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Coach retail workers can pursue California state wage claims for security checks

By Lisa Milam-Perez, J.D.

Curing the pleading deficiencies that prompted a federal district court to dismiss their initial claims for unpaid wages and overtime, employees of Coach stores were entitled to proceed with their putative class action California Labor Code suit alleging the luxury retailer’s policy of subjecting workers to bag inspections before exiting the store improperly cut into their meal and rest periods and left them working as much as 30 minutes past the end of their shifts without pay. Denying the employer’s motion to dismiss, the federal district court in California rejected Coach’s pleas that any such time was de minimis and that the Supreme Court’s recent decision in Integrity Staffing Solutions v. Busk foreclosed the employees’ state-law claims (Miranda v. Coach, Inc., April 17, 2015, Donato, J.).

Bag check policy. Coach retail store employees in California alleged that, pursuant to the employer’s uniformly applied loss prevention policy, they had to have their bags, purses, jackets, and other personal items inspected by a supervisor before leaving the store for meals and breaks and at the end of their shifts. They often had to wait between 5 and 30 minutes for a supervisor to conduct the inspection before they could finally exit the store, they asserted.

Wage suit. The employees filed a putative Labor Code class action suit contending this practice deprived them of their breaks and meal time and kept them late, without pay, at the end of their shifts. In a February ruling, the district court held the employees’ meal and rest period pleadings were sufficient to state a claim, rejecting the employer’s motion to dismiss them, but their weakly pleaded claims for unpaid wages and overtime were dismissed with prejudice. Coach filed a motion once again to dismiss their amended complaint in its entirety. However, the court found that on their second try, the employees alleged sufficient facts to survive dismissal.

Beefed-up pleadings. In their initial complaint, the employees merely parroted the statute and failed to note which plaintiffs, if any, actually did not receive full regular wages. Further, their overtime allegations used the conditional “if” rather than stating concrete facts showing that named plaintiffs actually worked overtime hours without proper pay. But the amended complaint described the company’s bag check policy and asserted that, as its consequence, the employees did not receive full wages due, along with overtime, for specifically identified weeks. That was enough to allege a claim for wage and overtime violations under the Labor Code.

The court was not persuaded by Coach’s argument that the plaintiffs, in amending their complaint, had substantively altered the primary allegations. “The plaintiffs were given leave to amend, and did just that,” the court noted. Also, because the employees now adequately alleged these claims (along with their previously well-pleaded meal period and rest break claims), the court denied the employer’s motion to dismiss their derivative state-law claims as well.

De minimis? We’ll see. The court also rejected Coach’s bid for dismissal based on its assertion that the time spent by employees waiting to have their bags checked was de minimis. While the employer cited a prior Ninth Circuit case that found daily waiting periods of 10 minutes too insignificant to count, the court here assumed, on a motion to dismiss, that the employees’ allegations—that they spent up to a half hour each day awaiting a bag check—were true, and were “clearly” a significant amount of time.

Supreme Court case inapplicable. Nor was the court swayed by Coach’s contention that the U.S. Supreme Court’s recent holding in Integrity Staffing Solutions v. Busk foreclosed the employees’ claim for compensation for time spent waiting for bag checks. The High Court decision addressed whether time spent waiting to go through security screenings was compensable under the FLSA, but the employees in this case brought their wage claims under state law. While Integrity Staffing Solutions turned on the meaning of “hours worked” under the Portal-to-Portal Act, California’s definition of ‘hours worked’ is different and does not exempt certain categories of work-related activities, as the federal statute does.