Is an End-of-Shift Security Clearance Compensable? The Supreme Court Will Decide Next Term

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
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On Monday, March 3, 2014, the Supreme Court of the United States agreed to decide whether a company was required to pay overtime compensation to its workers for the time they spent passing through a security clearance at the end of each shift. In a case on appeal from the Ninth Circuit Court of Appeals, the workers claimed that their employer violated the federal Fair Labor Standards Act (FLSA) and state labor laws by failing to pay them for the time they spent in security screenings that the company used to prevent theft.

Integrity Staffing Solutions, Inc., which provides staff and warehouse space to companies, required its workers to undergo a search at the end of each shift. As part of the search, which required employees to wait up to 25 minutes, employees were asked to remove their wallets, keys, and belts and pass through metal detectors.

Two warehouse employees of Integrity filed suit against the company on behalf of a putative class of workers claiming federal and state law wage-and-hour violations. The district court granted Integrity’s motion to dismiss the workers’ complaint, holding that the time they spent passing through the security clearance was not compensable.

The case was appealed to the Ninth Circuit. The appellate court noted that the FLSA, as amended by the Portal-to-Portal Act of 1947, does not require employers to compensate employees for activities that are “preliminary” or “postliminary” to employees’ “principal activity or activities.” But, preliminary and postliminary activities are compensable if they are “integral and indispensable” to an employee’s principal activities. According to prior case law, to be “integral and indispensable,” an activity must be “necessary to the principal work performed” and “done for the benefit of the employer.”

The Ninth Circuit found that the security clearances were necessary to the employees’ primary work, which involved access to merchandise, and were done for the benefit of the employer, as the security screenings were intended to prevent theft by employees. Thus, the court ruled that the warehouse workers had stated a valid claim for relief under the FLSA. In arriving at this conclusion, the Ninth Circuit distinguished cases from other circuit courts (namely, the Second Circuit and the Eleventh Circuit) holding that time spent clearing security is not compensable under the Portal-to-Portal Act. The security screenings at issue in Integrity Staffing, the court found, were implemented due to the nature of the employees’ work and because of employees’ access to merchandise. In other decisions the security screenings had been unrelated to employees’ primary work and had not been implemented for the employer’s benefit. Noting that there was no blanket rule that time spent going through security screening is noncompensable, the appellate court stated that the “integral and indispensable” test should have been applied to analyze the warehouse workers’ claims.

The Supreme Court agreed to hear the case to decide whether time spent in security screenings is compensable under the FLSA, as amended by the Portal-to-Portal Act. The Court, which recently decided a case concerning the compensability of time employees spend donning and doffing protective gear at the beginnings and ends of their shifts, Sandifer v. United States Steel Corp., will decide Integrity Staffing Solutions, Inc. v. Busk next term.

According to Alfred B. Robinson, Jr., a shareholder in the Washington, D.C. office of Ogletree Deakins, “This case raises another important FLSA question and will give the Supreme Court an opportunity to clarify the “integral and indispensable” standard for determining which of an employee’s activities are compensable. Heretofore, companies have implemented a variety of security screening or bag-check procedures with the understanding that such time is not compensable. The Ninth Circuit’s decision runs contrary to this general consensus and created potential liability for these companies. Thus, this case could have a significant financial as well as legal impact. In addition, there are a number of other cases pending where the compensability of time going through security screenings is at issue. It is encouraging that the Supreme Court has entertained a number of cases involving the Fair Labor Standards Act to provide greater clarity for both employees and employers.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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