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California Supreme Court: Apple’s Employee Bag Checks Are “Hours Worked”

by D. Gregory Valenza | |

When employees finish work, they typically punch out and head for the exit.  But what if those employees have to show a supervisor or security agent their personal belongings, to ensure they are not in possession of company merchandise?  That delay could be several minutes when bottlenecks occur.  

Apple store employees argued that the time spent waiting to be checked out counted as “hours worked” under California’s Wage Order 7-2001.  Today, the California Supreme Court agreed, affirmatively answering a question posed by the federal 9th Circuit court of appeals.  The case is Frleken v. Apple Inc. and the opinion is here. 

The Ninth Circuit’s question to the California Court was as follows: 

Is time spent on the employer’s premises waiting for, and undergoing, required exit searches of packages, bags, or personal technology devices voluntarily brought to work purely for personal convenience by employees compensable as “hours worked” within the meaning of Wage Order 7?

The Ninth Circuit posed the question in part because under Federal law, the Fair Labor Standards Act, time spent undergoing security screenings is NOT compensable under the U.S. Supreme Court’s Integrity Staffing Solutions, Inc. v. Busk (2014) 574 U.S. 27.  In that case, Amazon warehouse workers claimed security checks were compensable time under the Fair Labor Standards Act.  But the Supreme Court rejected that claim.

As you know, California law is – er –  different. First, the definition of “hours worked” under California law is more employee-friendly.  Second, California law does not feature the Portal-to-Portal Act, a federal statute that amended the FLSA.  So, long story short, despite Busk, the Ninth Circuit needed a specific ruling on California law.  And here we are.

As with other “hours worked” decisions, the California Supreme Court focused on Apple’s “control” of the employees, because that is one of the key elements of whether time counts as “hours worked.”   Employer control is just as important as whether the employee is actually “working” for the benefit of the employer. For example, when employees were required to meet at a central location and take company-provided transportation to a job-site, the time spent on the transportation counted as “hours worked” even though no work was performed. Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575, 582. Why? Because the transportation was mandatory and the employer “controlled” all the employees’ time.  And, when security guards had to carry radios so they might have to respond to calls during mandatory rest periods, they were not relieved of all duty and the time counted as “hours worked” – even if they never did any work. Augustus v. ABM Security Services, Inc. (2016) 2 Cal.5th 257.  Same thing when guards were required to stay on site overnight in a trailer, even if they watched TV and did not actually “work.” Mendiola v. CPS Security Solutions, Inc. (2015) 60 Cal.4th 833, 840.  The Court of Appeal long ago held that requiring employees to remain at the worksite during an unpaid meal period was sufficient to transform the unpaid lunch period into “hours worked.” Bono Enterprises, Inc. v. Bradshaw (1995) 32 Cal.App.4th 968, 972.  California wage and hour law, amiright? 

With respect to bag checks, the Apple employees were punched out and were not working. But one can see how employees argued they were under Apple’s “control” given the above decisions.  The Court explained: 

Apple controls its employees during this time in several ways. First, Apple requires its employees to comply with the bag-search policy under threat of discipline, up to and including termination.Second, Apple confines its employees to the premises as they wait for and undergo an exit search. Third, Apple compels its employees to perform specific and supervised tasks while awaiting and during the search. This includes locating a manager or security guard and waiting for that person to become available, unzipping and opening all bags and packages, moving around items within a bag or package, removing any personal Apple technology devices for inspection, and providing a personal technology card for device verification.

On the other hand, as Apple argued, employees did not have to bring personal bags to work, and could therefore avoid the screenings. Apple did not screen employees who had no personal bags or electronic devices.  Apple argued that because employees could avoid the screenings, the Morillion line of cases did not apply.  For example, when employers offer optional transportation from remote parking facilities to the worksite, the transportation does not count as hours worked.  Overton v. Walt Disney Co. (2006) 136 Cal.App.4th 263, 271. 

The Court rejected the argument that the bag checks were “optional” like in Overton and other cases.  First, the Court distinguished between commuting and “time spent at work.”  Unlike in the commuting context, where the employer’s interest in how the employee gets to work is small, the employer’s interest in controlling the employee’s potential for theft in its stores is high. The Court also believed that the amount of control was higher in the bag check context. Second, the Court believed that the optional commute cases involved situations that primarily benefited the employee: the employer offering a way for the employee to get to work.  The Court rejected Apple’s argument that bag checks benefited the employees.  

The Court was especially critical of Apple’s assertion that coming to work without a bag or electronic device is a true “choice.”  Of course a “no personal property” rule is not necessarily a wise policy to impose, and it may result in unhappy or fewer employees. But employees do have a choice not to bring property to work, as some in fact did not. And there’s no law against Apple imposing a no-bag requirement, at least for now.  Yes, I’m pretty sure Apple’s not going to impose that ban on employees’ carrying personal property – including personal iPhones. Because, like I said, it would tick off a lot of good employees. So, it’s probably a moot point.  Employers with a libertarian streak who nevertheless are considering banning employees from bringing personal bags to avoid paying for security screenings should consider not only the employee relations concern, but also the Chief Justice’s critical language in this opinion.  

The Court’s opinion was unanimous, authored by the Chief Justice.   The Court also rejected Apple’s argument that the decision should apply prospectively only. Therefore, it will apply retroactively to any business that was conducting security screenings without paying for them in California.  Eep.

So, employers that do security checks after employees punch out must find a way to either change the order so that the screening occurs before the punch, or find a way to pay for the screening after the punch.  Alternatively, employers can find a way to have employees secure bags and such near exits so they are unable to access them during the shift.  I’m sure you’ll think of something.  Meanwhile, I’m thinking the iPhone 12 will be a little more expensive. 

One more time –  The case is Frleken v. Apple Inc. and the opinion is here. 

Oh and Happy Valentine’s Day. 

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