Wage and Hour Defense Blog

Wage and Hour Defense Blog

Wages for Off-the-Clock Security Screenings – Employment Law This Week

LinkedIn Tweet Like Email Comment

Employment Law This Week – Epstein Becker Green’s new video program – has a story this week on off-the-clock security screenings, which are under scrutiny around the country. Two federal class actions challenging them have reached different outcomes.

Bath & Body Works recently agreed to settle a suit in California over unpaid overtime and off-the-clock security inspections. But a federal judge in the same state dismissed a similar class action against Apple in which retail workers claimed that they should be compensated for time spent having their bags checked. The judge concluded that the employees were not performing job duties and could avoid the screenings by not bringing a bag or cell phone to work.

See below to view the episode and read our recent blog post “Have We Now Seen the Last of ‘Bag Check’ Class Actions?”


Have We Now Seen the Last of “Bag Check” Class Actions?

LinkedIn Tweet Like Email Comment

Bag Security CheckIn recent years, employers across the country have faced a great many class action and collective action lawsuits in which employees have alleged they are entitled to be paid for the time spent in security screenings before they leave their employers’ premises – but after they have already clocked out for the day.  Retailers have been particularly susceptible to these claims as many require employees to undergo “bag checks” before they depart their stores to ensure that employees are not attempting to carry merchandise out in their bags or coats.

In late 2014, in Integrity Staffing Solutions, Inc. v. Busk, the United States Supreme Court held that time spent in security screenings was not compensable under the federal Fair Labor Standards Act (“FLSA”).

While Busk would seem to leave few circumstances under which employees could bring viable “bag check” claims under the FLSA, it did not put an end to the claims.  Among other things, the compensability of such time under California state law, which defines compensable time differently than the FLSA, remained unaddressed.  Indeed, late last week, Bath & Body Works Inc. reportedly agreed to pay $2.25 million to settle a putative class action asserting claims under the California Labor Code for unpaid work hours that included claims that employees were not paid for time spent in security screenings.  The critical difference between the FLSA and California laws is that California law requires that employees be paid for all time when they are “subject to the control of the employer” or for all time that they are “suffered or permitted to work.” And, not surprisingly, plaintiffs’ lawyers in California have argued that employees are “subject to the control of the employer” and “suffered” to work while they wait for and participate in security screenings.

In many, if not most, security screenings, employees who do not have a bag or a coat are not subject to a screening. They simply leave without being checked.  Under those circumstances, we have always argued that time spent in security screenings is not compensable precisely because the employee can avoid the screening altogether by not bringing a bag or coat.

Earlier this week, in what appears to be the first published opinion on the issue, District Court Judge William Alsup reached that very conclusion.  In Frlekin v. Apple Inc., the Court dismissed a class-action lawsuit brought by Apple store employees seeking compensation under California law for time spent waiting for their bags to be searched before they left the stores where they worked.  Granting summary judgment to Apple, the Court concluded that the time was not “hours worked” because the searches were peripheral to the employees’ job duties and could be avoided if the employees chose not to bring bags to work.

The history of Frlekin largely describes the development of the law on “bag checks” this decade. The Frlekin plaintiffs initially pursued their “bag check” claims under the FLSA and various states laws, including California law.  The FLSA and non-California claims were dismissed following the Supreme Court’s decision in Busk, leaving just the California claims.

On those California claims, the District Court explained that, to prove that they were subject to the control of Apple during the bag checks, the plaintiffs had to show that:

  • Apple restrained their actions during the bag checks; and
  • the plaintiffs could not choose to avoid the activity.

The District Court found that the first element was met because, once a worker wished to leave with a bag, the worker was required to stand in line for the security screening. However, the District Court found that the second element was not met because a plaintiff could choose not to bring bags to work and thereby avoid the “bag check” altogether.  Distinguishing cases cited by the plaintiffs, the District Court further held that “employee choice” is a dispositive element in determining whether an employee is subject to the control of the employer.

The District Court then addressed whether the employees were “suffered or permitted to work” during the time they were awaiting security screenings.  The Court stated that liability arises when an employer knows that someone is performing work for its benefit, and allows that work to proceed.  Therefore, “the touchstone is the failure to prevent work.

On this issue, the District Court then held that time spent waiting for security screenings was not “work” because it had no relationship to plaintiffs’ job responsibilities; the plaintiffs merely waited passively as managers or security guards conducted the searches.  Accordingly, time spent waiting for bag checks was not time during which the plaintiffs were “suffered or permitted to work.”

In light of its conclusions that the time spent in security screenings was not time during which the plaintiffs were “subject to the control” of Apple or “suffered or permitted to work,” the District Court held that the time was not compensable under California law and granted summary judgment to Apple.

While the District Court’s ruling is, of course, a significant victory for Apple and for employers in California, it does not necessarily spell the end of class actions in California alleging that employees are entitled to compensation for time spent in security screenings.

First, the Frlekin plaintiffs are likely to appeal this decision.  It would be surprising if they did not.

Second, the decision is not binding on other courts, and in particular is not binding on California state courts.

Third, the decision will not be helpful to those employers who require all employees to undergo screenings regardless of whether they brought a bag or a coat.

For these reasons, it is too early to declare “bag check” lawsuits dead.

But, based on this decision, plaintiffs’ lawyers may think twice about bringing “bag check” class actions, and employers that have security screenings similar to Apple’s can take comfort that the first court to address the practice in a published decision has found that time spent in “bag checks” is not compensable time.

Beauty School Unpaid Wage Lawsuit Dismissed – Employment Law This Week

LinkedIn Tweet Like Email Comment

Featured in Employment Law This Week – Epstein Becker Green’s new video program: Beauty school students are not entitled to wages – that was the conclusion reached by federal judges in two different cases where the students challenged the practice of serving salon customers in a clinical setting.

In both cases, the Court held that the students had not proven that the educational benefit they received was outweighed by the unpaid work they did, and they therefore did not qualify for minimum wages and overtime. Unpaid internships are under a lot of scrutiny right now by the Department of Labor and in the courts. Employers need to make sure that any internship programs meet the federal FLSA requirements and any state requirements.

Click above or watch via YouTube, Vimeo, MP4, or WMV.


Epstein Becker Green’s Wage and Hour Leaders Discuss Hot Button Issues at 34th Annual Workforce Management Briefing

LinkedIn Tweet Like Email Comment

On October 15, 2015, Epstein Becker Green hosted its 34th Annual Workforce Management Briefing, which featured senior officials from the U.S. Department of Labor and the Equal Employment Opportunity Commission.  This year’s briefing boasted a record setting attendance, including industry leaders, general counsel and senior human resources professionals, many of whom attended the briefing workshop, Wage and Hour Compliance: You Are Not Exempt.

The Wage and Hour workshop featured three of Epstein Becker Green’s wage and hour practice attorneys — Michael Kun, Patrick Brady and Jeffrey Ruzal — who addressed pressing wage and hour issues that face workforce management today.

Much of the program was dedicated to a discussion of two recent U.S. Department of Labor initiatives.  On July 6, 2015, the DOL published a Notice of Proposed Rulemaking that, when finalized, would extend overtime protection to approximately five million white-collar workers who are currently not entitled to overtime pay because they are exempt from the FLSA.  Shortly thereafter, on July 15, 2015, the DOL’s Wage and Hour Administrator David Weil issued Administrator’s Interpretation No. 2015-1, concluding that many employers throughout the country are improperly classifying workers as independent contractors.  Mike, Pat and Jeff discussed the DOL’s initiatives at length by dissecting the interpretation and proposed regulations, explaining the potential ramifications of non-compliance, and offering potential business-friendly solutions.

In addition to the DOL’s recent initiatives, the program focused on other significant wage and hour issues, including intern misclassification, tip-related issues, and bonus classification.  You can access the workshop’s slide presentation here.

Judging by the rampant increase in the number of wage and hour lawsuits and investigations being brought by the government and private plaintiffs, we expect that we will be reprising our program at the workforce management briefing next year.


“Small Doses” of Non-Educational Work Did Not Turn Students into Employees

LinkedIn Tweet Like Email Comment

Beauty and fashion background with open notebook, lipstick and pearls.Following recent precedent by the Second and Eleventh Circuits, the U.S. District Court for the Northern District  of California dismissed the claims of cosmetology and haircutting students who claimed they acted primarily as workers rather than students. 

In Benjamin v. B&H Education, Inc., the plaintiffs sought to represent a putative class of students seeking wages from their schools under the federal Fair Labor Standards Act (“FLSA”) and the wage hour laws of California and Nevada.

The District Court held that the putative class representatives had not established that the educational benefits they received from attending the defendant’s schools were outweighed by the unpaid work they performed.

Primary or Secondary Status?

The District Court expressly agreed with the Second and Eleventh Circuit’s interpretations of the United States Supreme Court’s decision in Walling v. Portland Terminal Co.

The Court held that, when assessing whether the students were employees when they did their clinical work, it would examine “all the circumstances” to determine whether the relationship chiefly benefits the student or the entity for which the student is working. 

In the context of a for-profit school’s clinical education program, “this means a court should inquire whether a school’s efforts to make money from the clinic relegated the educational function of the clinic to a secondary status.”

Standard Applicable under the FLSA and California & Nevada Law

The District Court applied this standard to the plaintiffs’ claims under the FLSA and the wage-and-hour laws of California and Nevada.

In regard to California law, the District Court noted that in distinguishing between “employees” and “independent contractors,” the California Supreme Court has stated that “[i]n no sense is [California law’s] definition of the term ’employ’ based on federal law.”  Furthermore, the District Court stated that California law tends to focus on a putative employer’s right to control its putative employee.

However, the District Court stated that it “makes no sense to” extend this principle to the educational context because schools typically exercise significant control over their students without their becoming “employers” of the students.

“Small Doses” on Non-educational Work

 The plaintiffs were required to do some non-educational work such as cleaning and answering telephones.  However, the District Court stated that because professionals could expect to do similar work, the tasks were relevant in preparing for the plaintiffs’ chosen professions and “in small doses” would not relegate the educational function of the clinics to secondary status. 

Furthermore, the plaintiffs failed to provide specific evidence that they did not receive meaningful clinical instruction.

Finally, the mere fact that the clinics charged customers for services was not independently sufficient to support a finding that the “business functions” of the position had been elevated above the educational purposes of the work.

Employers who allow unpaid student trainees to work at their facilities should examine their programs to ensure that the educational benefits to the student are not subordinate to the benefits of the work received by the employer.


New California Law Permitting Employers To Correct Some Defects In Wage Statements Unlikely To Lead To A Significant Decrease In PAGA Lawsuits

LinkedIn Tweet Like Email Comment

Vintage State Flag of California

On October 2, 2015, Governor Jerry Brown signed AB 1506, insulating employers from Private Attorneys General Act (“PAGA”)lawsuits based on employee wage statements if employers cure certain defects in the wage statements within 33 days of being put on notice of them.

The law is being celebrated by some as a major development that will significantly reduce the number of PAGA lawsuits filed against California employers.  Unfortunately, there may be a bit of a misunderstanding about what the new law does and how far it reaches.  While it is certainly a positive step for employers that will insulate them from some PAGA claims, its impact on PAGA lawsuits will likely be minimal, at best.

PAGA allows employees to file suit against their employers for alleged violations of the California Labor Code, and to do so on behalf of all “aggrieved employees.”  And it allows those employees to receive up to $200 per person per violation.  Because each pay period in which a violation occurs is generally considered to be a violation, the potential penalties under PAGA can be enormous depending on the number of different Labor Code violations alleged and the size of an employer’s workforce.

Importantly, PAGA claims are not considered “class actions.” While employers in California have been besieged by wage-hour class actions, they have also been besieged by PAGA claims addressing the same issues.  Sometimes the PAGA claims are filed in the same lawsuit with the class claims; sometimes they are filed as separate lawsuits. However they are filed, PAGA claims are often little more than strategic claims meant to drive up the settlement value of class actions or to force employers to settle claims on a classwide basis.

Most PAGA lawsuits would appear to include claims based on defective wage statements. That is not going to change, at least not in any significant way, with AB 1506.

The new law does not provide that employers must be permitted to cure all defects in wage statements before a PAGA claim can be filed.  Instead, it provides that employers must be provided a brief opportunity to cure a couple of specific defects in employee wage statements once put on notice of those defects through a letter to the state Labor Workforce and Development Agency (“LWDA”). It is limited to the failure to specify the pay period covered by the paycheck, and the failure to provide the employer’s name or address on the wage statement.  That’s it.

For employers whose wage statements don’t include one or both of those items, the new law is obviously a meaningful development.  Once put on notice of those defects, they can cure them by sending out compliant wage statements for the prior 3 years.

However, the impact of the new law on the filing of PAGA lawsuits, including those with wage statement components, will likely be tiny.

Very few PAGA lawsuits are based solely on claims that the wage statements did not include the pay period or the employer’s name or address.  Instead, to the extent individuals bring PAGA claims based on employees’ wage statements, they are typically tied to claims that employees were not paid for all time worked or did not receive premiums for missed meal or rest periods.  That is, the alleged wage statement violation is that the wage statement did not accurately record all of the wages that the employee should have received.  The new law will have no impact on those claims.

While AB 1506 may not have a huge impact on PAGA litigation, all employers with employees in California would be wise to take this opportunity to review their wage statements to ensure that they provide all of the items required by California law, including an identification of the pay period covered by the wage statements and inclusion of the employer’s name and address.  And should they ever receive notice of the defects, they would be wise not only to cure those defects, but to do so for the prior three-year period to avoid PAGA liability for that aspect of the wage statements.



Fifth Circuit Award Of Fees Against The Department Of Labor Shows That Even The Government Is Not Immune To Sanctions

LinkedIn Tweet Like Email Comment

Practitioners know how difficult it is to obtain an award of fees against the government. However, in an opinion in which the Court states at the outset, “the government here chose to defend the indefensible in an indefensible manner,” the Fifth Circuit Court of Appeals has awarded attorneys’ fees to an employer in a wage-hour dispute based on the Department of Labor’s (“DOL”) bad faith– both in pursuing a legally indefensible case and in the conduct of the litigation.

The case, Gate Guard Services, L.P. v. Perez, 792 F.3d 554 (5th Cir. 2015), is an unusual one But in this case, the government’s conduct was found to be outrageous on two fronts.  The DOL continued to litigate a case long after it became apparent the case was meritless, and it did so in an inappropriately aggressive fashion.

The DOL jumped into the fray when a drinking pal of a DOL investigator, who was inexperienced in classification issues, expressed concern that he had been underpaid by Gate Guard Services, which provided gate attendants for remote drilling sites and treated the attendants as independent contractors.  After interviewing only three witnesses and destroying his original notes, the investigator concluded that the company owed $6 million in back wages, nearly its entire net worth.  Even though there were several violations of the DOL’s internal policy in the conduct of the investigation, the DOL filed suit.

During the course of the ensuing litigation, the government opposed nearly every motion on spurious grounds, even a routine motion to transfer the case to a division where many of the gate attendants and the investigator lived or worked.  During the investigator’s deposition, the DOL’s lead counsel objected 102 times and instructed the witness 18 times not to answer basic questions about his investigation.

To make matters worse for the government, the district court where the case was pending held that gate attendants in another case, with nearly identical facts, were not employees.  The DOL also learned that the Army Corps of Engineers classified its gate attendants as independent contractors.  Gate Guard won summary judgment at the district court level and was also awarded over $565,000 in attorneys’ fees.  Both sides appealed.

The Fifth Circuit did not hesitate to send a message to the DOL and awarded fees for bad faith, noting “[t]he government’s intransigence in spite of its legally deteriorating case, combined with extreme penalty demands and outrageous tactics, together support a bad faith finding.”

While the circumstances presented in this case are certainly unique, it makes clear that employers should not hesitate to seek fees when the government oversteps its bounds—either in pursuing a case that lacks merit or engaging in unethical and spurious litigation tactics.

October 15: Attend Epstein Becker Green’s Workforce Management Briefing – High Stakes and High Priorities

LinkedIn Tweet Like Email Comment

34th Annual Workforce Management Briefing Banner

When:  Thursday, October 15, 2015    8:00 a.m. – 3:00 p.m.

Where:  New York Hilton Midtown, 1335 Avenue of the Americas, New York, NY 10019

This year, Epstein Becker Green’s Annual Workforce Management Briefing focuses on the latest developments that impact employers nationwide, featuring senior officials from the U.S. Department of Labor and the Equal Employment Opportunity Commission. We will also take a close look at the 25th anniversary of the Americans with Disabilities Act and its growing impact on the workplace.

In addition, we are excited to welcome our keynote speaker Neil Cavuto, Senior Vice President, Managing Editor, and Anchor for both FOX News Channel and FOX Business Network.

Our industry-focused breakout sessions will feature panels composed of Epstein Becker Green attorneys and senior executives from major companies, discussing issues that keep employers awake at night.  From the latest National Labor Relations Board developments to data privacy and security concerns, each workshop will offer insight on how to mitigate risk and avoid costly litigation.

View the full briefing agenda here. Contact Kiirsten Lederer or Elizabeth Gannon for more information and to register.   Seats are limited.

D.C. Employers Must Offer Transit Benefits Starting January 1, 2016

LinkedIn Tweet Like Email Comment

Brian W. SteinbachAlthough not widely reported, effective January 1, 2016, the District of Columbia joins New York City and San Francisco in requiring employers of 20 or more employees to offer qualified transportation benefits.  By that date, covered D.C. employers who do not already do so must offer one of three transit benefit options.

Under the Sustainable DC Omnibus Amendment Act of 2014, Title III, Subtitle A, “Reducing Single Occupancy Vehicle Use by Encouraging Transit Benefits,” at D.C. Code §32-151, et seq., covered employers must “provide at least one of the following transportation benefit programs to its employees:”

  1. A benefit program that allows employees to elect to set aside pre-tax funds each month to pay for their “commuter highway vehicle [van pool], transit or bicycling” commuting costs, consistent with Section 132(f)(a)(A), (B), and (C) of the Internal Revenue Code;
  2. An employer-paid benefit program in which the employer supplies, at the employee’s election, a transit pass or reimbursement of vanpool or bicycling costs in an amount at least equal to the purchase price of a transit pass for an equivalent trip; or
  3. Employer-provided transportation at no cost to the covered employee in a vanpool or bus operated by or for the employer.

The penalty for failing to offer at least one of these benefit programs is a civil fine pursuant to the Civil Infractions Act, which depending upon the class of infraction ranges from $50 to $2,000 for the first offense.

The D.C. Department of Transportation, in conjunction with other organizations, has engaged in considerable promotion of these requirements. The Employer Services section of its www.goDCgo.com website “offers complimentary assistance every step of the way to make offering commuter benefits easier than ever.” This includes an “Employer Transit Benefits Toolkit” that provides guidance on the steps to implement a compliant program. The Employer Transit Benefits Toolkit has a specific checklist to assist in implementing any of the three options provided under the law. Other useful information available at the Employer Services site includes newsletters with information on compliance assistance and periodic free seminars. The Washington Metropolitan Transit Authority (WMATA) also offers information and seminars on using its “SmartBenefits” program to comply with the Act’s requirements here.

The key takeaway is that covered D.C. employers should move quickly to have a program in place by January 1, 2016.

Meal Periods with Travel Restrictions May Be Compensable

LinkedIn Tweet Like Email Comment

In Naylor v. Securiguard, Inc., the Fifth Circuit Court of Appeals held that an employer may be required to compensate employees for meal breaks if the employees are required to spend a significant portion of that period traveling to a required break area.

Facts Black white striped sentry box

Securiguard employees guarded several gates to a Naval air station.  During their shifts, the guards received two scheduled thirty-minute meal breaks.  The guards expressed a desire to eat at their posts, but Securiguard prohibited them from doing so (out of concern that the customer would think they were shirking their security duties).

Accordingly, the guards were required to travel to designated break areas on the base.  Some traveled only a few yards, while others had twelve-minute roundtrip drives to the nearest meal area.

The District Court for the Southern District of Mississippi granted Securiguard’s motion for summary judgment. It held that the FLSA requires compensation for a meal break only when an employer imposes “substantial duties or restrictions” during the designated time, and found Securiguard’s restrictions too insubstantial to make the breaks compensable.

Rest periods, meal periods & on-call time

On appeal, the Fifth Circuit cited to 29 C.F.R. § 785.19 for the proposition that bona fide meal periods “are not worktime,” and noted the regulations state: “Ordinarily 30 minutes or more is long enough for a bona fide meal period. A shorter period may be long enough under special conditions.”

Conversely, under 29 C.F.R. § 785.18,  rest periods are “of short duration, running from 5 minutes to about 20 minutes, … promote the efficiency of the employee and … must be counted as hours worked.”

The Fifth Circuit noted that the District Court and the parties compared the restrictions imposed on Securiguard meal breaks to on-call time, in which “the critical question is whether the meal period is used predominantly or primarily for the benefit of the employer or for the benefit of the employee.”

Sufficient time “to use the break for their own purposes”

The Fifth Circuit affirmed summary judgment for Securiguard as to the gates where break areas were “a few yards away,” less than a minute’s drive or “across the street.”

As to the remaining gates, the Fifth Circuit reversed summary judgment for Securiguard and remanded the case because it concluded a jury could decide that, in some cases, the travel time was “a meaningful limitation on the employee’s freedom” during the meal period, and was imposed for benefit of the employer – rendering that time compensable.

The Court also stated that a jury could further conclude that the remaining time was not long enough for employees to qualify as a noncompensable meal period under FLSA.

Accordingly, employers (particularly those in the Fifth Circuit) should evaluate any restrictions imposed on employee meal-periods in light of the ruling in Naylor v. Securiguard, Inc.