California Supreme Court Holds That Time Spent Waiting by Apple Retail Employees for Exit Searches Is Compensable Under California Law

It is not unusual for businesses at risk of employee theft to implement security screenings for employees as they exit the employer’s facilities.  Such screenings are especially common in industries where small, costly items could easily be slipped into a pocket or handbag – jewelry, smartphones, computer chips, etc.

In light of the California Supreme Court’s decision in Frlekin v. Apple, Inc., those security screenings now seem likely to lead to even more litigation wherein employees claim that they were not paid for their time spent waiting to be screened, at least in California.

We have written about security screening cases a few times before – e.g., here, here and here – because they are claims that often arise in wage-hour class actions in California.

Importantly, claims regarding security screenings are exceedingly rare under federal law following the United States Supreme Court’s decision in Integrity Staffing Solutions, Inc. v. Busk, holding that time spent awaiting bag checks was not compensable time under the Fair Labor Standards Act (“FLSA”).

But generally, California law has broader coverage than federal law concerning what constitutes “hours worked” for purposes of compensation.  And the California Supreme Court reaffirmed that broad coverage in Frlekin.

Frlekin has a long history.  As we wrote about more than four years ago, the significant part of the case started in federal court, where District Judge William Alsup granted summary judgment to Apple, concluding that the time spent in exit searches was not “hours worked” under California law 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 plaintiffs appealed to the Ninth Circuit, which then asked the California Supreme Court to decide whether such time is compensable.

The relevant California wage order applicable in Frlekin – Wage Order No. 7 – defines “hours worked” as “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so[.]”

In Frlekin, the California Supreme Court held that the “time spent on the employer’s premises waiting for, and undergoing, required exit searches of packages, bags, or personal technology devices voluntarily brought to work purely for personal convenience by employees [is] compensable as ‘hours worked’” under California law concerning the mercantile industry.

In reaching that conclusion, the Court found that Apple’s “employer-controlled activity primarily serves the employer’s interests.  The exit searches are imposed mainly for Apple’s benefit by serving to detect and deter theft.  In fact, they are an integral part of Apple’s internal theft policy and action plan.  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 also made broad observations regarding compensability, reaffirming that “‘[t]he level of the employer’s control over its employees, rather than the mere fact that the employer requires the employees’ activity, is determinative’ concerning whether an activity is compensable,” and also “emphasiz[ing] that whether an activity is required remains probative in determining whether an employee is subject to the employer’s control.  But, at least with regard to cases involving onsite employer-controlled activities, the mandatory nature of an activity is not the only factor to consider.”  That is, “courts may and should consider additional relevant factors – including, but not limited to, the location of the activity, the degree of the employer’s control, whether the activity primarily benefits the employee or employer, and whether the activity is enforced through disciplinary measures – when evaluating such employer-controlled conduct.”

Significantly, the Court expressly stated that its ruling applies retroactively.  This means that even if an employer doing business in California were to revise its exit search policy today in light of Frlekin, it may still be subject to a claim for unpaid wages, with the relevant statutes of limitations reaching back as far as four years.

In light of Frlekin, California employers should reexamine their policies and practices to determine whether they place any off-the-clock control similar to that determined to be compensable in Frlekin.