In Frlekin, et al. v. Apple, Inc. (2020) S243805, the California Supreme Court held that California’s Industrial Welfare Commission Wage Order No. 7-2001 (“Wage Order 7”) requires employers to pay their employees for the time spent having their belongings searched at the end of a shift.
The class action law suit was filed by California employees of Apple, Inc. (“Apple”) who worked in Apple’s retail outlets. Apple required that all employees who brought a bag or personal Apple device, such as a cell phone, with them into work had to submit to a search before they were able to leave after the end of their shift. The policy required that employees gather their belongings, find a supervisor or security guard, and submit to a search before they were allowed to leave. Any personal Apple devices had to be checked against a list of serial numbers maintained by Apple to verify that it belonged to the employee. All of this activity occurred after employees had clocked out from their shift. Failure to comply with the policy could result in discipline up to termination.
The employees claimed that under Wage Order 7, the time involved in the search procedure was compensable as “hours worked” because they were still subject to their employers control. After losing on summary judgment in federal District Court, Plaintiffs appealed to the Ninth Circuit Court of Appeals. Because the case posed a novel issue involving application of California state law, the Ninth Circuit certified the question of whether time spent at the end of an employee’s shift waiting for a security check constituted compensable time under California law to the California Supreme Court for resolution. The California Supreme Court held that the time was compensable because the employees were under Apple’s control throughout the security check procedure.
In its holding, the Court explained that Wage Order 7 defines 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.” Under existing precedent, it is only necessary that one condition of the definition is met, not both. In other words, if an employee is either subject to the employer’s control, or suffered or permitted to work, he or she must be compensated.
The Court ruled that because the employees were required to submit to this policy, they were effectively under the control of the employer throughout the duration of the bag and device search. The Court disagreed with Apple’s argument that employees chose to bring items for their own personal convenience, and could avoid the search by not bringing bags or personal Apple devices into the workplace. The Court determined that such items are a practical necessity, and suggesting that employees could avoid security checks by not bringing phones or bags with personal items to work, especially when they are required to change into a uniform to work, is unrealistic.
The Court also made a point to note that it was not following the holding in United States Supreme Court case Integrity Staffing Solutions, Inc. v. Busk (2014) 574 U.S. 27, which held that time employees spent in security lines was not compensable under the federal Fair Labor Standards Act (“FLSA”). The Court noted that California’s wage laws in this case provide greater protection than the FLSA.
Finally, the Court ruled that its decision applied retroactively. As a result of its holding, Apple will have to compensate its employees for all of their lost wages from 2009, and will have to pay employees for mandatory search time going forward.
While the California Supreme Court’s holding in Frlekin addressed the application of Wage Order 7, which governs the wages and hours of all persons employed in the mercantile industry, i.e., “any industry, business, or establishment operated for the purpose of purchasing, selling, or distributing goods or commodities at wholesale or retail; or for the purpose of renting goods or commodities” (Cal. Code Regs., tit. 8, § 11070, subd. 2(H)), the decision likely will have broader implications for all employers that utilize security screening and search policies. Accordingly, employers that follow such practices should ensure that their pay practices compensate employees for all time subject to the employer’s control, specifically including time spent by an employee waiting for a security check either before the start of, or after the completion of, an employee’s assigned shift.
Questions
If you have any questions concerning this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.
David Tyra
dtyra@kmtg.com | 916.321.4594