The U.S. Supreme Court has held unanimously that hourly-paid employees don’t have to be paid for the time that they spend passing through after-work security screenings, reversing a Ninth Circuit ruling in favor of former employees of an Amazon.com warehouse against a staffing agency.
The Court handed a victory to employers over employee pay, ruling that companies do not have to pay employees for the time they spend undergoing security checks at the end of their shifts.
On a 9-0 vote, the Court decided on December 9, 2014, that employees of Integrity Staffing Solutions, Inc. facilities in Nevada, where merchandise is processed and shipped for Amazon.com, the internet retail giant, cannot claim compensation for the approximately 25 minutes that they spend each day waiting for and undergoing security screening at the end of their shift. The screenings are aimed at protecting against employee theft. Integrity Staffing Solutions provides warehouse staffing to Amazon.com throughout the United States. During the screenings, employees have to remove items such as wallets, keys, and belts from their persons and pass through metal detectors.
Justice Clarence Thomas wrote on behalf of the Court that the screening process is not a “principal activity” of the employees’ jobs, or an “intrinsic element” of retrieving products from warehouse shelves or packaging them for shipment under the Fair Labor Standards Act of 1938 (FLSA) and therefore is not subject to compensation.
For employees to be paid, the activity in question must be “an intrinsic element” of the job and “one with which the employee cannot dispense if he is to perform his principal activities,” Justice Thomas wrote.
Justice Thomas noted that prior Supreme Court decisions had identified several activities that satisfy this test. For example, the time that battery-plant employees spend showering and changing clothes because the chemicals in the plant are “toxic to human beings” and the employer conceded that “the clothes-changing and showering activities of the employees [were] indispensable to the performance of their productive work and integrally related thereto,” was found to be compensable. Similarly, the time that meatpacker employees spend sharpening their knives because dull knives would “slow down production” on the assembly line, “affect the appearance of the meat as well as the quality of the hides,” “cause waste,” and lead to “accidents,” also was held to be compensable. In contrast, the Court has found to be non-compensable the time that poultry-plant employees spend waiting to don protective gear because such waiting is “two steps removed from the productive activity on the assembly line.”
“We hold,” wrote Justice Thomas, “that 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.”
Justice Sonia Sotomayor, joined by Justice Elena Kagan, wrote a brief concurring opinion to stress that the Court’s opinion was consistent with U.S. Labor Department regulations, stating that “undergoing security screenings [is] not itself work of consequence that the employees performed for their employer.”
The Supreme Court reversed an April 2013 ruling by the 9th U.S. Circuit Court of Appeals, based in San Francisco, which had found that the screenings were an integral part of the warehousing job done for the benefit of the employer and should be compensated. Former employees had sued Integrity Staffing Solutions for back wages and overtime pay, arguing that they should have been paid for the time spent going through the security screenings at the end of their shifts.
Amazon, the world’s largest online retailer, is not directly involved in the case. But a business group called the Retail Litigation Center, in a brief supporting the warehousing company, said the industry in general loses $16 billion annually in thefts.
The decision is likely to benefit other companies facing similar lawsuits, including Amazon, CVS Health Corp., and Apple, Inc., according to Integrity’s lawyers.
President Barack Obama’s administration had backed the warehousing company’s position. Both the company and the government said the security checks are not central to warehouse work and instead are more like waiting in line to punch a time clock, an activity some courts have found does not require compensation. The FLSA itself does not define what “work” consists of.
In its legal brief asking the Supreme Court to overturn the Ninth Circuit’s decision, Integrity’s lawyers had argued that the security screenings “are indistinguishable from many other tasks that have been found non-compensable under the FLSA, such as waiting to punch in and out on the time clock, walking from the parking lot to the workplace, waiting to pick up a paycheck, or waiting to pick up protective gear before donning it for a work shift.”
However, in its Integrity decision the Supreme Court did not directly address the issue of employees’ wait time for punching in and out, and that issue, and whether employees must be paid for such wait time remains somewhat unclear.
In 1947 Congress passed the Portal-to-Portal Act to limit the FLSA liability of employers to pay for certain employee activities, such as (1) walking, riding and traveling to and from the actual place of work; (2) clothes changing in certain circumstances; and (3) other activities that are “preliminary to or postliminary” to principal work activities.
In a 2005 decision, IBP, Inc. v. Alvarez, cited by Justice Thomas in today’s decision, the Supreme Court recognized in passing that the time that employees must spend waiting to check in or out is generally a “preliminary” or “postliminary” activity that occurs outside of the continuous workday and therefore does not count as compensable work time under the Court’s “de minimis” (too little to matter) doctrine. However, that decision dealt with the time that employees had to spend “donning and doffing” (putting on and taking off) protective clothing and equipment at a poultry processing plant in Portland, Maine, and it did not directly address the legal issue of whether merely waiting to punch in or out is compensable work time.
For purposes of computing employee work time recorded by a time clock or similar device, the U.S. Department of Labor has adopted a regulation that generally allows time rounding practices. 29 CFR § 785.48(b) provides:
It has been found that in some industries, particularly where time clocks are used, there has been the practice for many years of recording the employees’ starting time and stopping time to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour. Presumably, this arrangement averages out so that the employees are fully compensated for all the time they actually work. For enforcement purposes this practice of computing working time will be accepted, provided that it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.
The text of the Court’s Integrity opinion is available free online here:
http://www.supremecourt.gov/opinions/14pdf/13-433_5h26.pdf
