California Supreme Court Holds That Time Spent Undergoing Exit Searches Constitutes Compensable "Hours Worked"

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On February 13, 2020, in a unanimous opinion, the California Supreme Court held in Frlekin v. Apple Inc., Case No. S243805, that time spent on an employer's premises waiting for, and undergoing, required exit searches of packages, bags, and personal technology devices voluntarily brought to work for personal convenience is compensable as "hours worked" under California's Industrial Welfare Commission Wage Order 7.

The Facts

Apple, a California-based technology provider, requires its retail store employees to undergo exit searches of their bags, packages, purses, backpacks, and briefcases for the purposes of loss prevention. Apple employees must also allow their personal Apple products (such as their iPhones) to be examined before leaving work. The searches must be done by an Apple manager or security employee, and employees may be subject to discipline for failing to comply. Apple also requires its employees to clock out before undergoing the exit search. Therefore, Apple does not pay its employees for the time they spend on the exit searches. These exit searches take between five and 20 minutes on the low end, and 45 minutes on the highest end. 

Employees bring searchable items such as bags and belongings to work for various reasons. Some bring bags to carry Apple apparel--which must be worn during work, but which must be removed or covered up outside the store. Others bring bags with their cell phones, food, keys, wallets, or glasses. Employees need not undergo an exit search if they do not bring bags or Apple products into the retail store. However, although Apple managers estimated that only 30 percent of Apple employees brought bags to work, employees estimated that nearly all employees do.

Supreme Court Decision

In Frlekin, the Supreme Court held that under these circumstances, Wage Order 7 requires Apple to compensate its employees for the time spent on exit searches. The Court first noted that under the Wage Order, employers must compensate employees for "hours worked" when: (1) the employee is subject to the control of the employer; or (2) when the employee is suffered or permitted to work. Focusing exclusively on the "control" prong, the Court noted that Apple controls its employees by requiring the bag searches under the threat of discipline, confining employees to the company's premises when they wait for and undergo exit searches, and forcing employees to track down a manager or security employee, unzip and open bags, and submit Apple products for inspection. 

The Court rejected Apple's argument that it need not pay for exit searches because the employees can avoid the searches by not bringing bags or their Apple products into the store. The Court emphasized that, as a practical matter, Apple's exit searches cannot be avoided because employees have little choice as to whether to bring a bag to carry their everyday personal belongings given that employees must wear Apple-approved attire at work, but must also remove or cover the attire outside of work. As a result, employees practically must carry their work uniform in a separate bag to the store. What's more, the Court noted how the iPhone, one of Apple's leading products, has become integral to one's daily life. According to the Court, employees have little true choice in deciding whether to bring their cellphones to work.

Because the Court held that Apple controls its employees during the exit searches, it specifically declined to consider whether the exit searches are also compensable under the "suffered or permitted to work" clause of the Wage Order. 

Finally, the Court expressly held that its holding applies retroactively to Apple. 

What Employers Should Know

Frlekin did not hold that all security checks must be compensated. In future cases concerning exit searches, employers may be able to distinguish Frlekin based on its facts. The simplest effective solution would be to compensate employees for the time spent undergoing an exit search by requiring employees to clock out only after completing their exit search. 

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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