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No pay for time spent in security checks, Supreme Court holds

December 11th, 2014  |  Lisa Milam

By Lisa Milam-Perez, J.D.

Amazon.com warehouse workers who must undergo antitheft security screening before leaving the warehouse each day are not entitled to pay for the time spent waiting to undergo those security checks, or actually undergoing them, a unanimous Supreme Court has ruled. Reversing a Ninth Circuit decision to the contrary—which had erred by fixating on the fact that the employer had required the activity—the High Court, in an opinion authored by Justice Thomas, held the security screenings at issue here are noncompensable “postliminary” activities under the Portal-to-Portal Act and thus not compensable under the FLSA. The High Court took heed of Congress’ underlying purpose in enacting the Portal-to-Portal Act way back in 1947: stemming a tidal wave of wage-hour litigation. The Court’s holding here may well have done the same–thwarting a potential flood of class-action security screening suits that had already begun to rise (Integrity Staffing Solutions, Inc v. Busk, December 9, 2014, Thomas, C.).

Two Nevada warehouse workers employed by an Amazon.com contractor filed a putative class action alleging the employer violated the FLSA and state law by failing to pay them for the 25 minutes or so each day they spent both waiting to undergo security screenings and then actually undergoing the screenings—during which they had to remove wallets, keys, and belts, and pass through metal detectors. Contending that this time was solely for the benefit of the employer, in that its goal was employee theft deterrence, the employees urged that the time was compensable.

The district court held the post-shift screenings were not integral and indispensable to the workers’ principal activities, and thus they were noncompensable postliminary activities. Reversing, the Ninth Circuit ruled the time was compensable. It reasoned that the screenings were “necessary” to the employees’ primary work and were carried out for the benefit of the employer.

Legislative backdrop. Tracing the historical backdrop in which the Portal-to-Portal Act was enacted, the High Court noted that, in its 1944 opinion in Tennessee Coal, Iron & R. Co. v. Muscoda Local No. 123, it applied an “expansive” definition of “work” as the “physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business.” Subsequently, in its 1946 opinion in Anderson v. Mt. Clemens Pottery Co., the Court defined “the statutory workweek” to “includ[e] all time during which an employee is necessarily required to be on the employer’s premises, on duty or at a prescribed workplace” and held that time spent walking from time clocks to work benches was compensable.

The implications of this broad construction were soon made clear: Within six months of the Court’s holding in Anderson, more than 1,500 FLSA lawsuits were filed—seeking nearly $6 billion in back pay and damages for pre- and post-shift activities. Responding “swiftly” to the deluge, Congress declared an emergency at hand; if such a generous interpretation were allowed to stand, “the payment of such liabilities would bring about financial ruin of many employers” Thus, it enacted the Portal-to-Portal Act, creating the exemption for “activities which are preliminary to or postliminary to … [one’s] principal activity or activities.”

Statutory framework.The High Court noted that it has “consistently interpreted” the phrase “principal activity or activities” in accordance with its ordinary meaning, i.e., as those activities which are “integral and indispensable to the principal activities that an employee is employed to perform.” Applying this approach, it has held that time spent by battery-plant employees showering and changing clothes was compensable; because the chemicals they used in the ordinary course of their workday were toxic, these activities were indispensable to their productive work “and integrally related thereto.” Similarly, meatpacking employees had to be paid for the time they spent sharpening their knives, since dull knives would slow down production. On the other hand, poultry workers did not have to be paid for time spent waiting to put on protective gear, as this activity was “two steps removed” from their productive work. This approach comports with the DOL’s regulations, too, the Court pointed out.

It went on to articulate a new test for whether an activity is a principal activity (and thus compensable), rather than a merely preliminary or postliminary function (and thus not compensable): An activity is compensable if it is “an intrinsic element” of one’s principal activities “and one with which the employee cannot dispense if he is to perform his principal activities.”

Security screenings not “intrinsic.” The security screenings challenged in this case were not an “intrinsic element” of the warehouse workers’ primary duty of retrieving products from shelves and packing them for shipment, the Supreme Court found. Indeed, the employer “could have eliminated the screenings altogether without impairing the employees’ ability to complete their work,” the Court reasoned.

And the Solicitor General, weighing in on this case, had agreed, adopting the DOL’s position as first set forth in a 1951 opinion letter. There, the DOL made no distinction between employee searches done for the safety of the employees themselves and those carried out for the purpose of theft prevention. In either case, the security checks were not compensable under the Portal-to-Portal Act.

“Required” is not the test. The Ninth Circuit had gone wrong by focusing on the fact that the security screenings were mandatory, the High Court explained. What matters with the “integral and indispensable” test is not whether the activity is required by the employer, but whether it is “tied to the productive work that the employee is employed to perform.” If the fact that the activity was employer-mandated were enough to satisfy the test, the Court reasoned, “it would sweep into ‘principal activities’ the very activities that the Portal-to-Portal Act was designed to address,” adding too that “[a] test that turns on whether the activity is for the benefit of the employer is similarly overbroad.”

But it could have been de minimis. The warehouse workers had contended that their employer could easily have reduced the time that they had to spend waiting to undergo the screenings by adding more security screeners, or staggering work shifts so that they weren’t all stuck waiting to be screened at the same time. But this argument held little sway with the Court. “The fact that an employer could conceivably reduce the time spent by employees on any preliminary or postliminary activity does not change the nature of the activity or its relationship to the principal activities that an employee is employed to perform,” it wrote. That was an argument to be made to the employer at the bargaining table—not to a court by way of an FLSA claim.

Concurrence. Writing separately to clarify the standards applied here by the Court, as she understood them, Justice Sotomayor (joined by Justice Kagan) agreed that the required security screenings were not “integral and indispensable” to the warehouse employees’ principal activities, as the screenings could be skipped altogether without impairing the safety or effectiveness of those activities. Nor were the screenings themselves “principal activities,” as they did not amount to “work of consequence that the employees performed for their employer.”

And, placing the activities within the context of the Portal-to-Portal-Act’s focus on employee ingress, egress, and related activities, Sotomayor noted that the security searches “were part of the process by which the employees egressed their place of work, akin to checking in and out and waiting in line to do so—activities that Congress clearly deemed to be preliminary or postliminary.”

A “resounding rejection.” The Supreme Court’s decision “is a resounding rejection of the Ninth Circuit’s opinion,” said Jackson Lewis attorneys Jeff Brecher and Eric Magnus. The Ninth Circuit was the first ever to hold that such screenings constituted compensable time, they noted. “Even the DOL rejected it in its amicus brief—one of only a few DOL amicus briefs filed by the Obama administration in support of an employer. It may, in fact, be the only one.”

The Ninth Circuit ruling had triggered a number of copycat lawsuits filed against various retailers nationwide, they added “These cases should now be dismissed in light of Busk.”

A new standard. “The decision also clarified the standard to use when applying the Portal-to-Portal Act, which has not been uniform among the circuit courts, even among circuits that agreed the screenings at issue in Busk, or other portal-to-portal activities, were noncompensable,” Brecher and Magnus continued. “The focus now will be whether the job could be performed safely with or without the duties at issue. If the duties could be eliminated, but the employee is still able to complete the work, the duty is a noncompensable preliminary or postliminary duty under Busk.

“This will cover many duties that may have been in the grey area before. Courts will no longer focus on whether the activities in question are required or whether they are primarily for the benefit of the employer, two factors many courts of appeal had previously considered.”

Of limited reach. Rebekah Bailey, an attorney with plaintiffs’ firm Nichols Kaster, saw the reach of the Supreme Court’s decision as limited—and not unexpected, given the DOL’s position on the matter. “The concurrence does a good job limiting the parameters of the ruling,” she said. “It makes clear that many pre-shift/post-shift duties are still integral and indispensable. A common example used at oral argument was a cashier checking out her drawer at the end of her day.”

“An unfortunate consequence,” though, “may be that employers shift around schedules so that less consequential work falls outside of the continuous workday and thus permits them to ‘stop the time clock’ during its completion,” Bailey theorized. Still, she doubted it would become a “widespread problem,” noting that “very few activities will fall in the ‘Integrity Staffing’ category. It will only impact activities that look more like waiting in line at the time clock (just like the security line time in this case) rather than work consequential to the major job duties. And, it’s important to note that employers have always had the power to do this. [Busk] did not create a new rule.”