The Ninth Circuit Asks the California Supreme Court to Weigh in on Bag Checks

By Philippe A. Lebel

On August 16, 2017, the Ninth Circuit Court of Appeals issued an order certifying a question regarding an important wage and hour issue to the California Supreme Court: Is time spent on an employer’s premises waiting for and undergoing required exit searches of bags or packages voluntarily brought to work for purely personal convenience by employees compensable as “hours worked” under California law?

The question arose in Frlekin v. Apple, Inc., an appeal in a wage and hour class action brought against Apple, Inc., by current and former nonexempt California retail store employees. In the suit, the plaintiffs sought compensation for time that they spent waiting for and undergoing exit searches whenever they left Apple’s retail store locations, pursuant to the company’s Employee Package and Bag Searches policy. The at-issue policy, which is similar to ones in place at many other large retailers, required that employees undergo unpaid, manager-performed bag/package checks before leaving the stores—at breaks or at the end of their shifts.

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Bag Check Claims: Not Quite Yet in the Bag for California Employers

By Cheryl D. Orr and Jaime D. Walter

California employers that perform bag checks on employees in order to deter theft breathed a sigh of relief in 2015 after a California federal court’s ruling in Frlekin v. Apple Inc., No. C 13-03451, 2015 WL 6851424 (N.D. Cal. Nov. 7, 2015), which provided that state law does not require that Apple compensate hourly employees for time they spend undergoing security checks. The ruling followed another favorable decision in December 2014, when the U.S. Supreme Court held in Integrity Staffing Solutions, Inc. v. Busk, 135 S. Ct. 513, 518 (2014) that security checks do not constitute compensable work activities under federal law. After years of increased attention having been paid to bag check actions, the decisions slightly cooled the plaintiffs’ bar’s enthusiasm for such actions. But despite the victories, California employers should not let their guard down quite yet. A number of recent high-value settlements continue to make bag check claims attractive.

Busk and Frlekin

In Busk, the Supreme Court provided that post-shift activities, such as bag checks, were compensable under the Fair Labor Standards Act if they constituted an “integral and indispensable” part of an employee’s job responsibilities. Because the bag checks in Busk had neither an integral nor indispensable relationship to the employees’ responsibilities, which involved retrieving shelved products and packaging them for delivery, they did not constitute compensable activities under federal law. Employees could retrieve and package items without security screenings, reasoned the Court.

As it is difficult to imagine many situations in which a court would deem antitheft security checks to be integral or indispensable to an employee’s job, Busk allowed employers to more confidently treat security checks as noncompensable. That confidence eroded a bit, however, when a federal district court in California held in Miranda v. Coach, Inc., No. 14-cv-02031-JD, 2015 WL 1788955 (N.D. Cal. Apr. 17, 2015) that Busk’s ruling did not apply to California labor law. As a result, when the Northern District of California later held that year that Apple’s bag checks did not constitute “work” under California law, employers rejoiced. The Frlekin court reasoned that the bag checks did not constitute “hours worked” because, among other things, employees were not “suffered or permitted to work.” Echoing the reasoning in Busk, the court explained that the bag checks were in no way related to the employees’ job responsibilities and were only “peripheral activities relating to Apple’s theft policies.” Moreover, the employees did not have to complete any job duties during the bag checks; they simply had to wait passively while other people searched their belongings.

Developments and Takeaways Following Frlekin

Although Busk essentially closed the door on bag check claims that arise under federal law, Frlekin is on appeal and bag check litigation—although not as popular—continues. A suit brought against Macy’s last year involves bag check claims, and the Northern District of California granted motions for class certification of bag check actions involving Converse and Nike last year. Coach, Burlington Coat Factory, Old Navy, CVS, and Real Time Staffing Services all settled bag check actions for amounts that ranged from $300,000 to $12.75 million.

The Ninth Circuit will likely hold a hearing in Frlekin in May 2017. While we would not be surprised if the court were to affirm the ruling, even if it does, the opinion may not entirely foreclose bag check litigation in California, as employees may attempt to factually distinguish their employers’ bag check policies from that imposed by Apple.

To reduce the risk of bag check exposure, employers should consider ways to allow employees to remain clocked in while undergoing bag checks. If practical difficulties make that option too burdensome, employers may want to review Frlekin and consider adopting a policy similar to Apple’s.