Apple’s Denying Pay to Workers for Bag Search Questioned

The California Supreme Court questioned how to balance Apple Inc.'s mandatory, unpaid employee bag and iPhone searches at the end of their shifts with California law requiring workers get paid for all time worked and under the employer’s control.

Apple is the latest California employer to defend its practice of not paying workers for all minutes worked under the state’s employee-protective wage orders. In the case of Starbucks, the court held that all time off the clock and still under an employer’s control is compensable. Prison workers got a split decision in July with the court holding 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.

“I really don’t expect Apple to impose a no bag policy but these laws apply far beyond the case at hand, and other companies, if they feel pressed, might go there and that would be a whole another can of worms I suppose,” said Corbin Barthold, Washington Legal Foundation senior litigation counsel.

A federal trial court held Apple employees chose to bring bags to work and subject themselves to the company’s search policy and thus failed to satisfy California wage law requirements for being compensated when “subject to the control of the employer.” The court granted Apple summary judgment.

The U.S. Court of Appeals for the Ninth Circuit asked the state court to review whether, under California law, Apple owes workers pay for time spent waiting for their bags to be searched after the end of their shift before leaving the store.

Justices during Dec. 4 oral arguments asked whether the bags, coats, umbrellas, and phones workers carry are really voluntary or outside of everyday conduct and whether the time spent on mandatory exit searches should be compensated.

“It would be a draconian policy for Apple to say no bags ever. It’s draconian because under ordinary understandings of life, people bring a few personal possessions to work. We all do it. And Apple here is making a concession to that reality,” Justice Goodwin Liu said.

“It seems weird to say that allowing people to bring bags to work is a benefit to the employer, just as it would be weird to say that it’s a benefit to the employee. Apple has made that claim, which I find rather astounding as well. It’s just part of the ordinary baseline baked into how we live. But in spite of that concession to reality, it seems then further odd to say that’s a form of work then to have the downstream consequence of that be compensable,” Liu said.

The key is employer control, with workers required to clock out, find a manager, wait for the search, and be under threat of termination if leaving before their belongings to be searched, said Kimberly Kralowec, a San Francisco plaintiff’s class-action lawyer representing worker Amanda Frlekin.

“There are other ways to deal with the potential issue of retail theft than to burden the employees,” Kralowec said.

Casting too wide a ruling could add to uncertainty when California case law has created a benchmark for employers that’s worked for nearly 20 years, said Theodore Boutrous, a Gibson Dunn & Crutcher LLP partner arguing for Apple.

Modern Standards

“States and federal courts have understood that the key question is whether the employee had a choice to avoid some sort of restricted activity,” Boutrous said. The court ruling in Morillion v. Royal Packing Co. involved workers being required to ride the employer’s buses and subject to the employer’s control.

While Morillion may stand for a controlled required activity that might be a factor of control when workers are being transported, this case involves “on-site searches, captive activities required by the employee before they may leave,” Chief Justice Tani Cantil-Sakauye said.

Justice Leondra Kruger said whether the activity is required is at least a significant factor in determining whether the time is subject to the employers’ control. Most people bring bags with them to work. “And the notion that the worker could avoid these searches by just leaving their bags at home doesn’t seem very realistic,” Kruger said.

A survey of the flagship San Francisco Apple store found 49% of workers didn’t bring bags or phones to the job, Boutrous said.

Justices are “trying to come up with a clear rule of law so the awareness of the workplace is evolving and the law needs to evolve, too. Morillion gives us standards but those standards need to be applied to a vastly different workplace,” said Gregg M. Adam, with Messing, Adam & Jasmine LLP in San Francisco, who represented the prison workers in the case the court decided last summer.

“Morillion was seven years before we had iPhones,” said Adam.

The ruling is expected within 90 days oral arguments. The case returns to the Ninth Circuit, which held 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.

In the meantime, it’s employer beware of California laws, Barthold said.

“As we all know, California does not bind itself to the Fair Labor Standards Act so there is a degree as an employer you’re on notice that California may play by a different set of rules,” he said.

The case is Frlekin v. Apple Inc, Cal., No. S243805, oral arguments 12/4/19.