AGO 1985 No. 2 - Jan 11 1985
INDUSTRIAL INSURANCE ‑- WORKERS' COMPENSATION ‑- MINIMUM WAGE ‑- APPLICABILITY OF MINIMUM WAGE LAW TO VOCATIONAL REHABILITATION TRAINEES
When an industrially-injured worker continues to receive temporary total disability compensation from the Department of Labor and Industries while participating in an approved vocational rehabilitation plan consisting of on-the‑job training and there is no payment of wages by the training employer to the worker, court decisions support the proposition that state or federal minimum wage laws generally will not be applicable; nevertheless, if sufficient other indicia of an employer-employee relationship are present a court could still find an on-the‑job trainee to have crossed the line to becoming an employee for minimum wage law purposes.
- - - - - - - - - - - - -
January 11, 1985
Honorable Sam Kinville
Director, Department of Labor
General Administration Building
Olympia, Washington 98504
Cite as: AGO 1985 No. 2
By letter previously acknowledged you requested the opinion of this office on a question which we paraphrase as follows:
When an industrially-injured worker continues to receive temporary total disability compensation from the Department of Labor and Industries while participating in an approved vocational rehabilitation plan consisting of on-the‑job training and there is no payment of wages by the training employer to the worker, is the relationship between the injured worker and the training employer such that either the state Minimum Wage Law (chapter 49.46 RCW) or the federal Fair Labor Standards Act (29 U.S.C. § 206) would apply?
We answer your question in the manner set forth in our analysis.
[[Orig. Op. Page 2]]
In responding to your request we will assume that the injured worker has an open claim with the Department of Labor and Industries and has been found to be a qualified injured worker, or the equivalent thereof, thereby entitling him (or her) to a continuation of temporary total disability benefits while engaged in a formal program of vocational retraining or rehabilitation. Accord, RCW 51.26.095 [RCW 51.32.095]. We will further assume, as your question stipulates, that no payment of wages is being made by the training employer to the subject individual, nor is any such payment of wages expected.
(a)State Minimum Wage Law:
The pertinent provisions of the state Minimum Wage Law are contained in RCW 49.46.010, the definitions section of that law. Subsections (3), (4) and (5) of that statute read as follows:
"(3) 'Employ' includes to suffer or to permit to work;
"(4) 'Employer' includes any individual, partnership, association, corporation, business trust, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee;
"(5) 'Employee' includes any individual employed by an employer but shall not include:
". . ."
(b)Applicable Federal Statutes:
The applicable federal statute is 29 U.S.C. § 206(a) which provides that:
"Every employer shall pay to each of his employees who in any work week is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, wages at the following rates:
". . ."
[[Orig. Op. Page 3]]
In turn, for the purposes of that provision, 29 U.S.C. § 203 contains the following express definitions of terms:
". . .
"(d) 'Employer' includes any person acting directly or indirectly in the interest of an employer in relation to an employee . . .
"(e)(1) . . . [T]he term 'employee' means any individual employed by an employer.
". . .
"(g) 'Employ' includes to suffer or permit to work.
". . ."
These statutory definitions do not, facially, contain any reference to the factor of compensation. In construing the provisions of both the state and the federal minimum wage laws in light of the underlying purposes of those laws, however, the courts have generally limited the applicability of both laws to those situations in which some form of compensation is being paid by the employer to the employee. The leading case isWalling v. Portland Terminal Co., 330 U.S. 148, 91 L.Ed. 809, 67 S.Ct. 639 (1946). There, the United States Supreme Court held that uncompensated trainees learning the duties of a job by observation and doing the work under the supervision of employees of the employer, none of whom were displaced, were not themselves employees under the federal Fair Labor Standards Act. In so concluding the Court stated that:
". . . The Act's purpose as to wages was to insure that every personwhose employment contemplated compensation should not be compelled to sell his services for less than the prescribed minimum wage. . . ." (Emphasis supplied) 91 L.Ed. at 813.
The Supreme Court in that case thus equated such trainees with individuals who would be taking courses in a public or private vocational school. There was also, in the case, an unchallenged finding that the training employer received no immediate advantage from any of the work done by the trainees.
[[Orig. Op. Page 4]]
A similar case, at the state level, is Cotton v. Weyerhaeuser Timber Co., 20 Wn.2d 300, 147 P.2d 299 (1944). There, the Washington Supreme Court held that if one has not hired another person expressly, and has not permitted such other person to work under circumstances where an obligation to pay for the work will be implied, there is as a result no "employer-employee" relationship within the meaning of our state Minimum Wage Law, chapter 49.46 RCW,supra.
The purpose of two minimum wage laws, in short, is not to create new wage liabilities where none exist as a consequence of some form of contract of employment, express or implied. Rather, their purpose is to measure the liability where it exists as a consequence of such a contract of employment‑-as was expressly observed by a federal Court of Appeals inWalling v. Jacksonville Terminal Co., 148 F.2d 768 (5th Cir. 1945).
In that case1/ the Court of Appeals for the Fifth Circuit distinguished betweenemploying and teaching learners. Those who are employed are, as a result, subject to the minimum wage law and its conditions. But, in the case of these learners who are merely there to be taught, the Court ruled that the law does not apply since no wages at all are due. In so concluding the Court said, at page 769:
". . . 'It is not the purpose of the Fair Labor Standards Act to create new wage liabilities, but where a wage liability exists, to measure it by the standards fixed by law. If one has not hired another expressly, nor suffered nor permitted him to work under circumstances where an obligation to pay him will be implied, they are not employer and employee under the act.'
". . ."
From our reading of the above‑cited cases, however, we are not entirely comfortable with a purely mechanical answer to your question based solely on whether or not some form of compensation is being paid by the employer to the employee‑trainee. Clearly, if such compensation is being paid the minimum wage laws (state and/or federal)will apply even though the worker is referred to as a learner, or trainee. On the other side of the coin, however, we must caution that the possibility of a state or federal minimum [[Orig. Op. Page 5]] wage law application may exist even where (as posited by your question) ". . . there is no payment of wages by the training employer to the worker . . ." If sufficient indicia of an employer-employee relationship are nevertheless present a court could still find an on-the‑job trainee to have crossed the line to becoming an employee. Among the factors possibly to be considered would be whether the employer is benefiting from the services of the trainee; whether the trainee has proceeded past the point of learning the basic skills and is now a productive worker; and whether, if the trainee was not present, the employer would have been likely either to have hired or have kept a regular employee to perform the services that the trainee is performing. In short, we caution against simply assuming that the courts would permit form to triumph over substance and thus allow the designation of a person as ". . . a trainee being vocationally rehabilitated under the Workers' Compensation Act . . ." to serve as a means of enabling an employer to evade the wage requirements of otherwise applicable federal or state minimum wage laws.2/
We trust that the foregoing will be of assistance to you.
Very truly yours,
KENNETH O. EIKENBERRY
ROBERT G. SWENSON
Assistant Attorney General
*** FOOTNOTES ***
1/Not the same case as Walling v. Portland Terminal Co., supra.
2/Both the federal act (29 U.S.C. § 214(c)) and the state statute (RCW 49.46.060) provide for exceptions to the minimum wage for learners, disabled people and others, when certificates are obtained from the proper governmental authority. These people are workers under the statute(s), but an exception from the minimum wage is created for them.