Security Screenings Settled?

The Supreme Court recently ruled in Amazon's favor on the long-debated issue of whether to pay employees during security screenings. But some legal experts believe the case also highlights an employee-morale issue, and predict that organizations need to address the issue through their overall compensation plans or else risk future lawsuits.

Wednesday, December 31, 2014
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The recent Supreme Court decision that supported Amazon's compensatory practices sends a clear message to HR professionals: Security screening is not a compensable process-at least, for now.

The plaintiffs in this case were two temporary workers assigned to Amazon's warehouses in Las Vegas and Fenley, Nev. They sued Integrity Staffing Solutions, a temp agency, in hopes of representing a class of workers and to be paid for the time they spent removing their personal affects-wallet, keys and belt-and walking through metal detectors designed to prevent theft. They claimed the process took up to 25 minutes at the end of their shift.

Not so, according to Amazon. Kelly Cheeseman, spokesperson for the online retailer, issued the following statement:

"The allegations in this case were simply not true-data shows that employees typically walk through security with little or no wait, and Amazon has a global process that is designed to ensure the time employees spend waiting in security is less than 90 seconds."

Initially, the United States Court of Appeals for the Ninth Circuit in San Francisco ruled in favor of the plaintiffs, claiming the screenings benefitted the company and were indeed a necessary part of their job.

The case worked its way up to the Supreme Court, where the justices unanimously disagreed with the lower court's decision. The litmus test, wrote Justice Clarence Thomas, was not "focusing on whether an employer required a particular activity," as did the Ninth Circuit judge, but if the activity "is tied to the productive work that the employee is employed to perform."

In this scenario, the employees retrieved products off warehouse shelves ordered by Amazon's customers and packaged them for delivery. Since the security checks were not an "integral and indispensable" part of their job, stated Justice Thomas, additional pay was not justified.

"The key holding here is that standing in line isn't compensable if it's not a productive part of your job," says Michael Reilly, director of the labor and employment practice group at Lane Powell law firm in Seattle. "The distinction here is this is just a qualification to work, it isn't the work itself."

He compares the scenario to people getting dressed for work. While employers require employees to wear clothes at work, they don't pay them for the activity of getting dressed.

Reilly says the history behind this court ruling dates back to 1946's Anderson v. Mt Clemens Potter Co. case. Plant workers had claimed they were not fully compensated for performing a variety of pre-work activities, like assembling and sharpening tools. The Supreme Court ruled that such preliminary work activities benefit the employer and fall under the Fair Labor Standards Act.

Within six months of this decision-referred to as the portal-to-portal case-roughly 1,500 similar lawsuits were filed, Reilly says, totaling $6 billion in damages. "So Congress passed an emergency measure to amend the FLSA, saying, 'We're not going to pay you for something that's not productive.' "

While Reilly and other labor and employment attorneys believe the Supreme Court made the right decision, the big surprise came when the U.S. Department of Labor also expressed its support for the high court's decision, he says, adding that many recognize the need for security screenings. According to the 2013-2014 Global Retail Theft Barometer Study, employee theft accounts for 28 percent of the $128.5 billion in retail shrinkage that occurred worldwide.

Still, watch out for state laws, he says, adding that this federal ruling may not trump state laws. While most states don't support a stand-alone wage-hour rule, he says, some states-including California-may use a different litmus test.

In those states, employers have to comply with both laws, he says. "Employers have to follow the statute that provides the most benefit to the employee."

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Setting aside the legal aspects, some believe the case was really about employee morale. HR needs to be reasonable about security screenings and work the process into its overall compensation plan, adds Robert Simandl, founding member and principal at Simandl Law Group in Waukesha, Wis., which focuses on labor and employment law.

While Amazon workers probably experience a short wait going through security lines, he suspects there may have been a handful of occasions where they were stuck in line longer than usual. That sensitivity was exaggerated and ultimately helped give way to this lawsuit.

Among the lessons HR can learn from this case is to pay better attention to its HR policies, especially those involving employee satisfaction and morale.

"[T]ake a look at what you pay employees for, and the processes for employees to come to [and leave] work," he says, offering the punch-in and punch-out process as an example. "This [case] is refocusing everyone right now on identifying what is compensable time or what services are being performed as to the particulars of the job."

Besides staggering work schedules to avoid long waits in security lines, another option would be to pay employees minimum wage as opposed to their regular pay during security checks, says Simandl. While some employers are compensating workers in this way, he doesn't suggest it. Even paying an extra $5 per employee, per day, can quickly add up to a substantial amount of money, he says.

For now, companies that require workers to go through security checks need not worry. But HR shouldn't get too comfortable, he says, adding that he envisions the laws changing as more attorneys explore different or unique ways to compensate employees.

"You're going to see more [legal] challenges," says Simandl. "This is just a speed bump."

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