In a case decided on December 8, 2014, the Supreme Court unanimously held the Fair Labor Standards Act (FLSA) does not require a staffing agency to compensate warehouse packers for time spent waiting in post-shift security lines. The packers argued their wait time, which they asserted could be as long as 25 minutes each day, should be compensated because the security checks were required by their employer and were necessary to the employer’s task of minimizing shrinkage (i.e. product loss). Following dismissal in the District Court for failure to state a claim, the Ninth Circuit reversed as to the FLSA claim, agreeing with the employees. The security checks were integral and indispensable to the employees’ work because the employer required the screenings to take place on the premises and because the screenings were designed to prevent theft, the threat of which arose as a result of the nature of the employees’ primary work as packers of Amazon.com merchandise.
The Court, in reversing the Ninth Circuit, addressed the appellate court’s mistaken focus on whether the security check was required by the employer. The appropriate test to determine whether an activity is compensable under the FLSA is simply whether the activity is integral and indispensable to the principal activities the employee is employed to perform. The Portal-to-Portal Act – enacted to amend the FLSA in response to Supreme Court decisions holding time spent on certain pre- and post-shift activities, such as walking from the time clock to a work bench, was compensable – narrowed the definition of work by exempting two categories of activities from liability under the FLSA: (1) traveling to and from the place of performance of the principal activities the employee is employed to perform; and (2) activities that are preliminary to or postliminary to the principal activities. At issue in the packers’ case was whether the required security screenings were an integral and indispensable part of their principal activities or merely postliminary activities, which are noncompensable in accordance with the Portal-to-Portal Act. The Court reasoned the security screenings were not integral and indispensable to the employee’s work because the screenings could be discontinued at any time without disrupting the employee’s ability to complete their assigned work: packing shipments for Amazon.com.
While the case has caused a significant amount of buzz in the news media, the decision is hardly surprising. The Ninth Circuit’s ruling that post-shift screening time is compensable was out of step with other Circuits, as well as Department of Labor regulations. (The United States argued on behalf of the employer before the Court.) The decision does, however, provide additional clarity on the issue of compensable time for pre- and post-shift activities. Employers may proceed with certain required (but unrelated to work) activities outside the workday, such as security screenings, without risking wage payment violations under the FLSA.1 But employers should be attentive to state and local wage payment laws, which may seek to address concerns of “wage theft,” particularly among low-wage workers. And employers with unionized workforces will likely have to negotiate both the duration and compensation of such activities as part of the collective bargaining process.