The Ninth Circuit certified to the California Supreme Court the question whether time spent on an employer’s premises waiting for and undergoing required exit searches of packages or bags voluntarily brought to work for employees’ own convenience amounts to “hours worked” within the meaning of California Industrial Welfare Commission Wage Order No. 7. The appeals court concluded that the question is of extreme importance to numerous employees and employers in California, is dispositive of the appeal before it, and that no clear controlling California precedent exists. Further, considerations of comity and federalism suggest that the court of last resort in California should have the opportunity to answer the question in the first instance (Frlekin v. Apple, Inc., August 16, 2017, per curiam).
Exit searches. Nonexempt employees of Apple retail stores brought a class action seeking compensation for time spent waiting for and undergoing exit searches. Under the employer’s “Employee Package and Bag Searches” policy, employees who bring a bag or package to work may not leave the premises before undergoing a search. All personal packages and bags must be checked by a manager or security before leaving the store. All employees, including managers, are subject to the policy. Personal technology must be verified against the employee’s “personal technology card” which lists the serial numbers of employees’ personal Apple devices.
Employees receive no compensation for the time spent waiting for and undergoing exit searches, because they must clock out before undergoing a search. Failure to comply with the policy may lead to discipline, including termination.
Class action. On July 16, 2015, a district court certified a class of nonexempt Apple employees in California who were subject to the bag-search policy. Because of concerns that there were individual issues regarding different reasons why employees brought bags to work, the court made clear that “bag searches” would be “adjudicated as compensable or not based on the most common scenario, that is, an employee who voluntarily brought a bag to work purely for personal convenience.” On November 7, 2015, the district court granted Apple’s motion for summary judgment. It ruled that time spent by class members waiting for and undergoing exit searches was not compensable “hours worked” under California law. The employees appealed.
Heightened California protections. California law provides no clear answer to the certified question. Under Integrity Staffing Solutions, Inc v. Busk, the exit search time is not compensable under federal law. But the California Supreme Court has held that state law “provides greater protection to workers” than the federal scheme and that “the federal statutory scheme, which differs substantially from the state scheme, should be given no deference” when interpreting California’s wage and hour laws.
California Industrial Welfare Commission Wage Order No. 7 provides: “‘Hours worked’ means 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.” The California Supreme Court has held that the two parts of the definition independently define whether time spent is compensable as “hours worked.”
Employer control. Apple conceded that employees who bring a bag or package to work and therefore must follow the search procedures are clearly under the “control” of the employer. Under a strictly textual analysis, the employees are entitled to compensation for the time spent undergoing the search because they are “subject to the control of an employer.” However, Apple argued that “control” during the search is insufficient to constitute “hours worked.” It argued that the search must also be “required,” but employees may avoid a search by declining to bring a bag or package to work.
There is strong support for Apple’s argument in the California Supreme Court’s decision in Morillion v. Royal Packing Co. Applying Morillion, the searches here are voluntary in that employees may choose not to bring a bag or package to work. Accordingly, the time spent undergoing the search is not compensable. However, the Ninth Circuit was not certain whether Morillion applies in a straightforward manner. Morillion involved pay for travel time, so its analysis may not apply in the same manner in the circumstances of this case—on-site searches, during which employees must remain on the employer’s premises—because both the level of control and the employer’s business interest are greater. (Namely, the exercise of control over bag-toting employees advances Apple’s interest in loss prevention.)
Concluding that the consequences of any interpretation of the Wage Order will have significant legal, economic, and practical consequences for employers and employees throughout the state, and will govern the outcome of many disputes in both state and federal courts in the Ninth Circuit, the appeals court ruled that this question is worthy of submission to the California Supreme Court.
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