHA.
Under WISHA, employers are responsible for the safety and health of their employees.
RCW 49.17.060. Courts interpret WISHA liberally to provide wide protection to workers. Frank
Coluccio Const. Co. v. Dep’t of Labor & Indus., 181 Wash. App. 25, 36, 329 P.3d 91 (2014). Under
multi-employee worksite liability, employers have a specific duty to comply with WISHA
regulations, which extends “to all employees” who may be harmed by an employer’s violation of
the WISHA regulations. Afoa, 176 Wash. 2d at 471-72. Therefore, to advance WISHA’s safety
objectives, the Department may cite multiple employers for violating workplace safety standards.
Afoa, 176 Wash. 2d at 472. “Washington courts look to federal cases interpreting the Occupational
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No. 52837-1-II
Safety and Health Act of 1970 (OSHA)5 as persuasive authority for how to apply the provisions
of WISHA because WISHA parallels OSHA.” Potelco, 191 Wash. App. at 30 (citing Lee Cook
Trucking & Logging v. Dep’t of Labor & Indus., 109 Wash. App. 471, 478, 36 P.3d 558 (2001)).
“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 Wash. App. at 30. The economic realities test requires the Board to analyze:
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;
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, 191 Wash. App. at 31 (quoting In re Skills Res. Training Ctr., No. 95 W253, 1997 WL
593888, at *4 (Wash. Bd. of Indus. Ins. Appeals Aug. 5, 1997)). The key question is whether the
employer has the right to control the worker. Potelco, 191 Wash. App. at 31. That is the only
disputed portion of the economic realities test at issue in this case.
Staffmark argues that the Board improperly concluded that Staffmark controlled the
workers. We disagree.
5
29 U.S.C. § 651.
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No. 52837-1-II
As to whether Staffmark, as the alleged employer, has the power to control the workers,
Staffmark retained the authority to discipline or terminate an employee because Johnson had the
ultimate authority to discipline or terminate Staffmark employees who were not meeting client
standards. Johnson could also reassign employees who did not “fit in with [a] particular work
group” to another client. CP at 1081. Thus, because Staffmark had the power to control the
workers, Staffmark was the employer.
The Board considered all of the factors of the economic realities test and properly
concluded that Staffmark was a joint employer. Accordingly, we agree with the Board and hold
that that Staffmark was a joint employer under the economic realities test because it had the power
to control the workers and we affirm the Board’s order.
IV. EMPLOYER KNOWLEDGE
Staffmark argues that the Board erred by determining that Staffmark had constructive
knowledge that Strumsky was operating the forklift in plain view because the forklift trainings
were for short periods of time and away from where other employees customarily worked. The
Department argues that substantial evidence shows that Staffmark knew or should have known
that Strumsky was operating a forklift without being trained because he operated the forklift in
plain view of other employees in the warehouse. We hold that substantial evidence supports the
Board’s finding that Staffmark had constructive knowledge of the violations.
“Under WISHA, an employer has a general duty to employees to provide employees a
place of employment free from recognized hazards that are causing or likely to cause serious injury
or death and a specific duty to comply with the rules, regulations, and orders promulgated under
WISHA.” Pro-Active Home Builders, Inc. v. Dep’t of Labor & Indus., 7 Wash. App. 2d 10, 16-17,
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No. 52837-1-II
432 P.3d 404 (2019). “‘RCW 49.17.180(2) mandates the assessment of a penalty against an
employer when a proven violation is serious.” Pro-Active Home Builders, 7 Wash. App. 2d at 17
(internal quotation marks omitted) (quoting J.E. Dunn Northwest, Inc. v. Dep’t of Labor & Indus.,
139 Wash. App. 35, 44, 156 P.3d 250 (2007)).
A “serious” violation of a WISHA regulation is defined as follows:
[A] serious violation shall be deemed to exist in a workplace if there is a substantial
probability that death or serious physical harm could result from a condition which
exists, or from one or more practices, means, methods, operations, or processes
which have been adopted or are in use in such workplace, unless the employer did
not, and could not with the exercise of reasonable diligence, know of the presence
of the violation.
RCW 49.17.180(6).6
“When alleging a violation of WISHA regulations against an employers, the Department
bears the initial burden of proving the existence of that violation.” Pro-Active Home Builders, 7
Wash. App. 2d at 17. “When an alleged violation is designated as ‘serious,’ the Department bears
the burden of proving not only the existence of the elements of the violation itself, but also the
existence of those additional elements of a ‘serious’ violation enumerated in RCW 49.17.180(6).”
Pro-Active Home Builders, 7 Wash. App. 2d at 17 (citing J.E. Dunn, 139 Wash. App. at 44).
6
The legislature amended RCW 49.17.180 in 2018. LAWS OF 2018, ch. 128 § 1. Because these
amendments are not relevant here, we cite to the current version of this statute.
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No. 52837-1-II
Accordingly, to establish its prima facie case in regard to a serious violation of a WISHA
regulation, the Department must prove each of the following elements:
(1) the cited standard applies; (2) the requirements of the standard were not met;
(3) employees were exposed to, or had access to, the violative condition; (4) the
employer knew or, through the exercise of reasonable diligence, could have known
of the violative condition; and (5) there is a substantial probability that death or
serious physical harm could result from the violative condition.
Pro-Active Home Builders, 7 Wash. App. 2d at 17-18 (internal quotation marks omitted) (quoting,
Washington Cedar & Supply Co. v. Dep’t of Labor & Indus., 119 Wash. App. 906, 914, 83 P.3d
1012 (2003)). Staffmark challenges the knowledge element. Br. of App. at 9, 22.
“An employer’s knowledge can be actual or constructive, and common knowledge can be
used to establish that a hazard is recognized.” Pro-Active Home Builders, 7 Wash. App. 2d at 18.
Here, the Board found that “Staffmark at least had constructive knowledge that Mr.
Strumsky was operating the forklift in plain view on numerous occasions, and a Staffmark lead
was aware he was being trained as a forklift driver.” CP at 68. We, therefore, examine whether
substantial evidence shows constructive knowledge. Potelco, 191 Wash. App. at 21
“In general, constructive knowledge is established where the employer in the ‘exercise of
reasonable diligence’ could have become aware of the condition.” Pro-Active Home Builders, 7
Wash. App. 2d at 18 (quoting RCW 49.17.180(6)). “‘Reasonable diligence involves several factors,
including an employer’s obligation to inspect the work area, to anticipate hazards to which
employees may be exposed, and to take measures to prevent the occurrence.’” Pro-Active Home
Builders, 7 Wash. App. 2d at 18 (internal quotation marks omitted) (quoting Erection Co., Inc. v.
Dep’t of Labor & Indus., 160 Wash. App. 194, 206-07, 248 P.3d 1085 (2011)). “Constructive
knowledge may be demonstrated by the Department in a number of ways, including evidence
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No. 52837-1-II
showing that the violative condition was readily observable or in a conspicuous location in the
area of the employer’s crews.” Pro-Active Home Builders, 7 Wash. App. 2d at 18.
The record shows that Strumsky was trained in an open warehouse where it was possible
for other employees and supervisors to see him operate the forklift without proper training. CP at
1150-51. In the month leading up to the accident, Strumsky operated the forklift “five or six
times.” CP at 1150. Each session was “[a]bout an hour.” CP at 1151. The Staffmark lead during
Strumsky’s shift, Thysell, discussed the possibility of training Strumsky with Maghanoy. CP at
1119. When Strumsky was asked if he believed Thysell saw him, he said, “Yeah. Yeah. He was
on the forklift pretty much the whole day. I mean, it would be kind of shocking if he didn’t see
me.” CP at 1147.
Based on these facts, the violative conditions as set forth in the Department’s WISHA
violations 1-1a and 1-1b were readily observable to Staffmark. Staffmark could have become
aware of the conditions with the “exercise of reasonable diligence.” RCW 49.17.180(6). Thus,
substantial evidence supports the Board’s finding that Staffmark had constructive knowledge of
both violations.
Given the legislature’s expansive definitions of “employer” and “employee,” holding
Staffmark liable as a joint employer on this record supports the legislature’s directive to establish
“safe and healthful working conditions.” RCW 49.17.010, .020.
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No. 52837-1-II
CONCLUSION
We affirm the superior court’s judgment and order affirming the Board’s order.
A majority of the panel having determined that this opinion will not be printed in the
Washington Appellate Reports, but will be filed for public record in accordance with RCW 2.06.040,
it is so ordered.
SUTTON, J.
We concur:
MAXA, C.J.
MELNICK, J.
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