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Dec. 9 — Warehouse employees at two Nevada facilities that serve Amazon.com customers aren't entitled to compensation under the Fair Labor Standards Act for time spent going through anti-theft security screens before leaving the workplace, the U.S. Supreme Court ruled in a 9-0 decision Dec. 9.
Ruling for Integrity Staffing Solutions Inc., the court reversed a U.S. Court of Appeals for the Ninth Circuit decision that warehouse employees who alleged they spent up to 25 minutes waiting to clear the mandatory security screens after their shifts end could have FLSA claims because the screens were “necessary” to the employees' primary work and done solely for the benefit of the employer (713 F.3d 525, 20 WH Cases 937 (9th Cir. 2013).
Writing for the court, Justice Clarence Thomas said the workers can't show the security screens were “integral and indispensable” to their principal work activities, the standard the court previously has set under the FLSA. The court's conclusion is consistent with the position taken by the Labor Department, and the government had participated at oral argument as an amicus for Integrity Staffing.
“[A]n activity is not integral and indispensable to an employee's principal activities unless it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform those activities,” Thomas wrote. “The screenings were not an intrinsic element of retrieving products from warehouse shelves or packaging them for shipment. And Integrity Staffing could have eliminated the screenings altogether without impairing the employees' ability to complete their work.”
In a concurring opinion, Justice Sonia Sotomayor noted the Labor Department reached the same conclusion regarding similar security screenings shortly after Congress amended the FLSA by enacting the Portal-to-Portal Act in 1947. The court owes deference to the DOL's determination, she said.
“The searches were part of the process by which the employees egressed their places 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” under the Portal-to-Portal Act, Sotomayor wrote.
Justice Elena Kagan joined in the concurring opinion.
Employer representatives expressed relief with the court's decision while employee advocates said it allows employers to take advantage of low-wage workers in particular.
The decision provides “welcome certainty” for employers, as it “reaffirms a long-settled understanding” that postliminary activities such as security screens aren't compensable under the FLSA, said Joseph Palmore, of Morrison & Foerster in Washington.
The court found the “text of the statute dictated the result,” and it's also significant that the Labor Department's decades-long interpretation of the Portal-to-Portal Act was “confirmatory,” Palmore said.
“The integral and indispensable test is tied to the productive work that the employee is employed to perform,” Justice Clarence Thomas wrote for the court.
Employers had been concerned that a decision affirming the Ninth Circuit would create havoc, as warehouse workers and others who must submit to security screens would file copycat lawsuits.
“The court’s decision should effectively stem the tide of litigation against employers under the FLSA that would have resulted had the Ninth Circuit decision been affirmed,” said Edward Brill of Proskauer Rose in New York, who had filed a joint amicus brief for the Retail Litigation Center, U.S. Chamber of Commerce, National Association of Manufacturers and Society for Human Resource Management. “The decision means that employers can continue to engage in pre- and post-shift screenings in order to provide a safe work environment as well as to combat employee theft, without the significant costs and operational burdens that the Ninth Circuit decision would have imposed.”
The court's opinion is significant for “what it didn't do,” as endorsing the Ninth Circuit's “unworkable” interpretation would have had “very negative ramifications” for employers generally, Brill said.
The decision reinforces the common understanding on “how to draw the line” between compensable and non-compensable activities, prevents “massive litigation” against employers and means companies that conduct such screens can be comfortable they are FLSA-compliant, Brill said.
Many retailers conduct similar screens to prevent merchandise theft, and the court made clear that for FLSA purposes there's no logical distinction between screenings to ensure employee safety, for example, and the anti-theft screens, Brill said. “This is about as clear as the Supreme Court can get,” he told Bloomberg BNA.
Palmore and others who commented noted that the FLSA provides a “floor” of employee protection, so states remain free to legislate compensation for time spent in security screens and employees in union-represented workplaces can bargain for such pay.
The current Supreme Court “cares a lot about the statutory text” when construing a law, so the Portal-to-Portal Act's language plus the Labor Department regulations supporting the court's reading led to the unanimous ruling, Palmore said.
It's significant the court ruled that just because an employer requires an activity, that doesn't make it “integral and indispensable” for FLSA purposes, said Noah Finkel, of Seyfarth Shaw in Chicago.
The decision most directly affects retail employers with anti-theft screens but also could influence lower courts' consideration of FLSA claims regarding other preliminary and postliminary activities, such as time spent donning and doffing protective gear or booting up computers in call centers, Finkel said. The court's decision “will impact a lot of current litigation” in a manner favorable to employers, Finkel said.
It's interesting the Labor Department twice in a row has backed the employer's side in a Supreme Court FLSA case, Finkel said. Last term, DOL had supported the employer in Sandifer v. U.S. Steel Corp., 134 S. Ct. 870, 21 WH Cases2d 1477 (2014), in which the court held the FLSA doesn't require pay for union-represented steel workers' time spent changing into personal protective gear.
In a Dec. 9 statement, the National Employment Law Project said the court reached a “grossly unfair outcome” that especially harms workers with child-care responsibilities, second jobs or other places they need to be after work.
“This decision ignores another common-sense principle: If we don’t have to pay for things, we take them for granted,” said Catherine Ruckelshaus, NELP's general counsel in New York. “Because the employer didn’t have to pay for the workers’ time, it didn’t care how long the screenings took, and had no incentive to add capacity to speed things up and be more considerate of the employees’ time. This decision creates a perverse incentive for employers to require workers to perform more ‘non-principal' activities that will not be compensated.”
Paul Mollica, a plaintiffs' attorney who filed an amicus brief on behalf of the National Employment Lawyers' Association, said the decision is a “relatively straightforward calling of balls and strikes” that resolves a circuit split caused by the Ninth Circuit's decision.
Warehouse employees' security screen FLSA pay claims are extinguished by the court's ruling, said Mollica, of Outten & Golden in Chicago. The decision is “pretty much dispositive of garden-variety claims” for pay for security screens because the same analysis would apply, he said.
But it's conceivable that in other workplace environments, employees could show a security screen is so closely related to their principal activities it must be paid, Mollica said.
Since the FLSA doesn't foreclose more protective laws, a state or locality remains free to legislate a different standard and find employee time spent clearing security must be compensated, Mollica said. If workers are union-represented, the union also could bargain for pay for security screening, Mollica said.
In interpreting the FLSA, as amended by the Portal-to-Portal Act, the court cited the dictionary definitions of “integral” and “indispensable” in rejecting the warehouse employees' claims.
“An activity is therefore integral and indispensable to the principal activities that an employee is employed to perform 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,” the court said. “As we describe below, this definition, as applied to these circumstances, is consistent with the Department of Labor's regulations.”
The Labor Department regulations, codified at 29 CFR § 790.7(g), provide that under normal circumstances, activities such as “checking in and checking out and waiting in line to do so” are “preliminary” or “postliminary” activities for which no pay is required under the Portal-to-Portal Act, the court said.
The employees had contended during the Oct. 8 oral argument that the security screenings were part of the employees' principal activities and distinct from the checking-out process.
But the court said the security screenings are postliminary activities that aren't part of the Amazon warehouse workers' principal activities of retrieving and shipping merchandise to customers.
Citing the DOL regulations and its precedent interpreting the Portal-to-Portal Act, the court said the Ninth Circuit erred by focusing on whether the employer “required” the activity. “The integral and indispensable test is tied to the productive work that the employee is employed to perform,” Thomas wrote.
“If the test could be satisfied merely by the fact that an employer required the activity, it would sweep into ‘principal activities' the very activities the Portal-to-Portal Act was designed to address,” the court said. Also, “a test that turns on whether the activity is for the benefit of the employer is similarly overbroad,” the court said.
The employees had argued that time spent waiting to undergo the security screenings also should be compensable under the FLSA because Integrity Staffing by adding resources or staggering employees' shifts could reduce that time to a de minimis amount for which the law wouldn't require payment. But the court rejected that argument.
“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 employer is employed to perform,” Thomas wrote. “These arguments are properly presented to the employer at the bargaining table, not to a court in an FLSA claim.”
Mark R. Thierman of the Thierman Law Firm in Reno, Nev., represented the employees. Paul D. Clement of Bancroft LLC in Washington represented Integrity Staffing Solutions. Solicitor General Donald B. Verrilli Jr. represented the United States as amicus for Integrity Staffing.
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Text of the decision appears in Section E and is available at http://www.bloomberglaw.com/public/document/Integrity_Staffing_Solutions_Inc_v_Busk_No_13433_US_Dec_09_2014_C.
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