Labor & Employment Law Daily Amazon’s security screenings may be compensable ‘work’ under Nevada, Arizona law
Friday, September 21, 2018

Amazon’s security screenings may be compensable ‘work’ under Nevada, Arizona law

By Lorene D. Park, J.D.

The Supreme Court’s ruling in Integrity Staffing did not foreclose claims under Nevada and Arizona law that plaintiffs working at Amazon warehouses were unlawfully denied compensation for time spent in post-shift security screenings, ruled the Sixth Circuit, finding that neither state’s statute incorporated the federal Portal-to-Portal Act, which exempts certain “postliminary activities” from compensable working time. Though dismissal of the Nevada claims was reversed, the Arizona plaintiffs did not allege a workweek in which they failed to receive minimum wage, as required by that state’s law, so dismissal of the Arizona claims was affirmed. Judge Batchelder dissented in part (In re:, Inc., September 19, 2018, Clay, E.).

Integrity Staffing Solutions provides labor at Amazon warehouses throughout the U.S., where hourly workers fill orders, track merchandise, and process returns. Integrity employs thousands of hourly warehouse employees at each of’s facilities. Some of the plaintiffs in this case were hourly employees of Integrity at warehouses in Nevada and Arizona. Others were directly employed by Amazon.

Unpaid security screenings. At issue here is a security clearance policy that is enforced by both Integrity and Amazon at all Amazon locations. Under the policy, hourly paid, nonexempt employees must undergo a daily security clearance at the end of each shift; ostensibly to deter employee theft. The policy worked like this: “At the end of their respective shifts, hundreds, if not thousands, of warehouse employees would walk to the timekeeping system to clock out and were then required to wait in line in order to be searched for possible warehouse items taken without permission and/or other contraband.” The plaintiffs claimed the screening process took 25 minutes. They also allegedly had to undergo the same process for lunch breaks, thus reducing the full 30-minute break to which they were entitled.

Lawsuit. In 2010, the plaintiffs filed a putative class action in the District Court of Nevada, alleging that the lengthy, unpaid security checks violated federal and state wage-hour laws. Dismissing the complaint, the court held that time spent waiting for and undergoing security screenings was not compensable under the FLSA. The plaintiffs appealed to the Ninth Circuit, which affirmed the dismissal of the meal-period claims but reversed as to the security-check claims.

Supreme Court decision. Ultimately, the issue reached the Supreme Court, which held in Integrity Staffing Solutions v. Busk that the warehouse workers were not entitled to pay under the FLSA for the time spent waiting to undergo the security checks before leaving the warehouse each day. The Court reasoned that the screenings were “noncompensable postliminary activities” under the Portal-to-Portal Act, so the workers were not entitled to be paid for that time. The state-law claims were unresolved.

MDL litigation. Following the Supreme Court’s reversal, the Ninth Circuit remanded the plaintiffs’ state-law claims to the district court, which transferred the case to an ongoing multidistrict litigation (MDL) in the Western District of Kentucky (in prior MDL proceedings, similar claims asserted by plaintiffs in other states have been resolved, with the judge applying Integrity Staffing to grant judgment on the pleadings against claims under the Kentucky Wage Hour Act and summary judgment against claims under the Pennsylvania Minimum Wage Act).

Nevada and Arizona classes. Consistent with the Supreme Court’s decision, the plaintiffs here filed a third amended complaint that eliminated federal claims and asserted claims under Nevada and Arizona law for unpaid wages and overtime, as well as minimum-wage violations. They asserted their claims as a class action under Rule 23 on behalf of both a Nevada class and an Arizona class, both including hourly paid warehouse employees who worked in the respective states within three years prior to the filing date of the complaint. The defendants filed a motion to dismiss these claims, which the district court granted. This appeal followed.

Nevada employees have private right of action. As an initial matter, the appeals court reversed the district court’s main basis for dismissing the Nevada claims because contrary to the district court’s position, an intervening state supreme court decision held that NRS § 608.140 recognizes a private cause of action for unpaid wages.

Time in security screenings compensable under Nevada and Arizona law. The Sixth Circuit also rejected the lower court’s conclusion that Integrity Staffing resolves similar claims brought under Nevada and Arizona law. The appellate court reviewed the statutes of both states, noting that both look to federal law for guidance but will part ways from the FLSA where state statutory language requires.

First, the parties disputed whether time spent passing through security screening was “work.” Under Nevada law, “hours worked” includes “all time worked by the employee at the direction of the employer, including time worked by the employee that is outside the scheduled hours of work of the employee.” And in Arizona, “hours worked” is even more broadly defined as “all time during which an employee is on duty or at a prescribed work place and all time the employee is suffered or permitted to work.” “On duty” means “time spent working or waiting that the employer controls . . .” Neither Nevada nor Arizona define “work” so the court looked to the FLSA, which defines the term broadly as any activity “controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business.” Thus, time spent waiting in line fit the definition of “work.”

While the defendants argued that the Portal-to-Portal Act excluded postliminary activities from the federal definition of “work,” that was not so. The Sixth Circuit explained: “the Portal-to-Portal Act excludes certain work activities from being compensable; it does not, however, redefine the Supreme Court’s earlier definitions of ‘work.’” Also rejected was the defendants’ argument that time waiting for the screenings was not “work” because it “involves no exertion.”

Neither state incorporated the Portal-to-Portal Act. Having concluded that time spent undergoing mandatory security screenings is “work” under both Nevada and Arizona law, the next question is whether the state legislatures exempted this “work” from being deemed “compensable” under their state wage-hour statutes, as Congress did in the Portal-to-Portal Act. “Absent any affirmative indication” that the states intended to adopt the federal Act, there was simply “no reason to assume” they did, said the appeals court. In addition to a lack of evidence of such an intent here, the plaintiffs identified several Nevada laws that they claimed are “in direct conflict” with the Act. Also, the Nevada legislature expressly adopted some federal regulations, suggesting its failure to adopt others, including the Act, was intentional.

As with Nevada, there was nothing to suggest that the Arizona legislature intended to adopt the federal Portal-to-Portal Act and there were provisions in the state’s law that seemed inconsistent with the Act. With all of this in mind, the appeals court refused to read in to either state’s laws the Portal-to-Portal Act by inference or implication.

But plaintiffs didn’t satisfy Arizona’s “workweek requirement.” The analysis did not end there, however, because the district court had dismissed the Nevada and Arizona claims for the additional reason that they “do not allege that there was a week for which they were paid less than minimum wage.” Again, the lower court based this conclusion largely on the assumption that the state laws incorporate the FLSA’s “workweek requirement” that plaintiffs identify a particular workweek in which, taking the average rate, they received less than the minimum wage per hour.

On appeal, the plaintiffs argued that Nevada and Arizona law do not calculate the wage requirement the same way, and only require a plaintiff to allege an hour of work for which he or she received less than the statutory minimum wage. With respect to Nevada law, the appeals court agreed, finding no basis to conclude the state incorporated the federal workweek requirement. However, Arizona does have an analogous workweek requirement that bars the claims for minimum-wage violations under the state’s law.

Based on the foregoing, the appeals court affirmed the dismissal of the Arizona state law claims and reversed the dismissal of the judgment regarding the Nevada claims in part, remanding for further proceedings.

Dissent. Judge Batchelder dissented in part, explaining that she would “expect the Nevada Supreme Court to find that Nevada’s wage-and-hour statutes do not differ materially from the FLSA, so they implicitly incorporate the Portal-to-Portal Act’s exclusions, and therefore time spent undergoing security checks is not compensable.”

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