Must employers compensate employees for the time spent undergoing security screenings at the end of the workday under the Fair Labor Standards Act?
Jesse Busk and Laurie Castro, employees of Integrity Staffing Solutions, Inc. (“Integrity”), sued Integrity alleging violations of the Fair Labor Standards Act (“FLSA”). Specifically, the employees alleged that Integrity required post-shift security screenings lasting up to 25 minutes, yet failed to compensate their employees for the time spent undergoing the screenings. Integrity claims that it is immune from liability under the Portal-to-Portal Act of 1947, which provides that employers are not required to compensate for activities that are postliminary to an employee’s primary work activities. The Supreme Court will address whether under the FLSA, as amended by the Portal-to-Portal Act, employers must compensate employees for post-shift security screenings. The Supreme Court’s decision in the case will reflect its view on the correct balance between the interest of employers in preventing employee theft, and the interest of employees in obtaining compensation for time spent undergoing screenings related to theft prevention or similar activities. This decision will affect the range of activities that employers can require employees to perform with and without compensation.
Questions as Framed for the Court by the Parties
Whether time spent in security screenings is compensable under the FLSA, as amended by the Portal-to-Portal Act?
Integrity Staffing Solutions, Inc. (“Integrity”) is a corporation that “provides warehouse space and staffing to clients such as Amazon.com.” Plaintiffs Jesse Busk and Laurie Castro worked as hourly employees at Integrity’s warehouses in Las Vegas and Fernley, Nevada Their duties included “filling orders placed by Amazon.com customers.”
In 2010, Busk and Castro sued Integrity on behalf of a putative class of the company’s employees, alleging violations of the Fair Labor Standards Act (“FLSA”), as amended by the Portal-to-Portal Act of 1947 (“Portal to Portal Act”). Specifically, the employees allege that Integrity mandated that employees undergo security clearances at the end of each shift in order to prevent theft, yet failed to compensate its employees for time spent in the clearances The clearances lasted “up to 25 minutes” and required employees to “remove their wallets, keys and belts” in order to pass through metal detectors. As relief, the employees sought back pay, overtime, and double damages.
The United States District Court for the District of Nevada dismissed the employees’ FLSA claim under Federal Rule of Civil Procedure 12(b)(6), holding that the employees failed to state a claim upon which the court could grant relief. Relying on cases from the Second and Eleventh Circuit, the district court ruled that the security clearances at issue were “postliminary” activities under the Portal-to-Portal Act. The Portal-to-Portal Act exempts certain activities that are “preliminary” or “postliminary” to an employee’s “principal activity” from FLSA-required compensation. Because of the district court’s categorization of the security clearances as “postliminary,” the district court ruled that the time employees spent in the security clearances was non-compensable.
The employees appealed to the United States Court of Appeals for the Ninth Circuit. The Ninth Circuit reversed the dismissal, holding that the employees stated a plausible claim for relief because the security clearances were for Integrity’s benefit and necessary for the employees’ job performance. Specifically, the court noted that the prevention of employee theft—a concern specific to the employees’ warehouse work duties—motivated the security clearances, thereby benefiting Integrity.
After the Ninth Circuit denied rehearing, Integrity appealed to the United States Supreme Court. The Supreme Court granted certiorari on March 3, 2014 to determine whether the FLSA requires compensation for time spent by employees in security screenings.
Under the FLSA as amended by the Portal-to Portal Act, employers are granted limited immunity from liability for employee actions seeking compensation for time traveling “(1) to and from the actual place of performance” and (2) any “activities which are preliminary to or postliminary to  principal” activities of their employment.
Integrity argues that the Court in Steiner v. Mitchell determined that employees can only recover compensation for activities that are “an integral and indispensable part of the principal activities” under the Portal-to-Portal Act. On the contrary, Busk and Castro argue that even without satisfying the integral and indispensable standard in Steiner, an employee activity is still compensable under the Court’s standard in Tennessee Coal, Iron & R. Co. v. Muscoda Local No. 123 if such activity was required by and benefitted the employer.
WHAT STANDARD SHOULD APPLY TO DETERMINE IF PRELIMINARY OR POSTLIMINARY ACTIVITIES QUALIFY AS COMPENSABLE WORK?
Integrity argues that under the Court’s interpretation of the Portal-to-Portal act in Steiner, preliminary or postliminary employee activities may be deemed compensable only if such an activity is “an integral and indispensable part of the principal activities.” Accordingly, Integrity contends that undergoing security clearances is not integral and indispensable to its employees’ principal activities as warehouse workers and thus must be deemed non-compensable.
Specifically, Integrity maintains that Busk and Castro’s jobs were processing and filling online orders which consisted of such principal activities as finding, delivering, and packing various merchandise for distribution to online customers. Integrity emphasizes that the security clearances at issue occurred away from the warehouse, and after Busk and Castro had completed the principal activities of the workday, and thus could not have been integral and indispensable to Busk and Castro’s principal job responsibilities. To illustrate this point, Integrity argues that even if employees somehow circumvent the security screening “by sneaking out the side door,” they would nonetheless fulfill their principal activities of employment.
Integrity also argues that undergoing security clearances is “indistinguishable” from employee activities deemed non-compensable in other cases, such as clocking in and out, traveling to the workplace, and waiting in line to pick up protective gear. For example, Integrity points to the Court’s holding in IBP, Inc. v. Alvarez where the Court distinguished between activities that are only incidental to productive work, such as waiting in line to pick up protective gear, and activities that are essential to the worker’s job responsibilities, such as putting on protective gear. Following this distinction by the Court, Integrity maintains that undergoing security clearances is sufficiently similar to waiting in line to pick up protective gear and thus must be deemed non-compensable.
On the other hand, Busk and Castro argue that Integrity’s standard to determine compensable work under Steiner unduly narrows the scope of the FLSA as amended by the Portal-to-Portal act. Busk and Castro contend that the integral and indispensable standard determined in Steiner is only one of many ways to identify compensable work, and that under the Court’s holding in Tennessee Coal, any activity required by and pursued for the benefit of the employer qualifies as compensable work. Busk and Castro point out that Integrity required its employees to undergo security clearances before leaving the warehouse after the workday and as a result benefitted from it. Therefore, Busk and Castro argue, even without satisfying the integral and indispensable standard, undergoing security clearances is a compensable activity under the Court’s holding in Tennessee Coal. Busk and Castro maintain that if Integrity had ordered its employees to come to work on an off day to undergo similar security screenings, employees would clearly be compensated and that requiring workers to undergo security clearances after work is no different.
Busk and Castro also argue that undergoing security clearances is a compensable principal activity under the Portal-to-Portal Act because the activity was required by the employer and necessary to perform principal job responsibilities. Therefore, Busk and Castro assert that because the worker’s principal activities had not been completed by the time employees were undergoing security clearances, doing so must be compensable as part of the continuous workday.
Moreover, Busk and Castro assert that undergoing security clearances is analogous to waiting in line to remove protective gear at the end of a workday, which the Court in IBP held to be compensable as part of the continuous workday. Busk and Castro also emphasize that although the Court in IBP held that waiting in line to pick up protective gear was non-compensable, it specifically recognized that its analysis would differ if such activity had been explicitly required by the employer.
IS THE NINTH CIRCUIT’S DECISION CONSISTENT WITH THE LEGISLATIVE HISTORY OF THE PORTAL-TO-PORTAL ACT AND RELEVANT CASE LAW?
Integrity maintains that the legislative history behind the Portal-to-Portal Act further supports its position that undergoing security clearances is a non-compensable activity. Integrity contends that Congress enacted the Portal-to-Portal Act to “repudiate expansive interpretations of the FLSA” enabled by the Court’s rulings in Anderson v. Mt. Clemens Pottery Co. and Tennessee Coal, which allowed compensation for activities that “allowed employees to recover massive damages for pre- or post-shift activities.” Integrity argues that Congress, recognizing the expanding liability to employers under this new standard, responded by designating “preliminary” and “postliminary” activities as non-compensable under the Portal-to-Portal Act.
Moreover, Integrity argues that the Ninth Circuit’s decision breaks from goes against the decisions of other courts. For example, Integrity cites the Second Circuit’s decision in Gorman v. Consol. Edison Corp., where the court denied compensation to nuclear-plant employees who were required to undergo radiation detectors and security checks when exiting the plant. In Gorman, the court denied the workers’ claim for compensation because the required security screenings were not “integral to principal work activities.” Integrity also points to the Eleventh Circuit’s decision in Bonilla v. Baker Concrete Construction Inc. where construction workers were denied compensation for the time waiting in line for security screenings. In Bonilla, the Eleventh Circuit held that mere causal necessity between the employee activity and the workers’ principal job responsibility cannot satisfy the “integral and indispensable” standard required by the Portal-to-Portal Act.
In contrast, Busk and Castro contend that the Ninth Circuit’s decision is consistent with Congress’s limited purpose in enacting the Portal-to-Portal Act and can be reconciled with existing case law. Busk and Castro argue that existing government regulations and nearly all circuit courts of appeals continue to define work as activities “required by and pursued for the benefit of the employer,” as set forth in Tennessee Coal. Directly disagreeing with Integrity’s assertion that Congress rebuffed the Tennessee Coal standard, Busk and Castro argue that the Court in IBP as well as the Government agree that Congress excluded certain activities only, and thus the other parts of Tennessee Coal’s definition of “work” is still viable.
Busk and Castro also assert, as the Ninth Circuit did below, that decisions from other courts of appeals regarding security clearances can be sufficiently distinguished and thus do not undermine its position that undergoing security clearances is compensable under the Portal-to-Portal Act. Busk and Castro argue that security clearances in those cases were distinguishable because they were directed towards the general public, whereas those required by Integrity applied exclusively to employees. Busk and Castro contend this distinction is important because security clearances directed at the general public must be viewed as being imposed by the “proprietor of the premises,” not the employer, and thus do not impose any specific burden on employees.
This case presents the Supreme Court with the opportunity to consider whether an employer must compensate its employees for time spent undergoing security clearances after their work shifts and for similar activities. Integrity argues that employers are not required to provide such compensation because activities such as post-shift security clearances are not related to the employee’s primary job duties. Conversely, Busk and Castro contend that, by requiring employees to submit to security screenings before departing from work, that activity is intertwined with their work and requires compensation. The Supreme Court’s resolution of the case implicates debates over employee theft prevention and various burdens that mandating compensation for time spent in security screenings or similar activities would impose on employers.
Integrity and numerous amici argue that requiring security clearances after employees’ shifts are reasonable responses to the threat of theft and that such clearances amount to checking out of the workplace. Specifically, the United States contends in support of Integrity that “[t]heft, or pilferage, by employees has long been considered a serious problem” and that requiring post-shift security checks in response to such a problem is no different than requiring employees to check out after their shift, which is typically non-compensable. In addition, the Retail Litigation Center, Inc. and Chamber of Commerce of the United States of America, along with supporting amici, assert that the prevention of employee theft not only benefits the employer, but also consumers and the community at large.
Busk and Castro, along with supporting amici, counter that allowing security clearances after work without compensation authorizes employers to force employee performance of other activities without providing compensation, so long as the activity is unrelated to an employee’s primary job duty. For example, the National Employment Lawyers Association argues that if Integrity’s view was the law, the company could direct employees to perform neighborhood book deliveries without providing compensation. Moreover, the American Federation of Labor and Congress of Industrial Organizations contends that requiring security clearances at the end of a work shift goes beyond simply checking out after work, and therefore requires compensation.
BURDEN ON EMPLOYERS
A number of Integrity’s supporters argue that requiring employers to compensate for time spent in post-shift security clearances or similar activities will impose undue burdens on employers including increased litigation-related costs and uncertainty in determining legal obligations. For example, the Retail Litigation Center, Inc. and Chamber of Commerce assert that such a requirement would produce more class action suits against employers and incentivize settlement by employers. The Retail Litigation Center, Inc. and Chamber of Commerce note that a single plaintiff can sue under FLSA on behalf of his or herself as well as on behalf of other employees in similar circumstances and can also recover double damages and attorneys’ fees if successful. Furthermore, the National League of Cities contends that the consequential costs of such litigation would be particularly troubling for state and local governments, which, as of March 2011 employ around 19.3 million residents.
In support of Busk and Castro, the American Federation of Labor and Congress of Industrial Organizations contends that requiring compensation in such cases would encourage employers to operate more efficiently. Specifically, Busk and Castro assert that, in order to reduce costs, “Integrity could simply hire additional screeners or stagger the shift times to eliminate the waiting period that consumes most of the worker time at issue.” Moreover, the National Employment Lawyers Association contends that theft prevention policies are already prevalent in modern retail because they increase employers’ profits.
In sum, this case presents the Supreme Court with the opportunity to determine whether an employer must compensate its employees for time spent undergoing security clearances after their work shifts and for similar activities. The Court’s ruling will implicate employees’ rights as well as employers’ managerial and legal obligations.
In this case, the Supreme Court will consider whether workers are entitled to compensation for the time spent undergoing security clearances under the FLSA, as amended by the Portal-to-Portal Act. The Court will likely decide the applicable standard to determine which, and when, postliminary work must be compensated by employers. In its determination, the Court will have to balance the interest of employers in preventing employee theft, and the interest of employees in obtaining compensation for time spent undergoing security clearances. Moreover, the Court’s ruling will affect the extent to which employers may require employees to do certain activities without compensation, and what rights employees may have to seek compensation for such activities.
The authors would like to thank Professor Angela B. Cornell for her assistance in the research for this preview.
- Kenneth W. Gage: Supreme Court May Finally Clarify Compensable Time, Law 360 (Apr. 2, 2014).
- Carlyn Kolker: U.S. Supreme Court agrees to hear Amazon workers' security check case, Reuters (Mar. 3, 2014).
- Shannon Seekao & Andrew Livingston: Are Employees Owed Pay for Going Through Security? SCOTUS Will DecideEmployment Law and Litigation Blog, Orrick (Mar. 18, 2014).