Verdict October 2019: The California Supreme Court Addresses Compensable Time Before and After Work

//Verdict October 2019: The California Supreme Court Addresses Compensable Time Before and After Work

Verdict October 2019: The California Supreme Court Addresses Compensable Time Before and After Work

Most California employers are aware of compensable time laws and know by now that employees must be paid for all time worked. But there are several types of pre- and post-shift tasks that could qualify as “time worked.” California law holds that employers must pay for this time, but some activities fall within a legal gray area.

Getting to the Worksite: When Is Travel to Work – By Bus or By Foot – Compensable?

An employer who provides bus transportation from a set location to the worksite and who makes that transportation mandatory must pay for the employee’s time spent riding the bus. This is because the employee is in the employer’s control during that time. (Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575). On the other hand, an employer who provides voluntary transportation to the work site – that is, the employer-provided transportation is merely an offered convenience – does not have to pay for employee’s riding time. (Vega v. Gasper (5th Cir. 1994) 36 F.3d 417, distinguished by Morillion, 22 Cal.4th at 589, fn. 5).

While this may seem like a simple dividing line, the next question is, “how voluntary is voluntary?” The California Court of Appeal in Overton v. Walt Disney Co. (2006) 136 Cal.App.4th 263 had to draw that line when Disneyland employees sued their employer. Disneyland required employees to park their cars in a lot “far, far away” from their designated clock-in area, but it provided a shuttle to the park’s staff entrance. The employees argued that the far-flung location of the parking lot made taking the shuttle from the lot to the entrance effectively mandatory. The Court of Appeal disagreed, finding that employees had the choice to come to work by different means – taking the public buses, getting a ride or cab, etc. Employees could also choose to walk to the park entrance from the designated employee lot. Therefore, Morillion did not apply and Disneyland did not have to pay employees for time spent riding the shuttle. (Id., 269-271).

Morillion continues to be a notable exception to the ordinary rule that an employer does not have to pay, either in wages or in reimbursement of expenses, for an employee’s time commuting to or from work. (Morillion, 22 Cal.4th at 586-587; see also Alcantar v. Hobart Service (9th Cir. 2015) 800 F.3d 1047). Yet lawsuits continue to test Morillion’s boundaries.

The latest example in Stoetzl v. Department of Human Resources (2019) 7 Cal.5th 718, in which correctional employees claimed that they should be paid for the significant amount of time they spent walking from the sign-in point to their work location within the facility. The employees also contended that they were required to perform other tasks before and after clocking in and out, such as attending briefings, donning and doffing equipment, undergoing security check and inventory weapons. (Id. At 722-23).

This case has turned in part upon a unique situation: the application of a collective bargaining agreement between the workers and the State of California.

In Stoetzl, there were two sets of class members: those who were represented in collective bargaining and subject to a Memorandum of Understanding (MOU), and those who were unrepresented and not subject to the MOU (Id. at 723).

The Court of Appeal, in Stoetzl v. Superior Court (2017) 14 Cal.App.5th 1256, agreed with the trial court that the FLSA applied to represented employees who were bound by the MOU, but the California Labor Code covered non-unionizing employees, who had entered no such agreement (Id. at 1273). The trial court had ruled in the State’s favor, holding that the FLSA – rather than the California Labor Code – applied to represented and unrepresented employees alike (Id. at 1267). Unlike California’s expansive definition of compensable time, which includes all time spent under the employer’s “control,” the FLSA’s language starts the employee’s time clock at the “first principal activity” of the work day (Id. at 1262, 1267). If the FLSA governed, the plaintiffs would have no claim.

The Court of Appeal in Stoezl found that the MOU was more than just an agreement, and more than a typical collective bargaining agreement. The MOU resulted from collective bargaining between the California Correctional Peace Officers’ Association (CCPOA) and the State of California, and because that State was involved, the contract has actually been codified into a law. As a result, the state claimed – and the Court of Appeal agreed – that this contract superseded the California Labor Code and IWC Wage Orders (Id.  at 1269-1272). Because the MOU specified that the FLSA applied, the court had to apply the FLSA’s definition of compensable time, rather than California’s (Id. at 1273, 1276). The Court of Appeal thus found that the unionized employees had no claim (Id. at 1269-1272).

In its July 2019 opinion, the California Supreme Court agreed with this part of the appellate decision (Stoetzl, supra, 7 Cal.5th at 737-738). It explained that under the Dills Act of 1977 (Cal. Gov. Code 3512), California government employees have the right to collective bargaining. The statute holds that when a provision of the collective bargaining agreement conflicts with California law, the agreement supersedes the law (Id. at 738). Importantly, the Supreme Court noted that this “is not a case in which a party to labor agreement agreed to waive state law protections that are not subject to waiver,” (Id. at 740).

As to those employees not covered by the MOU and not represented in collective bargaining, the Court of Appeal found California labor laws – including the minimum wage laws prescribed by the IWC Wage Orders – applied (14 Cal.App.5th at 1273-1276). Although the state provided a Pay Scale Manual that referenced the FLSA, the Court of Appeal held that the manual did not carry the same weight as the MOU, which was enacted law, and that it did not exclude pre- and post-work activities from compensable time (Id. at 1275-1276). The court found that Wage Order 4 applied to these state employees (Id.  at 1275).

For these non-unionized employees, the California Supreme Court reversed, finding they had no claim under the Wage Orders. The Supreme Court discussed at length the statutes and legal schemes that enabled the California Department of Human Resources to set compensation for its employees and that underlying the Wage Orders (Stoetzl, supra, 7 Cal.5th at 744-745). The Court observed that “given these two broad delegations of quasi-legislative authority, it is not obvious that, in the case of a direct conflict, the decisions of the IWC should invariably prevail over those of CalHR,” (Id. at 745). After close analysis, the California Supreme Court ruled that the Pay Scale Manual and Wage Order 4 could not be “harmonized,” and therefore, the “Pay Scale Manual must be treated as a statutorily authorized exception to Wage Order 4,” (Id. at 748).

Bag Check, Security Screening, and Compensable Time

Another major gray area is whether and under what circumstances a “bag check” counts as hours worked. Many employers, especially retailers who sell valuable or small, theft-prone goods, and who have high turnover, require all employees to undergo security checks before leaving the store. These security checks range from brief and targeted (searches of purses or backpacks only) to thorough (searches of bags, coats, and pants pockets). Litigation of this issue tends to center on not only the length of the search, but the length of time the employee must wait for a manager to come and conduct the search. If this time is compensable, damages and penalties can quickly add up if all employees have to be checked before leaving for rest breaks, meal breaks, and at the end of the day.

Several federal courts have certified classes of plaintiffs in cases brought under the California Labor Code where all employees must undergo security screenings. In Cervantez v. Celestica Corp. (C.D. Cal. July 30, 2008) 253 F.R.D. 562, the plaintiffs, who were shipping facility workers, had to pass through security checkpoints before and after each shift, and they spent 30-60 minutes a day on average waiting in security lines (Id. at 567). The employer did not pay employees for that time (Ibid). The court certified the class after determining that the key legal issue was that of the employer’s control, per Morillion, 22 Cal.4th at 585 (Cervantez, 253 F.R.D. at 570-572). The court found that there was no common question of law as to security screenings at the start of the shift, because employees could choose when to arrive before their shift began. The court did find commonality as to post-shift security screenings because employees had no choice but to go directly to the security line after their shifts (Id. at 571-572).

Here, as in other cases, the courts attempted to draw a fine line along the question of whether and to what extent the employees had choices that affected their preliminary and post-liminary activities. (See Greer v. Dick’s Sporting Goods, Inc. (E.D. Cal. April 13, 2017) no. 2:15-cv-01063-KJM-CKD, 2017 WL 1354568 [certifying class of retail workers who were required to bring jackets, bags, and all personal belongings to the exit and wait for a manager to inspect them, after clocking out]; Ogiamien v. Nordstrom, Inc. (C.D. Cal. Feb. 24, 2015) No. 2:13-CV-05639-ODW-JCG, 2015, 2015 WL 773939, at *5 [denying certification to a security check class where only bags were checked and evidence showed 25% of the class did not bring bags to work].)

Of course, the question of whether a security check class is certifiable is distinct from the ultimate question of whether and under what circumstances the time spent off-the-clock waiting for and undergoing a security check is compensable.

In 2017, the California Supreme Court decided to hear the question in perhaps its most common form – whether time spent waiting for a manager and having bags searched, assuming employees are voluntarily bringing bags, counts as hours worked under the California Labor Code. The issue was originally presented to the Ninth Circuit Court of Appeals in Frlekin v. Apple, Inc., 870 F.3d 867 (9th Cir. August 16, 2017), which certified the wait time question to the California Supreme Court. The issue as framed by the California Supreme Court is:

Is time spent on the employer’s premises waiting for, and undergoing, required exit searches of packages, bags, or personal technology devices voluntarily brought to work purely for personal convenience by employees compensable as “hours worked” within the meaning of California Industrial Welfare Commission Wage Order No. 7?

(Case no. S243805)

The plaintiff’s claim in Frlekin arise from Apple’s requirement that employees at its Apple retail stores have all “personal packages and bags checked by a manager or security before leaving the store.” Employees who brought bags are required to undergo searches before leaving the store or risk discipline, including termination of employment (Id. at 870). Employees clock out before having their bags checked, so they are not paid for bag check time.

The question the Ninth Circuit certified to the Supreme Court was limited to employees who bring bags “for personal convenience” due to issues with class certification that arose at the district court level. Specifically, there were concerns regarding commonality and typicality as between employees who truly chose to bring bags, and employees who needed to bring bags to work.

Apple acknowledged, during the Ninth Circuit appeal, that employees are under Apple’s control while they are waiting for and undergoing searches. However, Apple contended (and the District Court had agreed in granting summary judgment for Apple) that the searches were not required because employees did not have to bring bags to work. The Ninth Circuit acknowledged that this line of reasoning followed Morillion and its progeny, because “the searches here are voluntary in the antecedent sense that employees may choose not to bring a bag or package to work,” (Frlekin, supra, 870 F.3d at 872).

The Ninth Circuit, however, was not certain that the voluntariness test of Morillion, which dealt with transportation, was dispositive of a case regarding bag checks:

First, unlike Morillion, Overton, and other cases, this does not involve a question about time spent traveling to a work site. Instead, this case involves an on-site search during which the employee must remain on the employer’s premises. That difference may matter.

(Id. at 872) The reason traveling to work versus remaining at work may be a distinction with a difference, the Ninth Circuit explained, is the nature of the employer’s interest. In travel time cases like Morillion, the employer’s interest in providing transportation (whether mandatory or voluntary) is to have the employee arrive on time. “It is irrelevant to the employer how an employee arrives, so long as the employee arrives on time” (Id. at 872). The employer’s interest in conducting bag checks, by contrast, is loss prevention. Moreover, the level of control over the employee is greater for bag checks. Although the Ninth Circuit did not elaborate as to how employer control during bag checks is greater, the difference is easy to see. One of the defendant’s arguments in Morillion was that employees could sleep, read a book, listen to music, etc., on the company bus, but the California Supreme Court still found the control element met (Morillion, 22 Cal.4th at 586). By contrast, an employee can, as a practical matter, do nothing while waiting for a manager, and must simply stand and permit the search during the bag check. The time belongs to the employer entirely.

Due to the increased employer control involved in a bag check, the Ninth Circuit was uncertain as to whether the “voluntariness” element from Morillion should even apply.

Moreover, even if Morillion applied, the Ninth Circuit questioned just how “voluntary” bringing a bag to work truly is. The court suggested there is a “spectrum” of how voluntary certain activities are, and in this case, bringing a bag to work falls somewhere on that spectrum between the absurd (bringing a vintage “steamer trunk” to work) and the potentially necessary (bringing a jacket in a cold climate) (Frlekin, supra, 870 F.3d at 873). The court did not give further examples, but ubiquitous items in employee bags could include mobile phones, prescription medications, feminine hygiene products, contact lens solution bottles – all of which employees could contend they effectively must have with them during the eight or more hours they are at work. And employer policies could vary significantly, such as by allowing quick scans of small clear plastic bags that hold necessary items, and more extensive searches of larger bags that employees might choose to carry.

The California Supreme Court’s decision may ultimately turn on whether it views these, and similar types of items, as effectively requiring a majority of employees to carry bags.

The anticipated California Supreme Court opinion in Frlekin has the potential to clarify – or even change – the landscape of the law regarding the type of pre-work and post-work activities that employers must pay for.

DISCLAIMER: Content within this post should not be considered legal advice and is for information purposes only. Communications made through this post do not create an attorney-client relationship. Hackler Flynn & Associates is not responsible for any content that you may access from third-party resources that may be accessed through or linked to this post.

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By |2019-11-04T09:34:30-08:00October 7th, 2019|Uncategorized|

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