DO I REALLY HAVE TO PAY MY EMPLOYEES FOR THAT??

03Mar15

US Supreme CourtUPDATE – The Supreme Court Speaks

By: S. Adam Spiewak, Esq.
HR Consultant for HR Learning Center

The US Supreme Court issued its Opinion in the case Integrity Staffing Solutions, Inc. vs. Busk on December 9, 2014. The issue presented in this case was whether the Employer (Integrity Staffing Solutions), which had placed many workers at an Amazon fulfillment warehouse in Nevada, had to pay their employees for time that the employees spent waiting to go through security checks when they leave the facility each day. The Employees claimed that this added up to as much as 25 minutes each day that they were required to be at work after they had already clocked out and that they thus were not getting paid for this time.

This situation involves a well-known FLSA issue for most HR Professionals, dealing with the question of what time is compensable under the FLSA. The general rule, which has not changed after this decision, is that time is compensable including activities such as this one that are either preliminary or postliminary to the regular workday only if they are integral and indispensable to the employees’ job duties. Thus, in this case, the question was whether waiting to go through the employer’s security checkpoints is an integral and indispensable part of these warehouse workers’ job duties.

Originally, the District Court held that these screenings were not integral and indispen­sable but instead fell into a non-compensable category of postliminary activities. The 9th Circuit reversed in relevant part, agreeing with the employees and holding that the time they spent waiting to go through security checkpoints was compensable time under the FLSA because it benefited the employer by preventing theft.

In a unanimous decision authored by Justice Thomas, the Supreme Court reversed the judgment of the Ninth Circuit Court of Appeals. The Supreme Court held, as the District Court had originally, that the employees’ time spent waiting to undergo and undergoing the security screenings is not compensable under the FLSA, as amended by the Portal-to-Portal Act of 1947.

Importantly, the Supreme Court held that the Ninth Circuit applied the wrong analysis in concluding that the time was compensable because it was spent for the benefit of the employer in trying to prevent theft. Moreover, the Ninth Circuit erred by focusing on whether the employer required the particular activity. Instead of looking to whether the employer benefited from the way that the time in question was spent, the proper question is whether the activity in question is “integral and indispensible to the principal activities that an employee is employed to perform.”

To meet this test and be compensable, the Court held that an activity must be intrinsic to the employee’s core job and indispensible to performing the principle job responsibilities. This standard was clarified by citing past decisions, as the Court followed existing precedent. For instance, preliminary and postliminary activities that do meet this standard and are compensable include battery-plant employees spending time showering and changing their clothes before leaving the plant (because the chemicals are toxic and therefore those activities are critical safety measures) and meatpacker employees spending time sharpening their knives (because having sharp knives is necessary to perform the cutting safely and effectively). By contrast, the ability of the workers in the Amazon fulfillment center to pack boxes for shipment safely and effectively does not require that they go through the security screening procedure.

The Court reiterated that Federal Regulations explain that activities including waiting in line to check in and out or to receive pay checks, as well as changing clothes, where it is done as a convenience to the employee, are preliminary or postliminary activities that are non-compensable. There is thus an important distinction between a retail employee who is permitted to change into a work shirt in an employee locker room rather than having to arrive already dressed properly (the time not being compensable) and the chemical worker showering and changing to eliminate the toxic residue (that time being compensable).

As a secondary point, the Court addressed the employees’ contention that the time should be compensable because so much waiting time was being required while it could be reduced to a de minimus amount, indicating that it was not relevant to the pivotal determination regarding the nature of the activities in question. The Court did, however, indicate and practically invite that such issues could be presented more properly at the collective bargaining table. Therefore, employers with union workers may anticipate that the battleground will simply shift.

It is important to note that although this decision is useful to employers in clarifying the requirements to pay for such time under federal law, state law may still dictate that these activities are compensable and would potentially impose greater obligations on employers. In California, for instance, there is already case law that is undisturbed by this decision holding that under California law, time employees spend waiting to undergo and undergoing mandatory security screening before entering and exiting their work facility is compensable.

In the wake of this Supreme Court decision, it is imperative that employers nationwide understand the distinctions that the Supreme Court made in this case between activities that are indispensible and integral to employees’ basic job and those that are not and that they carefully assess any activities that employees perform while off the clock.   Where preliminary or postliminary activities are intrinsic to the employees’ core job, the time involved must be compensated under the FLSA. Furthermore, before making any changes to pay practices, employers should also examine their obligations under state law. Of course, when in doubt, it is advisable to consult with legal counsel, particularly for companies that have employees working in California.

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