March 19, 2015

KEEPING CURRENT: Integrity Staffing Solutions, Inc. v. Busk: Employee Time in Security Screenings Not Compensable Work under FLSA

Jon D. Bible

Integrity Staffing Solutions, Inc. (ISS) provides storage space and order-filling services for online retailers such as ISS requires its workers, who retrieve inventory and package it for shipment, to undergo an anti-theft security screening before leaving each day. Two former employees alleged that, under the Fair Labor Standards Act of 1938 (FLSA), they should be paid for the roughly 25 minutes per day that they spent waiting to undergo and undergoing screenings after they had already punched out. In December 2014, in Integrity Staffing Solutions, Inc. v. Busk, the U.S. Supreme Court unanimously ruled against them.

The FLSA calls for a minimum wage (now $7.25/hour) for employees other than exempt executive, administrative, and professional workers and requires overtime pay for each hour worked in excess of 40 hours in each work week. Unlike other laws that cover employers with a specified number of employees, e.g., Title VII of the 1964 Civil Rights Act (at least 15), the FLSA applies to employers whose annual sales total $500,000 or more or are engaged in interstate commerce. Because courts have interpreted that term broadly, including (for example) the regular use of the U.S. mail or of company telephones or computers to take orders or for interstate business calls, the net effect is that the law covers nearly all private employers.

Getting things wrong in terms of paying employees can be costly to employers. Those who violate the FLSA may be assessed damages for unpaid overtime or minimum wages, liquidated damages equal to the amount of unpaid wages, and reasonable attorney fees and costs. Willful violations may carry criminal and civil penalties.

While the command is simple – pay employees for their work – its implementation can be fraught with difficulties. The problem is that the FLSA does not define “work” or “workweek.” In the 1940’s the Court construed these terms broadly. It defined “work” as “physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business” and “workweek” to include “all time during which an employee is necessarily required to be on the employer’s premises, on duty or at a prescribed workplace.” Applying these definitions, the Court found compensable the time spent on such things as traveling between mine portals and underground work areas and walking from time clocks to work benches.

Concerned that such decisions would subject employers to unexpected liabilities, Congress in 1947 enacted the Portal-to-Portal Act, which excluded from the category of compensable work walking, riding, and traveling to and from the actual place of work; clothes changing in certain circumstances; and other activities that are preliminary or postliminary to principal work activities. The U. S. Department of Labor [DOL] then adopted regulations to help clarify what counts as time worked. Essentially, activities qualify if they are “primarily for the benefit of” and are “suffered or permitted by” an employer.

Integrity Staffing Solutions focused on the meaning ofpreliminary or postliminary to principal work activities” in the context of security screenings, an increasingly prevalent practice in an age of terrorism and sabotage. Observing that they had to stay at the plant for at least half-an-hour waiting their turn to be screened, and then had to remove their wallets, keys, and belts and pass through a metal detector, the plaintiffs alleged that this was a necessary part of their workday for which they should be paid. ISS countered that the screenings occurred after the workday was over, in a different location, and were effectively no different than walking to or from the parking lot to the warehouse, which is noncompensable postliminary activity.

The district court sided with ISS and dismissed the complaint, but the Ninth Circuit Court of Appeals reversed on the theory that the screening was required by ISS and was done for its benefit. The case then went to the Supreme Court, where the Justices used the hour of oral argument exploring myriad hypotheticals in an effort to come up with a workable standard for separating compensable from noncompensable activity. Justice Kagan, for example, asked whether law clerks should get extra pay if their judge required them to come to work early, cut his grapefruit, and prepare the rest of his breakfast.

Writing for the Court, Justice Thomas turned to the dictionary. He noted that the Court has interpreted “principal activities” to embrace everything that is an “integral and indispensable” part thereof, and he observed that “integral” means “forming an intrinsic portion or element, as distinguished from an adjunct or appendage.” “Indispensable” means a duty that “cannot be dispensed with, remitted, set aside, disregarded, or neglected.” Based on this, Thomas concluded that an activity is integral and indispensable to the principal activities that one is employed to perform if it is an “intrinsic element of those activities and one with which the employee cannot dispense if he is to perform the principal activities.”

Thomas cited several activities that satisfy this test. The Court has, for example, deemed compensable the time that battery plant employees spent showering and changing clothes because of toxic chemicals in the plant, for this cleaning process was indispensable to the performance of the employees’ productive work. The time spent by meatpackers sharpening their knives was found to be indispensable because dull knives would slow down assembly line production, affect the quality of the hides, cause waste, and lead to accidents. By contrast, the time spent by poultry plant employees waiting to don protective gear was not compensable because this was “two steps removed from the productive activity on the assembly line.”

The DOL regulations, Thomas observed, are consistent with this approach. They include as an integral part of a principal activity “those closely related activities which are indispensable to its performance.” As an illustration, the regulations explain that the time spent by an employee in a chemical plant changing his clothes is compensable if he could not perform his principal activities without donning those clothes but not if changing clothes was merely a convenience to the employee. When performed under normal conditions, the regulations explain, activities such as checking in and out and waiting in line to do so, changing clothes, washing up or showering, and waiting in line to receive paychecks are preliminary or postliminary activities.

Agreeing with every other federal appeals court that has considered the issue, Thomas declared that the screening procedure at issue was not an integral part of the workers’ job. The ISS warehouse staff was hired to take products off the shelves and package them for shipment, not to go through security screenings. Additionally, ISS could have eliminated the screenings without affecting the worker’s ability to complete their normal tasks. Thomas also observed that the Ninth Circuit’s test would bring within the realm of paid employment the very kind of activities that the Portal-to-Portal Act was enacted to exclude.

Finally, Thomas rejected the plaintiffs’ claim that the time spent in the screening process was compensable because ISS could have reduced that time to a de minimus amount. The fact that an employer could reduce the time spent on any preliminary or postliminary activity does not change the nature of the activity or its relationship to the principal activities that a worker is employed to perform. This argument, he stressed, is appropriate for the bargaining table, not a court.

This decision does not break new ground, but it does drive home the point that the fact that something an employee does before beginning or after ending his or her shift is not compensable just because it is required by an employer and done for its benefit. Rather, the test is whether the activity is an intrinsic element of the work that an employee was hired to perform and one with which the employee cannot dispense if he or she is to perform his or her main activities. Justice Sotomayor stressed this point in a concurrence, noting that the Portal-to-Portal Act distinguishes between activities that are essentially part of the ingress and egress process and those that constitute the actual work of consequence performed for an employer.

In light of this, it appears that the answer to Justice Kagan’s hypothetical question is that the law clerks would not be entitled to pay for cutting their judge’s grapefruit and preparing his breakfast. Although the judge required these tasks and benefitted from them – and, indeed, the clerks might be fired for refusing to perform them – the tasks are not an integral part of the work that the clerks were hired to perform – doing legal research for the judge, helping draft opinions, etc. – because they are not indispensable to the performance of that work.

Jon D. Bible

Jon D. Bible is a professor of business law at Texas State University–San Marcos.