Employers Do Not Have to Pay Employees for the Time Spent in a Security Screening After Work, Says the U.S. Supreme Court.

imagesAmazon warehouse employees can’t seem to catch a break. A few years ago, the media was abuzz with the stories about the grueling conditions inside the company’s warehouses. This year, the United States Supreme Court ruled that the warehouse employees are not entitled to overtime pay for the time spent waiting to undergo and going through the required security screenings after the end of their normal work hours.

In Integrity Staffing Solutions, Inc. v. Busk, Integrity Staffing Solutions, Inc. required its hourly warehouse workers, who retrieved products from warehouse shelves and packaged them for delivery to Amazon.com customers, to undergo a security screening before leaving the warehouse each day.

The employees argued that they spent roughly 25 minutes each day waiting to undergo and undergoing the screening that was meant to prevent employee theft and that since such screening was conducted for the sole benefit of the employer and its customers, the employees had to be paid for their time under the Fair Labor Standards Act of 1938 (FLSA).

The employees’ argument was based on the Portal-to-Portal Act (PPA), which provides that employers do not have to pay their employees for (1) “walking, riding, or traveling to and from the actual place of performance of the principal activity or activities which such employee is employed to perform,” and (2) “activities which are preliminary to postliminary to said principal activity or activities.”  The employees argued that the screening time was an integral and indispensable part of their principal activity – retrieval and packaging of Amazon products – and, therefore, was compensable time under the PPA.

The U.S. Supreme Court sided with the employer after finding that the security screening was neither the principal activity for which employees were hired, nor the “integral and indispensable” part of the employees’ duties as warehouse workers. The Court explained that it did not matter whether a particular post- or pre-shift activity was required by an employer, but whether such additional activity was indispensable to the performance of employees’ work.  In this case, the security screening, although required by the employer, was not integral part of the work for which the warehouse employees were hired – packaging of Amazon products. Thus, the employer did not have to pay for such time.

Compensable Pre- and Post-Workshift Activities 

Here are some examples of what pre-shift and post-shift activities the Court has previously held to be compensable because they were indispensable to the main work activities:

  • The time battery-plant employees spent showering and changing clothes because the chemicals in the plant were “toxic to human beings” and the employer conceded that “the clothes-changing and showering activities of the employees [were] indispensable to the performance of their productive work and integrally related thereto.”  Steiner v. Mitchell, 350 U.S. 247, 252-253 (1956).
  • The time the meatpacker employees spent sharpening their knives because dull knives would “slow down production” on the assembly line, “affect the appearance of the meat as well as the quality of the hides,” “cause waste,” and lead to “accidents.” Mitchell v. King Packing Co., 350 U.S. 260, 262 (1956)

Non-Compensable Pre- and Post-Shift Activities 

On the other hand, the Department of Labor regulations explain that the following post- and pre-workshift activities are generally non-compensable:

  • When performed under the conditions normally present, activities including “checking in and out and waiting in line to do so, changing clothes, washing up or showering, and waiting in line to receive pay checks” See 29 CFR Sec 790.7(g) (2013).

Practical Implications 

Those employers who have facilities where employees must pass through gates, security checks, or take other steps before entering or leaving the workplace, should apply the test that the Court formulated in Integrity Staffing Solutions, Inc. v. Busk to any such activities to determine whether they should be compensable or not. If the activity is a “principal” activity or is an “integral and indispensable” part of such “principal activity,” then the employer should pay employees for the time they spend performing such activities. Additional guidance as to what is considered compensable post- and pre-work activity is provided by the Department of Labor here.

For more information regarding compliance with the wage and hour requirements of the Fair Labor Standards Act, contact Leiza Dolghih at Leiza.Dolghih@GodwinLewis.com.

Unpaid Internships Are Mainstream, But Are They Legal?

During the last few years of tough economy, many companies have been tempted to save a  penny by offering unpaid internships to the eager hoards of college graduates, who have often been forced to accept unpaid positions because of lack of paid work in their chosen field.  While some of these unpaid positions offered true training and educational experience, others consisted entirely of menial tasks – ranging from stuffing envelopes and picking up dry cleaning to sanitizing door handles and sweeping bathrooms.

A publicized lawsuit by unpaid interns against the company that produced Black Swan and 500 Days of Summer filed in New York in 2011, began a rush of class and collective actions brought by interns under state and federal wage and hour laws.  To avoid being part of this litigation trend, any company that offers unpaid internships in Texas needs to make sure that it complies with both federal and state wage and hour laws.

Federal Law 

The Fair Labor Standard Act (FLSA) requires that an employer pays a minimum wage and overtime wages to anybody classified as its employee.  The Department of Labor issued a Fact Sheet in 2010 describing six factors that are used to determine whether a worker should be qualified as an intern/trainee or an employee under the FLSA.  If an employer offers an unpaid internship, it must make sure that the internship position meets the following criteria:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern and, on occasion, its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Texas Law

Texas does not have separate regulations at the state level regarding unpaid internships. Instead, the Texas Workforce Commission advises employers to adhere to the six-prong test established by the DOL.  Additionally, the Commission has specifically clarified that the key fourth factor on the list – that an employer receive “no immediate advantage from the activities of the intern” – requires that an intern receive more benefits from the work then the employer.

Unpaid Internship Class Actions (examples of what has triggered litigation so far)

1.    Glatt v. Fox Searchlight Pictures  (NYSD, 2013) – interns “performed routine tasks that would otherwise have been performed by regular employees” such as obtaining documents for personnel files, picking up paychecks for coworkers, tracking and reconciling purchase orders and invoices, drafting cover letters, organizing filing cabinets, making photocopies, running errand, assembling office furniture, arranging travel plans, taking out trash, taking lunch orders, answering phones, watermarking scripts, and making deliveries.  (held: the unpaid internship violated the FLSA).

2. Rabenswaay v. Kamali et al. (NYSD, 2013) – interns did photo retouching, photographed products, edited brand books, created visuals, signage, and labels, and other tasks requested by supervisors. The job involved no training (ongoing).

3. Ballinger et al. v. Advance Magazine Publishers (NYSD, 2013) – interns packed and unpacked accessories and jewelry, sorted through and organized accessories and jewelry, ran errands, filled out insurance forms, reviewed submissions, responded to emails, proofread, line-edited and relayed pieces between writers and editors (ongoing).

4. Bickerton v. Charles Rose (NY S. Ct. 2012) – interns performed background research for the show, escorted guests for interviews, assembled press packets, broke down the interview sets, and performed other productive tasks (settled for $250,000).

5. Wang v. Hearst Corporation (SDNY 2012) – interns coordinated pickups and deliveries of samples, provided on-site assistance at magazine photo shoots, managed reimbursement reports, etc. (dismissed due to lack of commonality).

CONCLUSION: In light of the rise of litigation related to unpaid internships, employers should modify their internship programs to comply with the DOL’s requirements described above. Although the above cases deal with the fashion and publishing industries, where unpaid internships have historically been the norm, the FLSA requirements apply to all industries and all businesses need to ensure that they are compliant.

Update (7/19): After running a quick search for unpaid internships on the local Craigslist, I have found a great example of a Marketing & Events Intern position advertisement that appears to violate the DOL requirements.  In contrast, this unpaid internship for a Solutions Consultant seem to comply with the FLSA as long as they actually do offer the described training.

Update (7/25)And here is Dallas Observer advertising an unpaid Marketing Internship position with a description that on its face appears to violate the FLSA’s minimum wage requirements.

Leiza Dolghih is a partner at Lewis Brisbois Bisgaard & Smith LLP in Dallas, Texas and a Co-Chair of the firm’s Trade Secrets and Non-Compete Disputes national practice.  His practice includes commercial, intellectual property and employment litigation.  You can contact her directly at Leiza.Dolghih@LewisBrisbois.com or (214) 722-7108.