In a monumental decision on February 13, 2020, regarding compensation due employees forced to undergo “exit searches,” the California Supreme Court declared such searches cannot be held off-the-clock. The United States Court of Appeals for the Ninth Circuit requested the California Supreme Court decide the issue of whether an employee’s time spent on an employer’s premises waiting for and undergoing an exit search, constitutes “hours worked” that must be compensated.
In Amanda Frlekin et al. v. Apple Inc. No. S243805 (Cal. 2/13/2020), a class of Apple retail store employees sued for unpaid wages related to exit searches. An Apple employee must undergo an exit search any time they leave the store, such as for a break, lunch, or the end of a work shift. These employees must find a store supervisor to search the employee’s belongings to ensure no product theft is taking place. For the retail employees with an Apple device (which is presumably all of them), the device’s serial number must be checked against an employee roster. The exit search typically takes anywhere from five minutes to 20 minutes. At very busy times in the store, employees reported waiting up to 45 minutes to undergo an exit search. Over the course of a week, months, and year, these exit searches add up to a significant amount of time that the employee is subject to the control of the employer.
Industrial Welfare Commission wage order No. 7-2001 (Wage Order 7) requires employers to pay their employees a minimum wage for all “hours worked.” (Cal. Code Regs., tit. 8, §11070, subd. 4(B).) “Hours worked” is defined 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.” (Id. at subd. 2(G).) Apple’s policy regarding the exit searches states Apple can discipline—which can include termination—employees that do not comply with the exit search protocols. The issue for the Court turned on the control Apple maintains over its employees in relation to this search. All employees must be searched, the search takes place within Apple’s store, Apple dictates the length of the search, the search itself is for the benefit of Apple, and there are consequences for failure to comply. This level of control, in the eyes of the Court, rises to the level of falling within the definition of “hours worked.”
In opposition to the class plaintiffs’ arguments, Apple argued there was no need for employees to bring bags or personal items—even cellular phones like iPhones—into the retail store. The Court found this argument unreasonable because Apple actually requires its retail store employees to wear a company-provided shirt while on shift, but not allow this shirt to be visible when not on the premises. Accordingly, it would make sense for employees to need to bring a bag to work to contain a change of clothing. The Court also noted that Apple itself has essentially declared the iPhone as an “integrated and integral” part of its owners’ daily lives. Therefore, Apple cannot claim that it is unnecessary for its own employees to bring their own iPhones to work.
The Court noted several changes Apple could implement to make the searches easier, including restricting the size, shape, and number of bags its workers could bring on site. Apple could also provide its employees with off-site lockers to store personal items. Significantly shortening the time involved with the exit search, and having the search take place near the end on an employee’s shift as they clock out and walk out the door, is likely the easiest solution for Apple.
Apple is certainly not the only employer to perform exit searches. Exit searches are commonplace in any retail outlet that is concerned with large-scale loss, sells high-end goods, or sells small items easily concealed and ripe for theft. With the Frlekin ruling, other groups of employees whose employers have subjected them to similar searches can be expected to file lawsuits. The Court’s ruling is retroactive, which means employees no longer employed with a company can seek damages for owed compensation for past off-the-clock exit searches. However, each lawsuit will be different depending on the policies of the particular employer and the control analysis. Further complicating the issue is that federal law only requires compensation for employees’ tasks that are “integral and indispensable” to the employees’ main duties. Therefore, employers with a presence in multiple states will need to be mindful of distinctions in labor laws not only state-to-state, but also state-to-federal government.