U.S. Supreme Court Narrows Range of Compensable Activities Under FLSA

December 11, 2014

BY NEAL D. MOLLEN & AARON J. VER

Clarifying the test for compensable work time under the Fair Labor Standards Act (FLSA), the Supreme Court has unanimously concluded that employees are not entitled to compensation for time spent submitting to mandatory anti-theft security screenings at the end of their work shifts. Integrity Staffing Solutions, Inc., v. Busk, No. 13-433, 574 U.S. ___ (Dec. 9, 2014).

The opinion, written by Justice Thomas, reverses a Ninth Circuit ruling that had held that the screening was compensable because it was at the insistence of, and for the exclusive benefit of, the employer. The Court held that this focus was misplaced: compensation under the Act is limited to the “principal activity” for which the employee was engaged (here, retrieving products from warehouse shelves and packaging them for delivery) or activities “integral and indispensable” to those specific activities. Because items could be “retrieved” and “packaged” without security screening, it was not compensable. In addition to resolving the specific security-screening question, the Court’s decision narrows the range of activities that might be considered compensable, and provides needed clarity for employers in determining the limits of their obligations under federal law.

Background

The plaintiffs were employed by Integrity Staffing Solutions to retrieve items from warehouse shelves to fill orders placed by Amazon.com customers. At the end of each shift, they were required to pass through an anti-theft security screening. They sued seeking compensation under the FLSA for time spent in the screening process, including time spent in line (alleged to be as much as 25 minutes a day). The plaintiffs argued that this time could have been reduced by hiring more screeners.

The district court concluded that this activity was “postliminary” activity under the FLSA as amended by the Portal-to-Portal Act, and thus was not compensable; it dismissed the complaint. The Ninth Circuit reversed in relevant part, finding that the screenings were “necessary to the principal work performed” by the employees and were done for the benefit of the employer, making them “integral and indispensable” to the warehouse employees’ principal activities. The Court granted certiorari to determine whether post-shift security screenings fall within the statutory exemption for “activities which are preliminary to or postliminary” to an employee’s principal activities. 29 U.S.C. § 254(a)(2).

Security Screenings Are Not Integral and Indispensable to Primary Activities

The Court rejected the Ninth Circuit’s construction of the FLSA standard for compensable time. It observed that Congress had amended the FLSA as a direct response to an “emergency” created by broad judicial interpretations of the Act’s coverage of activities related to employment but not intimately connected to the services the employees were hired to perform. Congress explicitly defined compensable time to exclude work-related activities such as “walking, riding, or traveling” to and from the place where the employee actually performed his or her work, as well as activities that are properly labeled “preliminary” or “postliminary” to the principal activities the employee is employed to perform. 29 U.S.C. § 254(a).

An activity is “integral and indispensable” to principal duties, the Court held, if it is an intrinsic element of the employee’s principal activities and is one with which the employee cannot dispense if he is to perform his principal activities. Under this test, the Court had previously found that for workers handling toxic chemicals in a battery plant, showering and changing clothes after a shift was compensable, as was time spent by those working a meatpacking line to sharpen their knives before beginning work. In each case, the job could not be performed adequately without these associated duties. Similarly, time spent donning protective gear in a poultry plant was compensable, but time spent waiting to put on the gear was “two-steps removed from the productive activity” and thus not compensable.

In this case, the Court unanimously held that the security screenings at issue were noncompensable postliminary activities. The employees were not employed to be screened—it was not the “principal activity” for which they were hired—and the screening was neither integral nor indispensable to the employees’ duties as warehouse workers. The post-shift anti-theft security screenings could have been eliminated entirely without impairing the employees’ abilities to perform their principal activities. The Court also noted that this approach was consistent with guidance provided by the Department of Labor.

Court Rejects Focus on Benefits Derived By Employer

The Ninth Circuit’s focus on the benefits derived by the employer was erroneous, the Court said. That interpretation of the FLSA would make compensable the very activities Congress sought to exclude in passing the Portal-to-Portal Act, such as time walking “from a timeclock near the factory gate to a workstation.” Instead, “the integral and indispensable test is tied to the productive work that the employee is employed to perform.” (emphasis in original). The Court also found it irrelevant that the employer could have reduced to a de minimis amount the time employees waited to undergo security screenings; that concern, the Court concluded, is properly addressed at a bargaining table, not in litigation.

Practical Implications

The precise holding of Busk will permit employers to act with confidence in treating post-shift security screenings as non-compensable under federal law. More significantly, the Court’s analysis clarifies the relevant FLSA test for compensable time and provides a more sure-footed basis for determining whether other preliminary or postliminary activities must be compensated. Under the clarified standard, it is likely that activities as to which doubt previously existed will be treated as non-compensable. Of course, the FLSA expressly allows states to impose more generous standards, so companies are strongly advised to consult local counsel when deciding upon the compensability of specific activities.

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Paul Hastings LLP
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