On October 8, 2014, the U.S. Supreme Court heard oral arguments in the case of Busk v. Integrity Staffing Solutions, Inc., 713 F.3d 525 (9th Cir. 2013), where they will decide whether employers will be required, in accordance with the Fair Labor Standards Act (FLSA), to compensate employees for the time employees spend going through security at the end of their shift. On its face, the answer to the question of compensation for that time seems straightforward (either yes or no) - however, as with most things in law, nothing is ever straightforward. We recently addressed a similar issue with one of our clients, a federal government contractor, so we thought it might be an issue that other government contractors would be interested in hearing about.
In Busk, the employer, Integrity Staffing Solutions, Inc., provided warehouse space and staffing to clients such as Amazon.com. At the end of each shift, employees were required to go through a security clearance where they might wait up to 25 minutes to be searched, time for which they were not compensated. The lower court, relying heavily on out-of-circuit cases, ruled that Integrity Staffing was not required to pay employees for that time. On appeal, the 9th Circuit reversed the lower court on this issue and held that such time was compensable because undergoing the security screening was "integral and indispensable" to their principal activities.
Under the FLSA, the general rule is that activities which are "preliminary" or "postliminary" to the principal activity(ies) that the employee is employed to perform are not compensable. However, preliminary and postliminary activities are compensable if they are "integral and indispensable" to an employee's principal activities. Under 9th Circuit law, to be "integral and indispensable," an activity must be: (1) necessary to the principal work performed; and (2) done for the benefit of the employer. Alvarez v. IBP, Inc., 339 F.3d 894 (9th Cir. 2003).
In rendering their decision, the 9th Circuit noted that the security screenings: (1) had to be conducted at work; (2) were not required for everyone entering the premises, only employees leaving the premises at the end of their shift; (3) were necessary to employees' primary work as warehouse employees; (4) were intended to prevent employee theft; and (5) were done for the employer's benefit.
Significantly, the 9th Circuit made a point to distinguish Busk from the 11th Circuit case of Bonilla v. Baker Concrete Constr. Co., 487 F.3d 1340 (11th cir. 2007). In Bonilla, the 11th Circuit held that construction workers working on an airport construction project were not entitled to compensation for time spent having to go through airport security. The court in Bonilla noted that because the Federal Aviation Administration mandated the security process, the screening did not benefit the employer.
For government contractors, the issue arises when you have employees performing work on Military installations and who may (if they don't already have a security clearance), on a daily basis, have to stop at the installation's visitor office to get a pass before proceeding to the job site (most government contracts specify that they will only pay for a contractor's time from the moment they reach the actual job site). Depending on what time of day and how busy the office is, this process may take a significant amount of time. Bonilla and the 9th Circuit's reference to it implies that employers would not have to compensate their employees for this time because it is a Government mandated requirement and not the employer's choice (and therefore the employer is not benefiting from the security process).
In spite of Bonilla's support for the proposition that such time is not compensable, I would guess that most government contractors do in fact compensate their employees for such time. Nonetheless, it will be interesting to see where the Supreme Court comes out on the issue - it may provide clarification as to situations where the security clearance (or other procedure) is a government requirement and it will certainly have an impact on commercial employers that employ such security measures.
Under the FLSA, the general rule is that activities which are "preliminary" or "postliminary" to the principal activity(ies) that the employee is employed to perform are not compensable. However, preliminary and postliminary activities are compensable if they are "integral and indispensable" to an employee's principal activities. Under 9th Circuit law, to be "integral and indispensable," an activity must be: (1) necessary to the principal work performed; and (2) done for the benefit of the employer. Alvarez v. IBP, Inc., 339 F.3d 894 (9th Cir. 2003).
In rendering their decision, the 9th Circuit noted that the security screenings: (1) had to be conducted at work; (2) were not required for everyone entering the premises, only employees leaving the premises at the end of their shift; (3) were necessary to employees' primary work as warehouse employees; (4) were intended to prevent employee theft; and (5) were done for the employer's benefit.
Significantly, the 9th Circuit made a point to distinguish Busk from the 11th Circuit case of Bonilla v. Baker Concrete Constr. Co., 487 F.3d 1340 (11th cir. 2007). In Bonilla, the 11th Circuit held that construction workers working on an airport construction project were not entitled to compensation for time spent having to go through airport security. The court in Bonilla noted that because the Federal Aviation Administration mandated the security process, the screening did not benefit the employer.
For government contractors, the issue arises when you have employees performing work on Military installations and who may (if they don't already have a security clearance), on a daily basis, have to stop at the installation's visitor office to get a pass before proceeding to the job site (most government contracts specify that they will only pay for a contractor's time from the moment they reach the actual job site). Depending on what time of day and how busy the office is, this process may take a significant amount of time. Bonilla and the 9th Circuit's reference to it implies that employers would not have to compensate their employees for this time because it is a Government mandated requirement and not the employer's choice (and therefore the employer is not benefiting from the security process).
In spite of Bonilla's support for the proposition that such time is not compensable, I would guess that most government contractors do in fact compensate their employees for such time. Nonetheless, it will be interesting to see where the Supreme Court comes out on the issue - it may provide clarification as to situations where the security clearance (or other procedure) is a government requirement and it will certainly have an impact on commercial employers that employ such security measures.
