HB 1440 AND THE PRACTICE OF SUBCONTRACTING
Companies engage contractors and subcontractors with increasing frequency in a number of
industries in Washington State and across the United States. These can be convoluted
arrangements that insert multiple layers of sub contractors between the workers and those in
charge. These arrangements can muddle employment relationships and create confusion
among workers as to who is the responsible employer or employers. In many cases, if a worker
is left to recover only against a sham or fly by night subcontractor, there is no recovery at all.
HB 1440 is a reflection of standard employment concepts in existence since at least 1938, with
the enactment of the Fair Labor Standards Act. In HB 1440, we intend to make worksite
employers or contractors liable in cases where they insert a control the work of a middleman
who isn’t in any real sense the “employer” of the workers and where they insert a middleman
to insulate themselves from liability for wage violation. We do NOT intend to make every
general contractor liable for every action of a subcontractor.
HB 1440 INCLUDES TWO STANDARD EMPLOYMENT LAW CONCEPTS
Joint Employers. Since 1938, the federal Fair Labor Standards Act has included the concept of
joint employment. The FLSA covers work relationships that allow workers to recover from
more than one employer in a chain of contractors and subcontractors as long as both
employers are, in some way, in charge of the workers work. 1 While the test for “employment”
is different in the FLSA than in HB 1440, the concept is the same.
Under FLSA, courts regularly find that a worksite employer is liable, along with a subcontractor,
for wage violations, when the relationship between the worker and the worksite employer
meets the same “employment” test as the relationship between the worker and the
subcontractor. Some sample cases include the garment,2 agricultural,3 janitorial,4 home health
care,5 computer software,6 building services,7 and retail delivery8 industries.
1
Rutherford Food Corp. v. McComb, 331 U.S. 722, 729 (1947). See generally Goldstein, Linder, Norton &
Ruckelshaus, “Enforcing Fair Labor Standards in the Modern American Sweatshop: Rediscovering the
Statutory Definition of Employment”, 46 UCLA Law Review 983 (April 1999).
2
Zheng v. Liberty Apparel Co., Inc., 355 F.3d 61 (2d Cir. 2003); Chen v. Street Beat Sportswear, Inc., 364 F. Supp. 2d
269 (E.D.N.Y. 2005)
3
Reyes v. Remington Hybrid Seed Co., 2007 WL 2067061 (7th Cir. 2007) . Antenor v. D & S Farms, 88 F 3d 925 (11th
Cir 1996); Torres-Lopez v. May, 111 F 3d 633 (9th Cir 1997); Ortiz v. Paramo, 2008 WL 4378373 (D.N.J. 2008).
4
Vega v. Contract Cleaning Maintenance, No. 03C9130, 2004 US Dist LEXIS 20949 (ND Ill, Oct 18, 2004) (janitors
hired by contractor could sue UPS for unpaid wages); Itzep v. Target Corp., 543 F Supp 2d 646 (WD Tx, 2006);
Zavala v. Wal-Mart Stores, Inc., 393 F. Supp.2d 295 (D.N.J.2005).
5
Coke v. Long Island Care at Home, Ltd., 376 F 3d 118, 130 (2d Cir 2004) (Home care attendant working for agency
employer who placed workers in individual homes can sue for unpaid wages).
6
Vizcaino v. Microsoft Corp., 97 F 3d 1187, 1189 (9th Cir 1997) cert den, 522 US 1098 (1998) (temporary
employees could sue Microsoft for benefits).
7
Falk v. Brennan, 414 US 190 (1973); Asselta v. 149 Madison Ave. Corp., 65 F Supp 385 (S.D.N.Y. 1945), aff’d 156 F
2d 139 (2nd Cir 1946), aff’d 331 US 199, 91 L Ed 1432 (1947); Hodgson v. Arnheim & Neely, Inc., 444 F 2d
Employers cannot dictate that a worker is an independent contractor. Another important
aspect of federal and state law is that an employer cannot uniformly decide that a worker is an
independent contractor, by just giving the worker a 1099 form or requiring the worker to sign a
contract that says he or she is an independent contractor.9
HB 1440 deletes portions of the existing 7 part test that allow employers to decide, on their
own, that workers are independent contractors.
HB 1440 AND CONSTRUCTION.
Subcontracting is common in construction projects and can result in high rates of workplace
violations if not properly overseen. In a labor-intensive industry — such as construction —
subcontractors are under enormous pressure to reduce labor costs, sometimes to the extent
that they cannot meet basic labor standards requirements. Contractors facing stiff competition
for contracts push heavily on subcontractors to reduce project costs, which leads —
intentionally or not — to neglect for workers’ rights as subcontractors are forced to trim
expenses. While a competitive bidding process solely based on price may drive down shortterm costs for developers, the practice also creates a race-to-the-bottom among subcontractors
who cut costs at the expense of their employees’ safety and wages.
Nonetheless, under existing law, general contractors are rarely held jointly liable for violations
of labor rights by sub-contractors in construction. HB 1440 does not change that, except in
instances where the sub-contractor is subject to control by the general contractor or not truly
an independent business. For example, a professional electrical company that contracts with
the general for work on a project is an independently established, skilled entity – not subject to
control by the general contractor.
609 (3d Cir 1971).
8
Ansoumana v. Gristede’s Operating Corp., 255 F Supp 2d 184 (SD NY 2003), adm’d to on recons, 255 F Supp 2d
197 (2003).
9
“That contractual language, however, is not conclusive in the circumstances presented here. Economic realities,
not contractual labels, determine employment status for the remedial purposes of the FLSA.” Real v. Driscoll
Strawberry Associates, 603 F.2d 748 (9th Cir. 1979); Rutherford Food Corp. v. McComb, supra, 331 U.S. at 729, 67
S.Ct. 1473; even the subjective intent of the parties to a labor contract cannot override the tests for employee or
independent contractor. Usery v. Pilgrim Equipment Co., 527 F.2d 1308, 1315 (5th Cir.), Cert. denied, 429 U.S. 826,
97 S.Ct. 82, 50 L.Ed.2d 89 (1976). Daily Herald v. ESD, 91 Wash. 2d 559 (1979); Penick v. ESD, 82 Wash. App. 30
(1996); Cascade Nursing Services v. ESD, 71 Wash. App. 23 (1993).