A federal judge in California handed employers a recent victory
earlier this week, dismissing a class action lawsuit brought by
Apple retail store employees who wanted to be paid for the time
they spend waiting for their personal bags to be checked at the end
of their work shifts (Frlekin v. Apple, Inc.). Although employers
won a similar victory at the U.S. Supreme Court this past summer
(see our Alert here), this decision was based
on California law and was not a foregone conclusion.
California employers and any other company that conducts bag checks
will want to pay close attention to this decision, as valuable
lessons can be learned to keep you out of legal hot water.
What Are Bag Checks?
Apple retail store employees are permitted to bring personal bags
(i.e., handbags and backpacks) to work. However, if they do so, the
employees are required to have their bags searched by a manager or
security officer before leaving the store as a loss prevention
measure. Generally, employees are required to clock out prior to
undergoing the search, so the time they spend waiting is not
compensable.
A group of current and former hourly-paid and non-exempt employees
brought a class action lawsuit against Apple, Inc. in the Northern
District of California federal court, seeking to be paid for that
bag search time under California law.
When Do Employers Have To Pay?
The federal judge granted summary judgment in favor of Apple on
November 7, 2015, holding that the time spent by waiting for their
personal bags to be checked was not compensable time under
California law. In reaching this conclusion, the court examined the
definition of "hours worked" under California Industrial
Welfare Commission Wage Orders 4 and 7.
These wage laws state that if employees can prove that time spent
is "subject to the control of the employer," or that they
were "suffered or permitted to work" by the employer,
they should be compensated for that time by the employer. The
Frlekin v. Apple, Inc. decision focused on these two
factors.
"Subject To The Control Of The
Employer"
The federal judge focused the bulk of his analysis on the
"subject to the control of the employer" prong of
California's definition of compensable time. In order to prove
this element, an employee must show that the employer restrained
the worker's actions, and that the employee has no plausible
way to avoid the activity.
In the Apple case, the first portion was undisputed – the
employer clearly restrains its employees' actions when it
conducts bag checks. Analyzing California case law, though, the
court found that the second element was not met.
Finding that "employee choice is dispositive," the court
sided with Apple. The judge cited to two other cases to reach this
decision. In the 2006 case of Overton v. Walt Disney Co.,
the California Court of Appeal found the time spent by employees on
company shuttles to and from the employee parking lot was not
compensable time because the employees were not required to take
the shuttle. The employees had a choice to bypass the lots
altogether or use some other mode of transportation.
Similarly, in the very recent 2015 case of Watterson v.
Garfield Beach CVS LLC, the U.S. District Court for the
Northern District of California held that the time spent at an
annual employee health screening was not compensable time. In that
case, although the employer required the health screening, it was
only mandatory if the employee voluntarily enrolled in the
employer's group medical insurance program.
Similarly, while Apple required employees to have their bags
checked, the requirement was triggered only when the employees
exercised the option to bring their personal bags to work. Because
the employees' freedom to bring their personal bags to work was
an optional benefit provided by Apple, the benefit was therefore
subject to the conditional bag check and not compensable
time.
(Note: this decision does not contemplate special-need scenarios,
when workers might be required to carry bags or other personal
items because of a mental or physical disability. Although the
judge invited employees with special needs who might be required to
bring a bag to work to intervene in the class action lawsuit, no
one did. Accordingly, the opinion applies only to bags that are
voluntarily brought in by employees.)
"Suffered Or Permitted To Work"
Even if employees are not subject to the control of their employer,
they still must be compensated under California law if the employer
"suffered or permitted them to work." In the Apple case,
the plaintiffs attempted to convince the court that any activity
that benefits the employer – such as ensuring that theft was
not taking place – should be considered as falling under this
second prong. However, the court was unpersuaded.
Simply put, the court found that waiting for a security check and
allowing a manager or security guard to look in their bags was
passive activity by the employees and therefore not considered
work.
Further, though the court declined to hold that the "suffered
or permitted" prong mirrors the scope of "compensable
activities" under the federal Fair Labor Standards Act, it did
find the U.S. Supreme Court's analysis under Integrity
Staffing Solutions, Inc. v. Busk to be persuasive. In awaiting
and being subject to bag checks, the employees were not doing
anything that resembled their job duties or responsibilities.
Accordingly, the court was not persuaded that they were
"suffered or permitted to work."
What's Next
This decision was a step in the right direction for retail
employers, but it likely is not the end of this discussion.
Although this decision is a win for Apple, it is limited to future
cases filed in federal district court, and state court judges might
issue contrary rulings.
Further, it is specific to Apple's policies and procedures, and
a court may find your own particular situation to be different
enough to warrant a different outcome. Finally, it is unclear if
the plaintiffs in the Apple case will appeal the court's
ruling, so we could see this decision overturned in the next year
or two.
If you want to lower the chances of such a claim being filed
against your company, there are a few relatively easy changes you
can make to your policies to minimize your legal risk:
- The best solution is to conduct security checks before employees clock out at the end of their work day, where possible.
- You can also diminish possible wait times by staggering the end-times for shifts so that employees are not required to wait in line.
- You may consider also setting the end-time for closing shifts later if they are currently unable to finish all security checks in the allotted time.
- Finally, try to coordinate your bag checks so that they are conducted by an employee who is not subject to the interruptions inherent in managing a retail establishment. This will help avoid employees waiting for several minutes while the manager is engaged in more urgent activities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.