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Apple Must Pay Workers for Time Undergoing Exit Searches (2)

Sept. 2, 2020, 3:51 PM; Updated: Sept. 2, 2020, 8:53 PM

Apple Inc. must pay its employees for time they spend undergoing mandatory anti-theft searches at the end of their shifts, a federal appeals court said.

The U.S. Court of Appeals for the Ninth Circuit issued the decision Wednesday after the California Supreme Court ruled in February that Apple violated state law by not compensating workers for that security-check time. The appeals court had asked the state high court to weigh in on the issue three years ago.

The case could cost Apple millions, as the federal judge certified a 12,400-member class in 2015. The company’s market capitalization stood at nearly $2.25 trillion on Wednesday.

The ruling casts a spotlight on the state-federal divide over whether companies must pay workers for screening time. U.S. Supreme Court created a high bar for proving that those security checks should be compensated under federal law in a 2014 decision. But some courts have found that state law can cover such time.

In June, a federal judge ruled that screening time at the end of shift is compensable under New Jersey law, while the Pennsylvania Supreme Court is considering what state law there says about the matter. Both cases involve state wage claims against Amazon.com Inc.

The San Francisco-based Ninth Circuit has held in separate cases that Nike Retail Services Inc. and Converse Inc. must face California workers’ class claims that they should be paid for time spent in post-shift bag checks.

Apple Security-Check Case

In the Apple case, the plaintiffs brought the wage-and-hour class action on behalf of current and former hourly employees who have worked in the company’s retail stores in California since July 25, 2009.

The time the employees are subject to the company’s control while awaiting, and undergoing, Apple’s exit searches counts as “hours worked,” the court said.

The court rejected Apple’s argument that disputed facts preclude summary judgment for the workers because some class members didn’t bring bags or devices to work, weren’t required to participate in checks, or worked in stores with remote break rooms where they stored their belongings.

Those purported disputed facts pertain solely to individual remedies, not to the main legal question as to classwide relief, the court said.

Apple, in November 2015, won at the trial level in the U.S. District Court for the Northern District of California, which found employees chose to bring bags to work and thus subject themselves to the company’s search policy.

On appeal, the Ninth Circuit turned to the state Supreme Court to interpret California law.

The opinion was written by Judge Consuelo B. Marshall of the Central District of California, sitting by designation. Judges Susan P. Graber and Michelle T. Friedland joined in the opinion.

The workers are pleased with the decision, which vindicates their right to be paid for the time that Apple controlled them, said their attorney, Kimberly Kralowec. Next, the case will get sent back to the district court to determine how much the workers are owed, she said. The Kralowec Law Group and McLaughlin & Stern LLP represent the employees.

Apple didn’t respond to requests for comment. The company was represented by Littler Mendelson PC and Gibson Dunn & Crutcher LLP.

The case is Frlekin v. Apple Inc., 9th Cir., No. 15-17382, 9/2/20.

(Updated with additional reporting throughout. )

To contact the reporters on this story: Peter Hayes in Washington at PHayes@bloomberglaw.com; Robert Iafolla in Washington at riafolla@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com

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