NFIB logoBusiness groups warn of consequences in Becerra v. Fred Meyer

In a filing late Friday afternoon, the National Federation of Independent Business, the state’s largest small-business association, joined the Association of Washington Business and others in asking the State Supreme Court to overrule a lower court’s decision on a matter that could severely paralyze future agreements between businesses and the firms they sub-contract with.

The case, Becerra v. Fred Meyer, is a big deal for the Washington state business community. The plaintiffs worked for independent companies that entered into service contracts to clean Fred Meyer stores. But in the lawsuit, these employees allege that Fred Meyer, along with the independent companies, should be viewed as a joint employer, which would entitle these employees to back wages and other benefits mandated by wage-and-hour law.

“The Washington State Court of Appeal held that these workers might be viewed as Fred Meyer employees under a joint-employer theory, but in doing so it construed the joint-employer theory so broadly that it would make it almost impossible to have a service contract with another company without potentially being viewed as a joint employer,” said Luke Wake, staff attorney for NFIB’s Small Business Legal Center.

Added Kris Tefft of AWB, which is spearheading the business groups’ brief on appeal, “The courts should not impose employment liability on a company for the wage and hour compliance of another company just because the two independently contract to do business. This case, if upheld, will have a chilling effect on routine and perfectly legitimate contracting and outsourcing business relationships all across Washington in many industries.”

Wake noted the compounding problems with the decision. “Making matters worse, the appeal court opinion conflicts with federal law—which Washington state courts say they follow when determining whether someone is a joint employer,” he said. “Moreover, the opinion failed to clearly explain how the test should actually be applied, so the result is that neither business owners, nor their attorneys, will be able to make intelligent decisions about how to structure contracts with third-party companies without potential liabilities—because, again, entering a service contract with another company might expose your business to a lawsuit like this.”

The Court of Appeal decision was rendered on September 16, 2013.

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