The United States Supreme Court issued its decision in Integrity Staffing Solutions, Ins. v. Busk on December 9, 2014 and reversed the Ninth Circuit Court of Appeal in a much awaited wage and hour decision concerning the issue of “compensable time” under the federal Fair Labor Standards Act (“FLSA”).
The facts of the case are very straight forward. Integrity Staffing Solutions, Inc. (“Integrity”) required its hourly non-exempt warehouse workers (who retrieved products from warehouse shelves and packaged them for delivery to Amazon.com customers), to undergo a security screening before leaving the warehouse each day. A number of former employees sued Integrity alleging, in part, that they were entitled to compensation under the FLSA for the roughly 25 minutes each day that they spent waiting to undergo and undergoing those screenings. The employees also alleged that the company could have reduced that time to a de minimis amount by adding screeners or staggering shift terminations and that the screenings were conducted to prevent employee theft and, thus, for the sole benefit of the company and its customers.
The District Court dismissed the complaint for failure to state a claim, holding that the screenings were not integral and indispensable to the employees’ principal activities but rather were postliminary and non-compensable under FLSA. The U. S. Court of Appeals for the Ninth Circuit reversed the District Court in relevant part, asserting that post-shift activities that would ordinarily be classified as non-compensable postliminary activities are compensable as integral and indispensable to an employee’s principal activities if the post-shift activities are necessary to the principal work and performed for the employer’s benefit.
Relying on the Portal-to-Portal Act, the Supreme Court disagreed with the Ninth Circuit and found that the time employees spent waiting to undergo and undergoing security screenings is not compensable under the FLSA. As the Court explained, the Portal-to-Portal Act exempts employers from FLSA liability for claims based on “activities which are preliminary to or postliminary to” the performance of the “principal activities” that an employee is employed to perform. Under U. S. Supreme Court precedent, the term “principal activities” includes all activities which are an “integral and indispensable part of the principal activities.” An activity is “integral and indispensable” if it is an intrinsic element of the employee’s principal activities and one with which the employee cannot dispense if he is to perform his principal activities.
According to the high Court, the security screenings at issue were non-compensable postliminary activities for a number of reasons. To begin with, the screenings were not the principal activities the employees were employed to perform (i.e., the workers were employed not to undergo security screenings but to retrieve products from warehouse shelves and package them for shipment). Further, the screenings were not “integral and indispensable” to those principal activities the employees performed. The Court said that this view of the screening at issue is fully consistent with an Opinion Letter that the Department of Labor (“DOL”) issued as far back as 1951. That Letter found as non-compensable, a pre-shift security search of employees in a rocket-powder plant “for matches, spark producing devices such as cigarette lighters, and other items which have a direct bearing on the safety of the employees,” as well as a post-shift security search of the employees done “for the purpose of preventing theft.” As the Court pointed out, the DOL drew no distinction between the searches conducted for the safety of the employees and those conducted for the purpose of preventing theft – neither were compensable under the Portal-to-Portal Act.
The Court held that the Ninth Circuit erred by focusing on whether an employer required a particular activity rather than whether it was tied to the productive work that the employee was employed to perform. The Court said that if the test could be satisfied merely by the fact that an employer required an activity, it would sweep into “principal activities” the very activities that the Portal-to-Portal Act was designed to exclude from compensation. Finally, with respect to the employees’ claim that an employer could conceivably reduce the screening time to a de minimis amount of time if the employer implemented other measures, the Court said that this does not change the nature of the activity or its relationship to the principal activities that an employee is employed to perform. If employees wish to pursue these arguments they should take it up at the bargaining table, not in court in an FLSA claim.
Lesson for Employers: The Court’s decision makes clear that based on the Portal-to-Portal Act, the time employees spend undergoing security screenings is non-compensable under the FLSA. The decision also provides helpful guidance when determining whether other pre-shift and post-shift activity may or may not be compensable. While there is no black and white answer to provide certainty for employers as to the compensability of a host of pre- and post-shift activities, one thing is clear from the Court’s unambiguous holding – the mere fact that the employer requires a particular activity does not make the time spent in that activity compensable.