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Apple on Hook for Millions for Off-the-Clock Bag Searches (2)

Feb. 13, 2020, 6:07 PMUpdated: Feb. 13, 2020, 9:41 PM

Apple Inc. violated California law when it failed to pay employees for time they spend waiting for mandatory bag and iPhone searches at the end of their shifts, the California Supreme Court ruled.

The Feb. 13 decision is the latest in the battle over pay for off-the-clock work and marks the California high court’s third wage and hour opinion in two years interpreting the state’s employee-protective wage requirements. Apple won at the trial level in U.S. District Court for the Northern District of California, which said employees of the Cupertino, Calif., tech company chose to bring bags to work and thus subject themselves to the company’s search policy. On appeal, the U.S. Court of Appeals for the Ninth Circuit turned to the state court to interpret California law.

Compensation turns on the issue of whether the employee is controlled by the employer. Apple workers “are clearly under Apple’s control while awaiting, and during, the exit searches,” Chief Justice Tani Cantil-Sakauye said.

“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 unanimous court said.

“Under the circumstances of this case and the realities of ordinary, 21st century life, we find far-fetched and untenable Apple’s claim that its bag-search policy can be justified as providing a benefit to its employees,” the court said.

The California Supreme Court “adhered to the text and purpose of the wage order, which is to protect California employees. And the control test in particular is meant to make more time compensable rather than less, so I think it’s a good day for California employees in general,” said Kimberly Kralowec, principal with Kralowec Law P.C. who argued on behalf of thousands of Apple store employees. The California class, which includes workers at stores from July 25, 2009, to present, at certification exceeded 12,400 workers.

“I do think that more employers would be likely to compensate their employees for security search time as the law requires,” Kralowec said.

An Apple representative couldn’t immediately be reached for comment.

The Golden State’s high court held in 2018 that Starbucks Inc. must pay employees for all time off the clock when they are still under an employer’s control. Prison workers got a split decision last summer, with the court holding that employees covered by a collective bargaining agreement can’t seek additional pay for time spent walking to their assigned job postings but supervisors could seek compensation.

“This decision is not dramatically expanding the scope of what’s compensable. But it is recognizing modern realities,” said Gregg McLean Adam, with Messing, Adam & Jasmine LLP in San Francisco who represents the prison workers. “The next generation in litigation will be cases that consider the degree to which the employer is exerting control on employees outside of the workplace.

“The court hasn’t given us too many clues on where it will land in the next case. But it certainly recognizes that people take bags to work,” Adam added.

Apple’s case will now return to the Ninth Circuit, which earlier held 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.

The California court also slapped Apple for its arguments that employees bringing their iPhones to work was a convenience.

“Its characterization of the iPhone as unnecessary for its own employees is directly at odds with its description of the iPhone as an ‘integrated and integral’ part of the lives of everyone else,” the court said, citing statements by company CEO Tim Cook.

Richard Howard Rahm, Julie A. Dunne, Todd Kenneth Boyer, and Michael Gerald Leggieri, Littler Mendelson PC; and Theodore J. Boutrous and Joshua Seth Lipshutz, Gibson Dunn & Crutcher LLP, represent Apple.

Kralowec and Kathleen Styles Rogers, the Kralowec Law Group, San Francisco; Lee S. Shalov and Brett R. Gallaway, McLaughlin and Stern LLP, New York; and Peter R. Dion-Kindem, Peter R. Dion-Kindem PC, Woodland Hills, Calif., represent plaintiffs.

The case is Frlekin v. Apple Inc., Cal., No. S243805, opinion 2/13/20.

(Updated with attorney comments in paragraphs 6 and 7 and 10 and 11.)

To contact the reporter on this story: Joyce E. Cutler in San Francisco at jcutler@bloomberglaw.com

To contact the editors responsible for this story: Terence Hyland at thyland@bloomberglaw.com; John Lauinger at jlauinger@bloomberglaw.com

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