February 1, 2015

U.S. Supreme Court Rules on Unpaid Security Checks

In December, the United States Supreme Court addressed whether employees are “working” while waiting to undergo mandatory, end-of-shift security checks.  The Court unanimously held that the time spent by warehouse workers waiting for and undergoing security screenings before leaving for the day is not compensable under federal law.  The decision in Busk v. Integrity Staffing Solutions, Inc. was widely heralded (or criticized) in the mainstream media as a big win for business, but California and Arizona employers shouldn’t stop shelling out wages for security checks or other post-shift activities just quite yet.


Federal Law Applies

The plaintiffs in Busk were hourly warehouse workers employed to retrieve products off shelves and fill orders for Amazon customers.  To prevent employee theft, Integrity Staffing Solutions (an Amazon contractor) required the workers to undergo a security check at the end of their shifts before allowing them to leave for the day.  During the screening, employees had to remove wallets, keys, belts and other items before passing through a metal detector.  The employees alleged the screening process took roughly 25 minutes each day for which they were not compensated.

The employees filed a class action lawsuit seeking to recover unpaid wages for this time.  The trial court dismissed the employees’ claim, holding that time spent going through security was not compensable under the Fair Labor Standards Act (FLSA), as amended by the Portal-to-Portal Act.  On appeal to the Ninth Circuit (which covers Arizona and California), the appellate court reversed the district court’s ruling under the theory that the test of whether a pre-shift or post-shift activity should be compensable turns on whether the employer requires the activity.  The U.S. Supreme Court granted Integrity Staffing Solutions’ petition for review.

According to the Supreme Court, the issue turned on whether the security checks are sufficiently “integral and indispensable” to employees’ primary work activities to count as paid working time under the FLSA.  Justice Clarence Thomas, writing for the Court, explained:

“An activity is integral and indispensable to the principal activities that an employee is employed to perform — and thus compensable under the FLSA — if it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.”

First, the Court said, the screenings were not the principal activities the employees were employed to perform.  The workers were employed to retrieve products from warehouse shelves and package them for shipment, not to undergo security screenings.  Thus, the security screenings were not the employees’ principal activity.  Nor were they “integral and indispensable” to those activities.  Finally, the Court dismissed employees’ claim that the screenings are compensable because Integrity Staffing could have reduced the time spent undergoing screening to a de minimis amount as a matter to be “properly presented at the bargaining table, not to a court in an FLSA claim.”


…But California Law is Different

As usual, this is another area of the law where California holds itself to a higher standard than its federal counterpart.  Under California law, the analysis does not turn on whether the activity at issue is a principal activity or is “integral and indispensable” to those activities. Rather, California law looks to whether the activity is deemed “hours worked.”  Fifteen years ago, the California Supreme Court defined “hours worked…as the time during which an employee is subject to the control of an employer.”  Using this analysis, the State High Court held that farmworkers had to be paid for time traveling by bus from a meeting point to the field even though they could read, sleep, or do other personal activities while on the bus.  The case, Morillion v. Royal Packing Co. (2000), concluded that “an employee who is subject to an employer’s control does not have to be working during that time to be compensated” under state law. In so holding, the court considered and rejected giving deference to the FLSA and related case law, noting that the federal and state statutory schemes differ substantially and that state law may provide employees with greater protection than the FLSA.

In Cervantez v. Celestica Corp., plaintiffs argued and presented evidence to show they were under the control of their employer when they waited in line to pass through security and clock in before their shifts and clock out and pass through security after their shifts. Applying California law, the Central District of California found that faced with such evidence, the defendant employers couldn’t plausibly argue that the employees were not under their control during pre- and post-shift security screening periods.


How About Them Wildcats… or Sun Devils?

Arizona generally follows the FLSA except where the state imposes more stringent standards, such as the Arizona Minimum Wage Act.  In fact, Arizona has several statutes affecting the employer-employee relationship, including wage-and-hour provisions in Title 23 of the Arizona Revised Statutes. ARS 23-250 defines “hours worked” to include “all time an employee is employed.”  That’s quite broad.  Also, “wages” is defined as “nondiscretionary compensation due an employee in return for labor or services rendered by an employee for which the employee has a reasonable expectation to be paid…” (Italics added.)

In other words, since employees are “employed” when waiting for and undergoing such security screenings, Arizona employers may be on the hook under state law if employees reasonably expect to be paid for such time.  A well-written policy may effectively disabuse employees of that notion.  But it’s instructive to know that attorney Mark Thierman, who brought the lawsuit against Integrity Staffing Solutions and argued the case before the Supreme Court, believes the state claims he still has pending against Amazon contractors under California and Arizona state law are still valid.

After Busk, many employers with union contracts and security screenings can expect the union to bargain for compensation for security screening time, per Justice Thomas’ admonition to plaintiffs to bring such matters to the bargaining table instead of court.

Finally, the Supreme Court distinguished the noncompensable security screening process from a long line of federal donning and doffing cases (i.e. putting on and taking off protective gear).  Those cases satisfy the “integral and indispensable” standard and therefore those activities generally remain compensable time.