Dana's Housekeeping, Inc. v. Department of Labor and Industries of State of Wash.

• Decision Date: 17 January 1995
• Docket Number: No. 32873-5-I,32873-5-I
• Citation: 76 Wn.App. 600,886 P.2d 1147
• Court: Washington Court of Appeals
• Parties: DANA'S HOUSEKEEPING, INC., Appellant, v. The DEPARTMENT OF LABOR AND INDUSTRIES of the State of Washington, Respondent.

Page 600

76 Wn.App. 600

886 P.2d 1147

DANA'S HOUSEKEEPING, INC., Appellant, v. The DEPARTMENT OF LABOR AND INDUSTRIES of the State of Washington, Respondent.

No. 32873-5-I.

Court of Appeals of Washington Division 1.

Jan. 17, 1995.

Reconsideration Denied Feb. 28, 1995.

Michael L. Hall, Perkins Coie, Seattle, for appellant

James Steele Kallmer, Asst. Atty. Gen., Seattle, for respondent.

WEBSTER, Chief Judge.

Dana's Housekeeping, Inc., a business which contracts with housecleaners to clean private homes, appeals two industrial insurance tax assessments. We affirm the trial court, although we interpret the domestic servant exclusion differently.

FACTS

Dana's Housekeeping, Inc. advertises itself to the public as Seattle's largest "personalized homemaking service." Dana's contracts with 140 housecleaners, all of whom sign an agreement characterizing the housecleaner as an "independent contractor". Dana's assigns housecleaners to specific jobs, and makes all arrangements for the housecleaning (housecleaners provide their own transportation). While jobs may be declined, Dana's warns the "relationship will likely be terminated" if jobs are refused or availability is continually changing. Jobs may not be subcontracted or swapped without Dana's permission.

Dana's considers the homeowners to be Dana's clients; housecleaners agree not to solicit Dana's customers for 90 days after termination. Homeowners must pay for housecleaning in advance, usually by leaving a check payable to Dana's. Housecleaners are instructed to not clean unless a check is waiting. The amount owed is determined by Dana's in advance, although a housecleaner can charge more and often receives a gratuity. Dana's pays housecleaners by taking checks made payable to Dana's and endorsing them over to the housecleaners. If a check bounces, Dana pays the housecleaner and pursues the homeowner. Dana's does all of the paperwork and accounting.

Housecleaners typically clean many different homes each week. Homeowners prepare priority lists for the housecleaner. A housecleaner who finishes the priority list before the agreed time has expired (usually 4 hours) is required to call Dana's for instructions on work in the same home to use up the remaining time. The homeowner is responsible for making all necessary cleaning supplies available. Housecleaners are prohibited from shampooing carpets, washing outside windows, stripping large floors, or waxing hardwood floors. Dana's prohibits housecleaners from giving their phone number to homeowners, receiving phone calls at a client's home, taking anyone along on a cleaning job, and smoking (unless it is done outside and is "okay with the client"). Dana's instructs housecleaners on cleaning methods and important detailing to insure the "Dana's Sparkle." Homeowners are encouraged to complain to Dana's, who also calls clients periodically to monitor quality.

PROCEEDINGS BELOW

Dana's appeals a July 1987--September 1988 $65,030.71 industrial insurance premium assessment and an October 1988--June 1989 $59,099.25 assessment. The Board of Industrial Appeals Decision and Order (hereinafter Decision and Order ) held (1) the housecleaners were Dana's workers pursuant to RCW 51.08.180(1), (2) because the domestic servant exclusion contained in RCW 51

0(1) does not apply to commercial entities, the housecleaners were not exempt domestic servants, (3) the Department was not collaterally estopped from arguing that the housecleaners were Dana's "workers," even though the Department had denied an injury claim filed by a Dana's housecleaner, and (4) the proper risk classification for the housecleaners was the domestic servant classification. The trial court agreed the housecleaners were "workers," but held commercial entities could be exempt from coverage under 51.12.020(1), unless two or more domestic servants collectively worked more than 40 hours. Because Dana's 140 housecleaners collectively worked more than 40 hours, the court held the domestic servant exclusion did not apply to Dana's. The trial court affirmed the Decision and Order's collateral estoppel and risk classification decisions.

STANDARD OF REVIEW

The standard of review for agency proceedings which began prior to July 1, 1989, is outlined in RCW 34.04.130, while "agency proceedings begun on or after that date" are governed by RCW 34.05.570. RCW 34.05.902 (1992). Notice and Order of Assessment (NOA) 68944, issued March 23, 1989, assessed Dana's for industrial insurance premiums allegedly owed for July 1987 through September 1988. Dana's filed a notice of appeal on April 3, 1989, making former RCW 34.04.130 applicable:

The court may affirm the decision of the agency or remand the case for further proceedings; or it may reverse the decision if the substantial rights of the petitioners may have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:

. . . . .

(d) affected by other error of law; or

(e) clearly erroneous in view of the entire record as submitted and the public policy contained in the act of the legislature authorizing the decision or order;

RCW 34.04.130(6) (1987). NOA 74094, issued August 8, 1989 (and appealed August 16, 1989), which assessed Dana's for industrial premiums allegedly owed for October 1988 The court shall grant relief from an agency order in an adjudicative proceeding only if it determines that:

through June 1989, is reviewable under the current Administrative Procedure Act (APA):

. . . . .

(d) The agency has erroneously interpreted or applied the law; [or]

(e) The order is not supported by evidence that is substantial when viewed in light of the whole record before the court, which includes the agency record for judicial review, supplemented by any additional evidence received by the court under this chapter.

RCW 34.05.570(3) (1992).

Appellate review of factual findings under the former and current APA requires weighing the findings against all evidence presented. RCW 34.04.130(6)(e); RCW 34.05.570(3)(e); W. Andersen, The 1988 Washington Administrative Procedure Act--An Introduction, 64 Wash.L.Rev. 781, 839-840 (1989). A finding is clearly erroneous when, although there is evidence to support the finding, the reviewing court is left with the definite and firm conviction that a mistake has been committed based on the entire record; substantial evidence, similarly, is evidence in sufficient quantum to persuade a fair-minded person of the truth of the declared premises. Peter M. Black Real Estate Co. v. Department of Labor and Indus., 70 Wash.App. 482, 487, 854 P.2d 46 (1993); Olmstead v. Department of Health, Medical Section, 61 Wash.App. 888, 893, 812 P.2d 527 (1991). Under both the "error of law" and the "erroneously interpreted or applied the law" standards, an agency's interpretation of the statute with whose administration it is charged is entitled to substantial weight. Evans v. Department of Employment Security, 72 Wash.App. 862, 865, 866 P.2d 687 (1994); Cascade Nursing Servs., Ltd. v. Employment Security Dep't, 71 Wash.App. 23, 29, 856 P.2d 421 (1993), review denied, 123 Wash.2d 1013, 871 P.2d 599 (1994). A court may, however, substitute its own judgment on the statute which the agency primarily applies and interprets. Cascade Nursing Servs., 71 Wash.App. at 29, 856 P.2d 421. An agency's legal interpretation in areas outside of its expertise is entitled to no deference. Russell v. Department of Human Rights, 70 Wash.App. 408 Although the parties dispute whether current or former APA standards govern review, neither party argues that the result depends on which APA version is applied. We find that the result in this case would be the same under either standard. Because there is no conflict between the factual and legal review under former and current APA standards, it is proper to apply one standard. Cf. Burnside v. Simpson Paper Co., 123 Wash.2d 93, 101, 864 P.2d 937 (1994) (false conflict of laws makes application of local law proper). Therefore, although the commencement of NOA 68944 technically requires application of RCW 34.04.130(6)(d)-(e), we accept appellant's invitation to review the appeal entirely under the current APA, RCW 34.05.570(3)(d)-(e).

412, 854 P.2d 1087 (1993), review denied, 123 Wash.2d 1011, 869 P.2d 1085 (1994).

DISCUSSION

Housecleaners As "Workers" Pursuant

To RCW 51.08.180(1)

Dana's first contends the housecleaners are not Dana's "workers" for purposes of RCW 51.08.180(1), despite the Industrial Insurance Act's sweeping purpose: "There is a hazard in all employment and it is the purpose of this title to embrace all employments which are within the legislative jurisdiction of the state." RCW 51.12.010. This broad policy is effected by defining "worker" to include both employees and independent contractors (the latter with one exception):

"Worker" means every person in this state who is engaged in the employment of an employer under this title, whether by way of manual labor or otherwise in the course of his or her employment; also every person in this state who is engaged in the employment of or who is working under an independent contract, the essence of which is his or her personal labor for an employer under this title, whether by way of manual labor or otherwise, in the course of his or her employment, or as a separate alternative, a person is not a worker if he or she meets the tests set forth in subsections (1) through (6) of RCW 51.08.195....

RCW 51.08.180(1). ¹ The current broad definition of "worker" includes independent contractors whose personal efforts constitute the main element in accomplishing the objects of the employment. Norman v. Department of Labor and Indus., 10 Wash.2d 180, 184, 116 P.2d 360 (1941); Peter M. Black Real Estate Co., 70 Wash.App. 482, 488, 854 P.2d 46. This case addresses whether the housecleaners are (1) working under an independent contract, (2) the essence of which is personal labor, (3) for...