12/07/2014

Supreme Court Narrows Categories Of Work Covered By The FLSA

Are all activities required by employers compensable under the Fair Labor Standards Act? How about activities that are for the primary benefit of the employer? Not necessarily, according to the United States Supreme Court.

On December 9, the Supreme Court unanimously ruled that a staffing agency was not required to pay workers at Amazon warehouses for the time they spent waiting to go through a required security screening at the end of the day. In that case, Integrity Staffing Solutions, Inc. provided warehouse staffing to Amazon.com throughout the United States. The warehouse employees were employed to retrieve products from the shelves and package those products for delivery to Amazon customers. Integrity Staffing required the warehouse employees to undergo a security screening before leaving the warehouse at the end of each day. During the screening, employees were required to remove items such as wallets, keys, and belts and pass through metal detectors.

Two employees filed a putative class action against Integrity Staffing on behalf of similarly situated employees and alleged that they were entitled to compensation under the Fair Labor Standards Act (FLSA) for the time spent waiting to undergo and actually undergoing the security screenings, which the employees claimed amounted to 25 minutes. The employees also alleged that the screenings were solely for the benefit of the employers and their customers because they were conducted to prevent employee theft. The United States Court of Appeals for the Ninth Circuit found that these activities were compensable because Integrity Staffing required the security screenings to prevent employee theft and that the screenings were necessary to the employees’ primary work as warehouse employees and done for Integrity Staffing’s benefit.

The Supreme Court disagreed. The Portal-to-Portal Act (the Act), which amended the FLSA, provides that companies need not pay for “preliminary” or “postliminary” activities. The Supreme Court previously interpreted the Act to require pay only for tasks that are an “integral and indispensable part of the principal activities for which covered workmen are employed.” The Court determined that the security screenings were not the principal activity or activities which the employee is employed to perform. The employees were not employed to undergo security screenings but rather to retrieve products from warehouse shelves and package those products for shipment to Amazon customers. As a result, the Court found that the activity, even though required by the employer, was not compensable under the FLSA.

This decision is a win for employers because it further narrows the categories of work that are covered under the FLSA. Additionally, the Court made clear that the integral and indispensable test is “tied to the productive work that the employee is employed to perform” and explicitly rejected tests that focused on whether an employer requires a particular activity or whether the activity is for the benefit of the employer as overbroad.