Employment Law

U.S. Supreme Court: Security Screenings Not Compensable

Why it matters: In a closely watched case, the U.S. Supreme Court unanimously reversed the Ninth U.S. Circuit Court of Appeals to rule that the time spent by workers undergoing security screenings is not compensable under the Fair Labor Standards Act (FLSA) because it was not “integral and indispensable” to the workers’ principal activities. A group of hourly employees filed suit alleging they should have been paid for the roughly 25 minutes spent each day undergoing a security screening before they left their employers’ premises. Emphasizing that the activities were performed for the employer’s benefit, the Ninth Circuit agreed with the plaintiffs. But the justices reversed, finding that the screenings fell under an exemption in the Portal-to-Portal Act for “activities which are preliminary to or postliminary to” performance of the principal activities that an employee is employed to perform. The security screenings themselves were not the principal activities the employers were hired to perform, Justice Clarence Thomas wrote for the Court, nor were they “integral and indispensable” to those activities, leaving the time not compensable under the statute.

Detailed Discussion

Integrity Staffing Solutions provides warehouse staffing to Amazon. Employees retrieve products from the shelves and then package them for delivery to the online retailer’s customers. At the end of each day, Integrity required that its employees undergo a security screening before leaving the warehouse. Removing items like wallets, keys, and belts, employees passed through metal detectors.

Two hourly workers at Integrity warehouses in Nevada filed suit against the employer, seeking to represent a collective action of fellow employees demanding payment pursuant to the FLSA for the approximately 25 minutes spent each day waiting to undergo and actually undergoing the security screenings.

A federal court judge dismissed the complaint, determining that the time was not compensable under the FLSA. The Ninth Circuit reversed, finding that because the security screenings were necessary to the principal work performed and conducted for Integrity’s benefit, the time was compensable.

But U.S. Supreme Court Justice Clarence Thomas said the screenings failed to meet the required standards. The Portal-to-Portal Act exempts employers from liability based on two categories of work-related activities, including “activities which are preliminary to or postliminary to … principal activity or activities.”

The Court has consistently interpreted the term “principal activity or activities” to embrace “all activities which are an ‘integral and indispensable part of the principal activities,’ ” Justice Thomas wrote.

Consistent with Department of Labor regulations, previous opinions have applied the ordinary sense of the words, defining “indispensable” as a duty “[t]hat cannot be dispensed with, remitted, set aside, disregarded, or neglected.” Integral has been interpreted to mean “[b]elonging to or making up an integral whole; constituent, component; spec[ifically] necessary to the completeness or integrity of the whole; forming an intrinsic portion or element, as distinguished from an adjunct or appendage.”

Applying these standards, the security screenings at issue failed to pass the compensability test. The screenings themselves were clearly not the principal activity of the employees, as “Integrity Staffing did not employ its workers to undergo security screenings, but to retrieve products from warehouse shelves and package those products for shipment to Amazon customers,” the Court said.

Further, the screenings were not “integral and indispensable.” The Ninth Circuit incorrectly focused on whether the screenings were required instead of whether the activity at issue “is tied to the productive work that the employee is employed to perform,” the Court explained.

“If the test could be satisfied merely by the fact that an employer required an activity, it would sweep into ‘principal activities’ the very activities that the Portal-to-Portal Act was designed to address,” the Court wrote, and a test that turns on whether the activity is for the benefit of the employer is overbroad.

“[A]n activity is not integral and indispensable to an employee’s principal activities unless it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform those activities,” the justices said. “The screenings were not an intrinsic element of retrieving products from warehouse shelves or packaging them for shipment. And Integrity Staffing could have eliminated the screenings altogether without impairing the employees’ ability to complete their work.”

Justice Thomas noted that several activities have satisfied the test, such as the time spent by meatpacking employees to sharpen their knives as well as a shower and clothes change for battery plant employees to wash toxic chemicals off their bodies. Justice Sonia Sotomayor authored a concurring opinion joined by Justice Elena Kagan.

To read the opinion in Integrity Staffing Solutions, Inc. v. Busk, click here.

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Wake Up – It’s Time to Get Paid

Why it matters: California employers must pay workers for “all hours worked,” the state’s highest court recently determined, ruling that 24-hour security guards must be paid even while asleep. The guards filed a class action against a security company arguing that Wage Order 4 mandates that they be paid for all of their time on the clock while on call, whether watching TV, engaging in personal activities, or sleeping. The employer countered that federal law treats on-call time as uncompensated free time. While recognizing “the difficulty” facing employers, the California Supreme Court said state law sets a higher standard and examines the level of an employer’s control over the employee during the on-call time. As for the security guards, they remained under the employer’s control during the on-call time, the court said, and the fact that guards could engage in limited personal activities – including sleeping – did not lessen the extent of the employer’s control. Importantly, the court explicitly noted that its decision has retroactive application.

Detailed Discussion

In 2008, security guards employed by CPS Security Solutions filed a pair of class action lawsuits challenging the company’s on-call compensation policy. The plaintiffs alleged that CPS violated minimum wage and overtime obligations imposed by Wage Order 4.

Wage Order 4 requires that employers “pay to each employee … not less than the applicable minimum wage for all hours worked in the payroll period,” defining 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 or permitted to work, whether or not required to do so.”

CPS employed on-call guards to provide security at construction sites. Part of a shift involved active patrol, and each evening, guards were required to be on call at the worksite and to respond to disturbances should the need arise.

Pursuant to a written agreement, on-call guards were required to reside in a trailer on the premises provided by CPS. The trailers featured amenities like a bed, bathroom, kitchen, heating, and air conditioning, and guards were allowed to keep personal items in the trailers. Children, pets, and alcohol were not permitted, however, and adult visitors were allowed only with the approval of the CPS client.

On-call guards had to notify a dispatcher in order to leave the worksite and indicate where he or she was going and for how long. If another guard was available to provide relief, the on-call guard was required to remain on-site until the reliever arrived; if no reliever was available, the guard had to remain on-site even in the case of a personal emergency.

Guards were paid hourly for their time spent patrolling the worksite. On-call time was not compensated unless an alarm or other circumstances required that they conduct an investigation or they waited for, or were denied, a receiver. If three or more hours of investigation occurred during on-call time, the guard was paid for the full eight hours.

A trial court granted summary judgment for the guards, holding that CPS’s compensation policy violated Wage Order 4. An appellate panel agreed, although it carved out an exception for an eight-hour period of sleep for guards working a 24-hour shift.

The state’s highest court affirmed that the on-call policy violated state law and went a step further, concluding that CPS could not exclude time spent sleeping from 24-hour shifts.

An employee who is subject to an employer’s control does not have to be working during that time to be compensated, the court said. Factors used to determine the extent of an employer’s control include whether the on-call employee could easily trade on-call responsibilities, whether the employee actually engaged in personal activities during on-call time, whether an on-premises living requirement existed, and whether the on-call time is spent primarily for the benefit of the employer and its business.

“The guards here were required to ‘reside’ in their trailers as a condition of employment and spend on-call hours in their trailers or elsewhere at the worksite. They were obliged to respond, immediately and in uniform, if they were contacted by a dispatcher or became aware of suspicious activity. Guards could not easily trade on-call responsibilities. They could only request relief from a dispatcher and wait to see if a reliever was available. If no relief could be secured, as happened on occasion, guards could not leave the worksite,” the court wrote. “CPS exerted control in a variety of other ways. Even if relieved, guards had to report where they were going, were subject to recall, and could be no more than 30 minutes away from the site. Restrictions were placed on nonemployee visitors, pets, and alcohol use.”

The guards’ on-call time was spent primarily for the benefit of CPS, the court added. The company based its business model on the idea that construction sites need an active security presence around the clock to deter theft and vandalism. “Thus, even when not actively responding to disturbances, guards’ ‘mere presence’ was integral to CPS’ business,” the court said. “Indeed, the parties also stipulated that CPS would have been in breach of its service agreement had a guard or reliever not been at the worksite during all contracted for hours.”

Analogizing to listening to music and drinking coffee while working in an office setting, the court rejected CPS’s argument that because the on-call guards engaged in personal activities ranging from watching TV to showering to browsing the Internet, the time was not compensable.

“The fact that guards could engage in limited personal activities does not lessen the extent of CPS’s control,” the court said. “It is the extent of employer control here that renders on-call time compensable hours worked under Wage Order 4.”

CPS’s fallback position, that federal regulations treat on-call time as generally uncompensated, also failed to sway the court, which noted that California is free to offer greater protection to employees than federal law.

What about sleeping? Sleep time may not be excluded from the 24-hour shifts, the court wrote, finding no evidence that a federal regulation permitting the exclusion of eight hours of sleep time was incorporated into the wage order and declining to adopt the “vacillating and contradictory” viewpoint of the state’s Department of Labor Standards Enforcement.

To read the opinion in Mendiola v. CPS Security Solutions, Inc., click here.

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California’s FEHA Doesn’t Require Indefinite Leave, Federal Court Rules

Why it matters: According to a California federal court judge, employers are not required to provide indefinite leave as an accommodation for a disability under the state’s Fair Employment and Housing Act (FEHA). The case involved an employee injured on the job who took time off to recover. She returned to work with a temporary light-duty job, and her restrictions changed over the following months, with the employer purchasing her a motorized scooter. But a few months later, she went out on leave again. The employee exhausted her Family and Medical Leave Act (FMLA) time, and the employer repeatedly extended her leave under its own policy. When her doctor provided a note stating he was “unable to give a return date in the reasonably foreseeable future as the leave is indefinite,” the employee was terminated. Granting summary judgment for the retailer, the court said that California law does not mandate indefinite leave as an accommodation for a disability.

Detailed Discussion

Hourvash Dezham began working as a sales associate for Macy’s in 1997. In July 2010, she injured her foot in a fall at work and Dezham was placed on a leave of absence at the request of her physician.

Dezham returned to work in August to perform modified/light-duty activities in the administrative support team based on a work restriction form completed by her doctor. The physician provided updated restrictions for standing and walking over the following months until Dezham returned to her position on the sales floor. To help with her duties, Macy’s purchased a motorized scooter for her use.

However, after five months of using the scooter, Dezham developed extreme back pain and her physician placed her back on a leave of absence in May 2011. By July, she had exhausted her FMLA leave; in October, all eligible leave under Macy’s leave policy was also used up. The employer granted Dezham multiple extensions of her leave through the end of the year.

In January 2012, Dezham’s doctor provided a note stating that he was “unable to give a return date in the reasonably foreseeable future as the leave is indefinite.” Macy’s then removed Dezham from the payroll, although the company informed her that she was free to reapply for a position in the future.

Dezham filed suit alleging that Macy’s engaged in violations of 19 state and federal laws, including the Age Discrimination in Employment Act, the Americans with Disabilities Act, and FEHA.

Working his way through the claims in response to Macy’s motion for summary judgment, U.S. District Court Judge David O. Carter tossed the majority of the plaintiff’s allegations, including those based on FEHA.

Focusing on the claims based on Dezham’s termination, the court agreed that FEHA does not require employers to provide an indefinite leave of absence for employees.

The plaintiff pointed to the note provided by her doctor, on which he also checked a box indicating “No” in response to a question of whether “the limitation affect[s] the employee’s ability to perform any of his/her job functions as shown on the attached Job Description?” Because the doctor checked the box, he should not have answered the other questions on the form, Dezham told the court, including the question where he indicated she could not return to work in the reasonably foreseeable future.

Macy’s proffered nondiscriminatory reason for terminating Dezham – the exhaustion of all of her leave of absence options coupled with the doctor’s note – was not rebutted by this reasoning, the court said.

Judge Carter disagreed that Macy’s took advantage of an error committed by the doctor, particularly as it was undisputed that Dezham did not return to work in January. Instead, he found that Dezham’s argument was “insufficient to create a genuine factual dispute” as the plaintiff failed to meet “her burden of offering specific and substantial evidence that Macy’s asserted non-discriminatory reason is a pretext.”

The plaintiff’s claims that Macy’s failed to offer her a reasonable accommodation in violation of FEHA similarly fell short. Such claims require not only that a plaintiff has a disability under the FEHA and that the employer failed to reasonably accommodate the disability, but that the plaintiff is also qualified to perform the essential functions of the position.

“Although a finite leave of absence has been held to be a reasonable accommodation, ‘[t]here are limits to how far an employer must go in granting medical leave,’ ” the court wrote. “Because Ms. Dezham ‘was not released by her doctor to return to work, she has not met the second requirement that she be qualified to perform the essential functions of the job.’ ”

Macy’s efforts over the 17-month period – granting a leave of absence, providing her with a temporary assignment based on her work restrictions, purchasing a scooter so that she could return to her sales position, and granting multiple extensions of leave when she again left work – established that “Macy’s accommodation of Ms. Dezham was reasonable as a matter of law,” Judge Carter wrote. “Only after Ms. Dezham had been on leave for approximately eight consecutive months and her doctor could not provide an anticipated return date in the reasonably foreseeable future did Macy’s decide to take her off the roll.”

The court granted Macy’s motion for summary judgment on the majority of the plaintiff’s claims, only permitting allegations based on unfair competition and failure to pay vacation time and wages to go forward.

To read the order in Dezham v. Macy’s West Stores, Inc., click here.

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Employee’s Failure to Engage in Reasonable Accommodation Precludes ADA Suit

Why it matters: An employee who failed to take part in the discussions to find a reasonable accommodation for her type I diabetes was responsible for the breakdown in the process and could not sue her former employer for violating the Americans with Disabilities Act (ADA), the First U.S. Circuit Court of Appeals has ruled. When a full-time sales associate began working swing shifts, the erratic hours of the schedule change aggravated her condition. A meeting to discuss scheduling alternatives ended with the employee cleaning out her locker and leaving the building. Despite a subsequent call from her supervisor to return to work and discuss alternatives, the employee refused and contacted the Equal Employment Opportunity Commission (EEOC), which filed suit on her behalf. The First Circuit affirmed summary judgment for the employer, holding that the employee effectively ignored the employer’s efforts to engage in the process of finding a reasonable accommodation and was therefore responsible for the breakdown in the interactive process. The divided panel – a dissent noted that a reasonable jury could view the facts “very differently” – emphasized the need for “bilateral cooperation and communication” between employees and employers during the ADA’s interactive process.

Detailed Discussion

As a full-time employee at Kohl’s Department Stores, Pamela Manning worked 36 to 40 hours each week in predictable shifts for two years of her employment. In 2010, the company restructured its staffing system nationwide and Manning’s hours became unpredictable, with an increase in “swing shifts” (a night shift followed by an early shift the next day).

The new schedule aggravated her type I diabetes, Manning told her employer, and she provided a note from her endocrinologist requesting that she work “a predictable day shift (9a-5p or 10a-6p)” so that she could better manage her stress, glucose level, and insulin therapy.

Manning met with members of the human resources (HR) department, who had been instructed that while she would still be required to work nights and weekends, Kohl’s could offer a no swing-shift option. When informed that she could not be provided with a consistently steady nine-to-five schedule, Manning became upset. Stating that she had no choice but to quit because she would go into a coma or ketoacidosis if she continued working unpredictable hours, Manning put her store keys on the table, walked out of the office, and slammed the door.

An HR employee followed Manning to the break room, tried to calm her down, and requested she reconsider her resignation and discuss other options. Manning refused, cleaned out her locker, and contacted the EEOC a few days later. Kohl’s made another attempt to reach out to Manning via phone to come in and discuss other alternatives but she refused.

The EEOC then filed suit on her behalf alleging violations of the ADA. A federal district court judge sided with Kohl’s, granting the employer’s motion for summary judgment.

A divided panel of the First Circuit affirmed.

“If an employer engages in an interactive process with the employee, in good faith, for the purpose of discussing alternative reasonable accommodations, but the employee fails to cooperate in the process, then the employer cannot be held liable under the ADA for a failure to provide reasonable accommodations,” the majority wrote.

After Manning left the meeting with HR, a Kohl’s employee “pursued her, attempted to calm her down, asked her to reconsider her resignation, and requested that she contemplate alternative accommodations. Manning refused, instead confirming that she quit by cleaning out her locker and departing the building,” the court said. The employer followed up with a phone call repeating a request to reconsider her resignation and contemplate alternative accommodations.

“The refusal to give Manning’s specific requested accommodation does not necessarily amount to bad faith, so long as the employer makes an earnest attempt to discuss other potential reasonable accommodations,” the court added. Although Kohl’s refused to provide the plaintiff’s preferred schedule, it was willing to discuss other options – but Manning declined to take part.

“Manning’s refusal to participate in the interactive process is the reason why the record lacks facts regarding what reasonable accommodations Kohl’s might have offered had Manning cooperated,” the panel majority wrote. “We conclude that Kohl’s acted in good faith when it initiated an interactive process and displayed its willingness to cooperate with Manning, not once but twice, to no effect.”

The plaintiff’s refusal to participate in further discussions was not a good faith effort to participate in the interactive process, as required by the ADA. “Indeed, because Manning chose not to follow up with [Kohl’s] offer to discuss alternative accommodations, Manning was primarily responsible for the breakdown in the interactive process,” the court said.

Manning’s choice to resign was “grossly premature,” the court added, as it was based on her own worst-case scenario assumption that Kohl’s would not provide her with accommodations. “Here, Manning not only jumped to a conclusion prematurely, but she also actively disregarded two opportunities to resolve her issues.”

A dissenting opinion declined to “bless as a matter of law a negotiating tactic that is unfair to disabled employees who reasonably believe that they confront imminent serious harm if an accommodation is not provided,” and said that the majority applied “heightened judicial scrutiny for breakdowns in the interactive process only when the employee may have erred.”

To read the decision in EEOC v. Kohl’s Department Stores, click here.

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