CWS 3.0: October 15, 2014

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Supreme Court weighs staffing buyer security line pay

The US Supreme Court heard oral arguments Oct. 8 in a case where staffing firm workers claim they are owed pay for waiting in security screening lines when leaving the warehouse of staffing client Amazon.com. The outcome of the case could affect all companies with such security systems in place.

“This case will create a significant precedent whichever way the court decides,” said Fiona Coomb, director, legal & regulatory research, at Staffing Industry Analysts. “However the financial implications of a decision that such security checks are an integral part of the work would be immense for staffing firms and hirers particularly at busy times like the run up to the Christmas period. It would also stretch interpretation of the law and create uncertainty in relation to a number of activities ancillary to work across different sectors.”

The justices have until June to issue a decision in the case, which has attracted the attention of the federal government, the National Federation of Retailers and more. However, the decision will likely be released before then.

“The justices were very engaged they asked hard questions and good questions of both sides; I think it’s difficult to make a prediction of what the court will do,” said Joseph Palmore, who viewed the hearing. Palmore is co-chair of Morrison & Foerster’s Appellate and Supreme Court Practice Group as well as a former assistant to the solicitor general at the Justice Department.

Plaintiffs Jesse Busk and Laurie Castro were assigned by Integrity Staffing Solutions to Amazon warehouses in Las Vegas and Fernley, Nev., where they filled orders, according to court records. They argued violations of federal and state labor laws because they were required to spend up to 25 minutes at the end of their workday going through a security line. Employees had to remove wallets, keys and belts then pass through metal detectors.

A federal court in Nevada ruled in favor of Integrity in July 2011. However, the Ninth Circuit Court of Appeals in 2013 reversed the lower court’s decision related to time spent in the security line, ruling it was an integral part of the employees’ work.

Palmore said Integrity’s argument is the screening is a logical part of the exit process — similar to punching a time clock, which is not compensable.

“As is often the case, the court asked many hypothetical questions to gain a better understanding of implications of counsel’s positions,” Palmore said. “I think [Integrity’s attorney Paul Clement] was able to allay many concerns through his answers to some of those hypothetical question.”

One such question was whether mandatory drug testing is compensable. Clement argued it would be because it was not part of the exit process.

That is also the position of the US Department of Labor, and Justice Breyer referred to this, Palmore said. Long-standing positions by a federal agency can be important in a case such this, he said.

Several “friend of the court” briefs were filed before the oral arguments.

In one, the National Federation of Retailers argued against a ruling that security line time is compensable, noting many other retailers use similar security measures.

“Affirmance of the Ninth Circuit’s decision would significantly harm retailers that use employee bag searches — 63 percent of retailers in 2012 — and other employee security screenings, as loss prevention measures similar in purpose to the security screenings at issue here,” the organization wrote. “Affirmance would not only generate potential legal liability for retailers, but would impose substantial costs on retailers that must reconfigure their security screening and time clock procedures in order to continue using employee bag searches.”

The US federal government also filed a friend of the court brief supporting Integrity’s side saying the Department of Labor already issued interpretive regulations.

“The United States also employs many employees who are covered by the FLSA, 29 U.S.C. 203(e)(2)(A), and requires physical-security checks in many settings,” according to the federal brief. “The United States accordingly has a substantial interest in the resolution of the question presented.”

For more on the case, click here.