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This week, the U.S. Supreme Court handed a big win to contractors for The Court unanimously held that time spent by employees in security screenings when exiting from warehouses after their work shifts did not have to be compensated under the Fair Labor Standards Act.

In Integrity Staffing Solutions, Inc. v. Busk, the Court's analysis centered on amendments to the FLSA in the Portal-to-Portal Act of 1947, which generally exclude from FLSA-compensable work time the time spent by employees in activities that are "preliminary" and "postliminary" to the "principal activities" of their work. The Court determined that the security screening process at issue was "postliminary" to the principal activities of the job and therefore did not have to be paid under the FLSA. The Supreme Court reversed a contrary ruling from the U.S. Court of Appeals for the Ninth Circuit, and resolved a split among several federal appellate courts. The Ninth Circuit* had held that the security screening time was compensable because (1) the employer required the screening, and (2) the screening was for the employer's benefit.

*The Ninth Circuit hears appeals from federal courts in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, Washington, Guam and the Northern Mariana Islands.

The Court's Analysis

The majority opinion, written by Justice Clarence Thomas, took up the Portal Act's exemption from FLSA work time for activities that are "preliminary to" or "postliminary to" the "principal activity or activities" of work. "Preliminary" activities occur before the "principal activities" begin, and "postliminary" activities occur after the "principal activities" have concluded. The Court noted that it had consistently interpreted "principal activity or activities" to include activities that are an "integral and indispensable" part of the principal activities. "An activity is ... integral and indispensable to the principal activities that an employee is employed to perform if it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities." The Court noted that regulations issued by the U.S. Department of Labor applied the same standard.

The Court first determined that the Integrity Staffing security screenings were not the "principal activity" that the employees were hired to perform. Their "principal activity" was to retrieve products from warehouse shelves and package them for shipment to Amazon customers.

The Court also found that the security screenings were not "integral and indispensable" to the employees' job duties:

The security screenings also were not 'integral and indispensable' to the employees' duties as warehouse workers. As explained above, 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. The 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 perform the work.

The Ninth Circuit had concluded that the security screening time was "indispensable" because it was (1) required by the employer, and (2) done for the benefit of the employer because it reduced employee theft. The Supreme Court rejected the Ninth Circuit's reasoning, and indicated that the key inquiry is whether the activity "is tied to the productive work that the employee is employed to perform."

Finally, the Court rejected the employees' argument that the time spent waiting to undergo the security screenings is compensable because Integrity Staffing could have reduced the time to a de minimis amount. "The fact that an employer could conceivably reduce the time spent by employees on any preliminary or postliminary activity does not change the nature of the activity or its relationship to the principal activities that an employees is employed to perform." According to the Court, "These arguments are properly presented to the employer at the bargaining table, not to a court in an FLSA claim."

Justice Sonia Sotomayor, joined by Justice Elena Kagan, concurred in the result, applying the Portal-to-Portal Act and concluding that the security screening time was "part of the process by which employees egressed their places of work, akin to checking in and out and waiting in line to do so – activities that Congress clearly deemed to be preliminary and postliminary." On the other hand, the concurring justices emphasized that activities that were more than just "ingress and egress" – such as sharpening work tools or donning protective gear – would still be "integral and indispensable."

The Practical Effect Remains to Be Seen

The Court's decision is likely to have a significant impact on employers in the retail, warehousing, and logistics industries, including those already involved in litigation over proper FLSA classification of employees' time spent in security-related checkouts. Similar lawsuits against Apple and other large national retailers have drawn media attention, with commentators noting that hundreds of millions of dollars and the financial viability of some corporations are at stake. As new factual situations are presented to the courts and the U.S. Department of Labor, concerned parties and their counsel are likely to gain an even better sense of where the lines for "compensable" and "non-compensable" time under the FLSA are drawn. Employers should also keep in mind that state and local wage and hour laws may be applied differently, and that there is no federal preemption in this area of the law. Thus, employers should carefully consider all applicable laws.

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