Why it matters

Employees at a national retailer can pursue a suit based on time spent checking their bags before breaks and at the end of a shift, a federal court judge in California ruled, distinguishing recent U.S. Supreme Court precedent in a similar suit. The retailer had a policy that all bags, purses, jackets, and other personal items had to be inspected by a supervisor before leaving the store for meals and breaks and at the end of their shifts. Alleging that the checks lasted up to 30 minutes, a putative class alleged labor violations for lost meal and rest period time as well as missing overtime. The employer filed a motion to dismiss, but the court denied it, finding that the plaintiffs’ amended complaint sufficiently asserted that the employees were due additional wages and overtime during specifically identified time periods. The court also rejected the retailer’s contention that any time loss was de minimis and further found that the U.S. Supreme Court’s recent decision in Integrity Staffing Solutions v. Busk was inapplicable as that suit was decided under the Fair Labor Standards Act (FLSA) and the plaintiffs in the instant suit made their claims under state law. In addition to serving as a reminder to employers of the generous scope of review in a motion to dismiss, the decision provides an important lesson that Integrity Staffing Solutions will not eliminate wage and hour suits based on wait time, at least for California employers.

Detailed discussion

A pair of plaintiffs filed a putative class action suit against Coach, Inc. in California federal court. They claimed the national retailer violated state wage and overtime laws and committed unfair business practices. Coach moved to dismiss the complaint and the court granted the motion with respect to the overtime claim with leave to amend.

The plaintiffs responded with an amended consolidated class action complaint that re-alleged the overtime claims. Coach filed a second motion to dismiss the suit in its entirety.

This time, the complaint survived judicial scrutiny and U.S. District Court Judge James Donato allowed the suit to move forward.

The “gist” of the complaint “is that Coach required plaintiffs to submit to a bag check when leaving the store, which cut into time for breaks and meals, and kept them late without pay at the end of their shifts,” the court explained.

Although the original complaint “merely parroted” the statute without stating concrete facts showing that the named plaintiffs actually worked overtime hours without proper pay or failed to receive full regular wages, the amended complaint cured those deficiencies, the court said.

The plaintiffs described the “bag check” policy, explaining that they were required to first clock out and then locate a manager, request a bag check, undergo the check, and then be escorted out of the store by a manager, estimating the elapsed time between 5 and 30 minutes while off the clock.

Further, the workers said the policy resulted in working “off the clock” time as well as unpaid overtime on days where they worked over eight hours or weeks with more than 40 hours. The complaint cited specific time periods—the week of December 15, 2013 through December 22, 2013, for example—when the plaintiffs were allegedly entitled to overtime due to the extra time spent on bag checks.

“The [amended complaint] describes the bag check policy and alleges that, as a result of the policy, employees, including [the named plaintiffs], actually failed to receive full wages and proper overtime pay, even going so far as to name specific weeks that the two named plaintiffs did not receive overtime pay that they were entitled to,” the court said. “Because plaintiffs have adequately alleged the underlying wage/overtime, meal period and rest break claims,” the defendant’s motion to dismiss was denied.

Coach’s contention that any time spent awaiting bag checks was de minimis did not change the court’s mind. Assuming that the plaintiffs’ allegations were true as required at the motion to dismiss stage, Judge Donato wrote that the plaintiffs overcame the de minimis argument because they alleged they waited for bag checks for up to 30 minutes a day, “which is clearly significant.”

Finally, the court distinguished a recent decision from the U.S. Supreme Court. In Integrity Staffing Solutions v. Busk, the justices held that the time spent by workers undergoing security screenings was not compensable under the Fair Labor Standards Act (FLSA) because it was not “integral and indispensable” to the workers’ principal activities.

Despite the similarities between the cases, the judge said Integrity Staffing Solutions did not apply. “Plaintiffs here bring California state law claims, not FLSA claims,” Judge Donato wrote. “Integrity Staffing Solutions was ‘premised on an interpretation of the Portal-to-Portal Act of 1947 and how it exempts employers from liability for certain categories of work-related activities. In contrast, California law’s definition for ‘hours worked’ is defined differently and California law does not include an exemption similar to the Portal-to-Portal Act.’”

The plaintiffs’ claims were viable under the California Labor Code, the court said, allowing the case to move forward.

To read the order in Miranda v. Coach, Inc., click here.