Apple Case Shows Federal-State Split on Security Screening Pay

The California Supreme Court’s ruling Thursday that Apple Inc. must pay store workers for time spent in anti-theft security checks when they leave work highlights a legal issue that’s settled at the federal level but continues to develop as a matter of state law.

Retail, warehouse, and shipping company workers have pressed state law wage claims in the wake of a U.S. Supreme Court ruling in 2014 that created a high bar for proving that those screenings should be compensated under federal law. A federal appeals court subsequently said that security screening time can straightforwardly be considered paid work under Arizona and Nevada law, while Kentucky law applies the same exacting test as federal law.

The question is also pending at the Pennsylvania Supreme Court and New Jersey federal court, which are poised to further clarify state law requirements for security screening time.

The potential for state law liability for unpaid security checks could fuel further worker lawsuits and prompt employers to reassess their policies for screening workers as they enter or exit the workplace.

“In light of the way case law has been developing, whether or not an employer is in a jurisdiction that treats security screening and bag checks as compensable time, employers would still be well advised to look for ways to reduce the burden on employees,” said Paul DeCamp, co-chair of management-side firm Epstein Becker & Green’s national wage and hour group.

Companies may want to consider shortening the amount of time security checks take or eliminating them all together, said DeCamp, who led the Labor Department’s Wage and Hour Division during the George W. Bush administration. How companies handle security screening has implications for compensation costs as well as worker morale, he said.

The development of state law on pay for screening time demonstrates that employers should proceed with caution even if they perceive federal workplace regulators and federal law to be business friendly, said Terri Gerstein, director of the State and Local Enforcement Project at Harvard University’s Labor and Worklife Program.

Anti-theft employee screening is mostly conducted at large chain retailers rather than smaller, mom-and-pop stores, National Retail Federation spokesman Craig Shearman said. About a third of “inventory loss” in the retail industry is attributed to internal theft, he said.

Supreme Court Sets Test

In Integrity Staffing Solutions v. Busk, the Supreme Court ruled that Amazon.com Inc. warehouse workers weren’t entitled to pay under federal law because waiting in a security line isn’t “integral and indispensable” to their principle job activities of picking packages for shipment. The court based its decision on its reading of the Portal-to-Portal Act, a 1947 law amending the Fair Labor Standards Act to clarify that workers’ time before or after their main duties need not be paid.

The high court set a difficult, but not impossible bar for showing time in a security line is compensable. For example, the U.S. Court of Appeals for the Tenth Circuit ruled earlier this month that New Mexico detention officers are entitled to pay because going through screenings is part of their job to maintain custody of inmates, search for contraband, and provide security.

After the Supreme Court ruled, workers pushed forward with wage claims against Amazon under state law, eventually making their way to multidistrict litigation proceedings in the U.S. District Court for the Western District of Kentucky. That litigation has fed a series of cases to the Sixth Circuit to consider the compensability of security screening time, with different three-judge panels reaching different conclusions.

Kentucky, Arizona, Nevada, Pennsylvania

Kentucky law applies the Busk test because it implicitly adopted the Portal-to-Portal Act’s limitations on payment for activity at the start and end of a worker’s shift, a panel of Circuit Judges Eugene Siler, Alice Batchelder, and Richard Griffin ruled in 2017.

Arizona and Nevada law considers screening time to be compensable under the FLSA’s broad definition of work, according to a 2018 ruling by Circuit Judges Batchelder and Eric Clay, and U.S. District Judge Edmund Sargus sitting by designation. Neither Arizona nor Nevada incorporated the Portal-to-Portal Act, the panel said.

But that panel dismissed the Arizona law claims against Amazon because the workers didn’t point out a specific week that they should have been paid overtime, which was a pleading requirement. The Supreme Court last fall declined to take up a challenge to the Sixth Circuit’s decision allowing the Nevada claims to proceed.

For Pennsylvania law, the state high court should decide whether payment for security screening time is mandatory, Circuit Judges Griffin, Gilbert Merritt, and Martha Craig Daughtrey ruled in 2019. Pennsylvania state courts have said the state hasn’t adopted the FLSA or the Portal-to-Portal Act and that the Busk standard doesn’t apply to state law claims, the panel said.

New Jersey, California

In New Jersey, U.S. District Judge Freda Wolfson is considering two different security screening cases, one against Amazon and the other against FedEx Ground Package System Inc. A key issue in those cases is whether the security line is considered a place of work and thus compensable under New Jersey law.

The California Supreme Court’s decision against Apple primarily turned on the workers being under the company’s control during security checks.

“The exit searches burden Apple’s employees by preventing them from leaving the premises with their personal belongings until they undergo an exit search—a process that can take five to 20 minutes to complete—and by compelling them to take specific movements and actions during the search,” the court said.