U.S. Supreme Court Reconsiders the Implications of the Portal-to-Portal Act--Integrity Staffing Solutions, Inc. v. Busk
Thursday, February 5, 2015
Integrity Staffing Solutions, Inc. (ISS), required its warehouse employees who filled orders for Amazon.com to go through security at the end of their shift to ensure that they did not steal any products. Former employees sued ISS alleging entitlement to compensation under the Fair Labor Standards Act of 1938 (FLSA) for the time they spent waiting to go through security, allegedly as much as 25 minutes at times.
The FLSA establishes a minimum wage and overtime compensation for each hour worked in excess of 40 hours in each workweek. An employer who violates these provisions may be held civily liable for backpay, liquidated damages, and attorney's fees.
ISS was successful in having the case dismissed when the district court held that the screenings were not compensable insofar as they were not "integral and indispensable" to the employees' principal activities. The United States Court of Appeals for the Ninth Circuit reversed on the ground that ISS must compensate employers for activities performed for the benefit of ISS that are necessary to the principal work.
The United States Supreme Court reversed the Ninth Circuit's decision and held that the former ISS employees are not entitled to compensation. In reaching this decision, the Court examined the Portal-to-Portal Act (Act). Congress passed the Act in 1947 after a flood of litigation about what constitutes compensable time in the workplace so that employers would not be required to pay overtime for certain activities taking place outside of an employee's shift. Under the Act, employers are exempt from FLSA liability for claims based on "activities which are preliminary to or postliminary to" the performance of the principal activities that an employee is employed to perform.
The Court previously interpreted the Act to mean that employees must be compensated for activities that are "integral and indispensable part of the principal activities." This time included activities such as time spent showering and changing clothes in jobs where employees use dangerously caustic and toxic materials because it relates to worker safety and the worker could not do the job without certain clothes and time spent by meatpacker employees sharpening their knives because dull knives would make them less effective and affect the appearance of the product. In contrast, time spent by poultry-plant employees waiting to don protective gear is not compensable because waiting is "two steps removed from the productive activity on the assembly line." Similarly, Labor Department regulations provide, "when performed under the conditions normally present," activities including "checking in and out and waiting in line to do so, changing clothes, washing up or showering, and waiting in line to receive pay checks" are not compensable.
The Court in Integrity Staffing Solutions, Inc., found that security checks were not "integral and indispensable" to the productive work that the former ISS employees did because ISS "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." Justice Clarence Thomas, writing for the Court, reasoned: "Integrity Staffing could have eliminated the screenings altogether without impairing the employees' ability to complete their work." He noted that the appeals court had "erred by focusing on whether an employer required a particular activity." The real issue is whether the activity "is tied to the productive work that the employee is employed to perform."
The Court further found it irrelevant that ISS could have cut the wait time down, stating: "[t]hese arguments are properly presented to the employer at the bargaining table, not to a court." In reality, however, the ISS employees were not unionized.
Justices Sonia Sotomayor and Elena Kagan concurred in the decision, and Justice Sotomayor wrote the concurrence. She viewed the contested activities as part of the ingress and egress process rather than actual work. She also emphasized that activities related to worker safety and efficiency remained covered.
This decision will have far-reaching consequences because security checks are common among retailers and distributors. According to a brief filed by ISS, there have been 13 class-action lawsuits against Amazon and other companies involving more than 400,000 plaintiffs and seeking hundreds of millions of dollars. Employees' rights groups have criticized this decision as allowing employers to waste employees' time without compensating them for it.
While we encourage you to reassess your current compensation policies and practices, we urge you to consult with an employment law attorney before revising your policies. Employer obligations under the FLSA are often factually and legally specific.
