In recent years, there has been a gradual increase in the number of employers that utilize security screenings, such as “bag checks,” to prevent employees from stealing merchandise or other employer property. In some instances, the bag checks last no more than a few seconds; in other instances, they can take several minutes or more. A recent California class action lawsuit in which the employees alleged they were not compensated for time spent waiting for bag checks at the end of their shifts settled for $4 million. Are employers required to pay employees for the time spent waiting for and undergoing bag checks? In California, the likely answer is “yes.”
“De Minimis” Standard under the Fair Labor Standards Act
Most California employers must adhere to both the Fair Labor Standards Act (“FLSA”) and state wage-hour law. The FLSA sets minimum wage, overtime pay, recordkeeping and other wage standards for private and public sector employees. Under the FLSA, certain activities conducted before or after an employee’s “principal activities” are not compensable time. “Principal activities” include any work of consequence performed for an employer, no matter when the work is performed. Activities necessary to an employer’s business and performed for the employer are generally considered “principal activities,” entitling an employee to compensation. But, time spent on activities that is short, occurs infrequently, and is difficult for an employer to track sometimes is considered be “de minimis.”
“De minimis” time is not compensable time under the FLSA. For example, in Busk v. Integrity Staffing Solutions, No. 11-16892 (9th Cir. April 12, 2013), the court found that that spending five minutes to pass through a security screening on the employees’ way to lunch was “de minimis” under the FLSA and therefore not compensable time. By contrast, the Busk court ruled that spending up to 25 minutes waiting for a bag check at the end of the employees’ shifts may be compensable. The employees were therefore allowed to proceed with their lawsuit on that issue.
Bag Checks of Any Duration are Likely Compensable Time Under California Law
Unlike the FLSA, California law generally does not recognize the “de minimis” rule. California’s Department of Labor Standards Enforcement (“DLSE”), the agency responsible for enforcing the state’s wage-hour laws, recognizes the “de minimis” rule “only where there are uncertain and indefinite periods of time involved of a few seconds or minutes’ duration, and where the failure to count such time is due to considerations justified by industrial realities.”
California’s Wage Orders, which along with the California Labor Code, establish the wage standards for California employees and require employers to pay employees for “all hours worked.” The Wage Orders broadly define “hours worked” as “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered and permitted to work, whether or not required to do so.” The key determination is whether an employee is, “subject to the control of the employer.” In Morillion v. Royal Packing Co., the California Supreme Court held that the employer exercised enough control over its employees by requiring them to commute to worksites on company-owned buses, such that the employees’ commute time was compensable. Similarly, in Rutti v. Lojack Corporation, 596 F.3d 1046 (9th Cir. 2010), the court held that the employee’s commute time was compensable under California law, but not the FLSA, because his employer required him to drive the company vehicle from his home to his job and back and prohibited personal errands, passengers and cell phone use while driving the company vehicle, among other restrictions.
California appellate courts have yet to rule on whether bags checks are compensable time under California law. Presumably, however, employees are “subject to the control of the employer” when undergoing security screenings because they are not free to take breaks or leave the employer’s premises at the end of the day until passing through bag checks. This time is likely compensable in California.
Tips for Employers
Failing to compensate an employee for time spent waiting for and during security screening can be costly. An employer runs the risk of owing back pay, penalties and incurring attorneys’ fees if litigation ensues. To minimize potential liability and payroll expense, employers should consider conducting security screenings at or near the time clock. This may require employers to move the time clock so that it is closer to the employees’ point of entry and exit. Employers may wish to stagger start and stop times to minimize potential bottlenecks when employees’ shifts begin and end. Employers also should ensure that they allow enough time for uninterrupted meal and rest periods, net of any time devoted to security screening or other activities performed for the employer’s benefit.