Tuesday, December 16, 2014

Whose Time Is It Anyway? The Supreme Court portends a dim future for hourly employees.


‘Tis the season to be jolly….But if you are an hourly employee working at a breakneck speed to fulfill online orders for Amazon.com, you may be not be feeling so jolly. On December 9, 2014, the Supreme Court ruled in Integrity Staffing Solutions, Inc. v.  Busk, No. 13-433, Slip Op. (December 9, 2014), that the time hourly employees of Integrity Staffing Solutions, Inc. spent waiting to undergo and undergoing security screenings at the end of the day is not compensable under the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. § 201, et seq. Integrity provides warehouse staffing to Amazon.com throughout the United States. The warehouse employees retrieve products from the shelves, and package those products for delivery to Amazon customers. Integrity does not allow its employees to leave the warehouse at the end of each day without first going through a security screening. During this screening, employees must remove items such as wallets, keys, and belts from their persons, then pass through a metal detector. The warehouse workers spend an average of 25 minutes each day going through the required security screening.
In 2010, two of Integrity’s employees filed a putative class action against Integrity for alleged violations of the FLSA. The FLSA requires employers who are engaged in the production of goods for commerce to pay their employees at least the federal minimum wage, and to pay overtime pay for hours worked in excess of 40 in each workweek. 29 U.S.C. § 206, 207, respectively. [1] The Ninth Circuit Court of Appeals reversed the District Court’s dismissal of the complaint for failure to state a claim, finding that the post-shift screening activities were necessary to the principal work performed and done for the benefit of the employer. The Ninth Circuit accepted as true the allegation that Integrity required the screenings to prevent employee theft.

The Supreme Court reversed the Ninth Circuit. In Integrity, the Supreme Court began its analysis by discussing the litany of lawsuits that followed the passage of the FLSA in 1938, in which employees sought nearly $6 billion in backpay and liquidated damages for various pre- and post-shift activities. “Congress responded swiftly,” the Court wrote. “Declaring the situation to be an ‘emergency,’ Congress found that, if such interpretations ‘were permitted to stand,…the payment of such liabilities would bring about financial ruin of many employers.” The Portal-to-Portal Act was enacted in 1947 to quell the tide of these litigious actions. The Portal-to-Portal Act exempts employers from liability under the FLSA for claims related to two categories of work-related activities: (1) “walking, riding, or traveling to and from the actual place of performance of the principal activity or activities which such employee is employed to perform, and (2) activities which are preliminary to or postliminary to said principal activity or activities.” 29 U.S.C. § 254(a).

Focusing on the second exemption under the Portal-to-Portal Act, the Supreme Court held in Integrity that the warehouse employees’ time spent waiting to undergo and undergoing Integrity’s security screenings does not meet the criteria for being a principal work activity that is compensable under the FLSA.  The Court first found that the “screenings were not the ‘principal activity or activities which [the] employee is employed to perform.’” According to the Court, “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.” Secondly, the Court reasoned, the security screenings “were not ‘integral and indispensable’ to the employees’ duties as warehouse workers.” The Court explained that “…an 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.” Integrity, Slip Op. at 7. Accordingly, under the Court’s definitions, the security screenings were not an intrinsic portion of the work performed by the warehouse workers, and the warehouse workers could dispense of the screenings and still perform their work for Integrity.
In reaching this conclusion, the Court erred in a number of significant ways. First, the Court attempted to create a third category of activities: those that are integral and indispensable to a principal activity, but which are not themselves principal activities. The Court found the screening activities were not the principal activity or activities for which Integrity hired the warehouse workers. Slip Op. at 7. Then the Court found that the security screenings were not integral and indispensable to the employees’ duties as warehouse workers. Id. By bifurcating the integral and indispensable duties from the principal activities, the Court in essence attempted to create a third category of activities—those that are integral and indispensable to the employer, and thus compensable, but which are not designated principal duties of the employees. In IBP v. Alvarez, 126 S. Ct. 514 (2005), the Court rejected this very analysis by respondent employer IBP. In IBP, the Court explained that in “Steiner [v. Mitchell, 350 U.S. 247 (1956)], we made it clear that § 4 of the Portal-to-Portal Act does not remove activities which are ‘integral and indispensable’ to ‘principal activities’ from FLSA coverage precisely because such activities are themselves ‘principal activities.’” IBP, 126 S. Ct. at 523 (quoting Steiner, 350 U.S. at 253).

Secondly, the Court erred in concluding that the security screenings did not constitute a principal activity of the warehouse workers. While Integrity may not have hired the warehouse workers for the particular purpose of undergoing security screenings, see Integrity, Slip Op. at 7, neither did King Packing Company hire its meatpacker employees to sharpen knives, see Mitchell v. King Packing Co., 350 U.S. 260, 262 (1956); nor did the battery plant hire employees to shower and change clothes after working. See Steiner, 350 U.S. at 249. That the Court erred in its analysis and conclusion is further demonstrated in Justice Sotomayor’s concurring opinion. Justice Sotomayor stated that the Portal-to-Portal Act “distinguishes between activities that are essentially part of the ingress and egress process, on the one hand, and activities that constitute the actual ‘work of consequence performed for an employer.’” Integrity, Slip Op. at 2. Justice Sotomayor concluded that “[t]he searches were part of the process by which the employees egressed their place of work, akin to checking in and out and waiting in line to do so—activities that Congress clearly deemed to be preliminary or postliminary.” Id. (citations omitted). By reaching this conclusion, Justice Sotomayor failed to comprehend the very purpose of the security screenings. Integrity did not require its warehouse employees to empty their pockets, wallets, etc. and pass through a metal detector merely as an alternative means of exiting the warehouse. Rather, the purpose of requiring its warehouse employees to undergo the security screenings was to prevent employee theft. Thus, going through the required security screenings was not merely part of the egress process.
Third, the Court erred in its analysis of whether the security screenings were integral and indispensable to the principal activities performed by the warehouse workers. The Court wrote that, “[t]he 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.” Integrity, Slip Op. at 7. The Court cited three cases to support its conclusion. The Court first discussed Steiner, in which the Court had held compensable “the time battery-plant employees spent showering and changing clothes because the chemicals in the plant were ‘toxic to human beings.” Integrity, Slip Op. at 6 (quoting Steiner, 350 U.S. at 249, 251). Next, the Court explained that in Mitchell, 350 U.S. 260, it had held as “compensable the time meatpacker employees spent sharpening their knives because dull knives would ‘slow down production’ on the assembly line, ‘affect the appearance of the meat as well as the quality of the hides,’ ‘cause waste,’ and lead to ‘accidents.’” Id. (quoting Mitchell, 350 U.S. at 262). In contrast, in IBP, the Court explained it had held as noncompensable the “time poultry-plant employees spent waiting to don protective gear because such waiting was ‘two steps removed from the productive activity on the assembly line.’” Id. (quoting IBP, 126 S. Ct. at 528).

The Court failed to recognize that in IBP, it had made a distinction between essential work that the employer always required the employees to perform (donning the protective gear)—which is compensable—and time the workers spent waiting to don the first piece of protective gear, which “may or may not be necessary in particular situations or for every employee,” and thus not compensable. IBP, 126 S. Ct. at 527. Integrity always required its warehouse employees to undergo security screenings at the end of each day; this requirement did not vary from day to day or worker to worker. Additionally, the Court missed entirely the very purpose of the security screenings—to prevent employee theft. The Court summarily—and erroneously—concluded that “Integrity Staffing could have eliminated the screenings altogether without impairing the employees’ ability to complete their work.” Integrity, Slip Op. at 7. If Integrity believed it could eliminate the security screenings altogether without impairing the warehouse employees’ ability to complete their work, surely it would not have required them to undergo the security screenings.
Fourth, citing to the Department of Labor’s regulations at 29 C.F.R. § 790.8(c), the Court erred in finding that the security screenings were not closely related activities which were indispensable to the performance of the warehouse workers’ principal activities. “[T]he regulations explain that the time spent by an employee in a chemical plant changing clothes would be compensable if he ‘c[ould not] perform his principal activities without putting on certain clothes’ but would not be compensable if ‘changing clothes [were] merely a convenience to the employee and not directly related to his principal activities.” Integrity, Slip Op. at 6-7 (brackets in original) (quoting 29 C.F.R. § 790.8(c)). In the regulations, the Department of Labor added a footnote to this provision cited by the Court, stating, “[s]uch a situation may exist where the changing of clothes on the employer’s premises is required by law, by rules of the employer, or by the nature of the work.” 29 C.F.R. § 790.8(c) n. 65. The Court failed to appreciate that the warehouse workers did not empty their pockets, wallets, etc., and pass through a metal detector as a convenience to themselves. Rather, the security screenings were required by Integrity’s rules. Under the Department of Labor’s regulations, the security screenings were closely related activities which were indispensable to the performance of the warehouse workers’ principal activities of retrieving products from warehouse shelves and packaging those products for delivery to Amazon customers. For if employee theft (which the security screenings were intended to prevent) resulted in little or no products remaining on the shelves for delivery to Amazon’s customers, the warehouse workers would not be able to perform these principal activities.

What does the Court’s holding portend for hourly workers? According to the Court, any work which hourly employees perform but for which they were not specifically hired is not a principal activity and thus not compensable. See Integrity, Slip Op. at 7. And, according to the Court, only that work which is “tied to the productive work that the employee is employed to perform constitutes work that is integral and indispensable to a principal activity.” See id. at 8 (emphasis in original). Should hourly employees pay very close attention to the duties set forth in a job description (as that description would presumably define the work that the employee is employed to perform) and refuse to perform any other duties, for fear of not getting paid for those other duties? Not if they want to keep their jobs. Should hourly employees refuse to perform any work that is not actual productive work? Not if they want to keep their jobs.
The Supreme Court has left hourly employees with a Hobson’s Choice: spend time on duties which they were not specifically hired to perform or which is not actual productive work—and not get paid for that work—or refuse to do that work and risk getting fired. In this time of a shrinking middle class, it seems that the Supreme Court’s decision in Integrity will all but ensure a continuation of that downward spiral.

 

Written by Valerie Chastain




[1] There are several exceptions to this rule, which are not at issue in this analysis.

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