Is an employee compensable for time spent on waiting and exit searches as "hours worked," even after clocking out? Per the California Supreme Court, it depends on the level of the employer's control over its employees. Specifically, when evaluating employer-controlled conduct, several factors are relevant, including the location of the activity, the degree of the employer's control, whether the activity benefits primarily the employee or the employer, and whether the activity is enforced through disciplinary measures.
Background
In Frlekin v. Apple Inc. (2020), 8 Cal. 5th 1038, former Apple retail store employees filed a class action against Apple alleging, among other things, that Apple failed to pay them minimum and overtime wages for time spent waiting for and undergoing exit searches. Under Apple's employee guidelines, employees were subject to a bag search after work, which required opening every personal bag and removing any personal Apple device to verify the serial number against a technology log. Under the policy, employees were required to clock out before waiting for the exit search. Plaintiffs estimated that searches took 5 to 20 minutes, depending on manager or security guard availability.
Under the applicable Industrial Commission Wage Order, employees must be paid for all "hours worked." The Frlekin decision focused on the "control standard" in the definition of "hours worked," which includes "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." See Cal. Code Regs., tit. 8 § 11070.
Under this control standard, the California Supreme Court concluded that the employees were subject to Apple's control and must be compensated for the time spent on waiting and the exit bag search. In reaching this conclusion, the Court considered various factors to determine whether an employer-controlled activity was compensable as "hours worked."
The Court first observed that the bag search occurred at the worksite, where Apple retained control over its employees during the search. Under the policy, employees subject to a search remained confined to the premises until they could submit to a search procedure. This involved, among other things, locating and waiting for an individual to become available to perform a search and being compelled to take specific actions during the search, including opening their bags, unzipping internal compartments, removing personal Apple technology devices and technology cards, and proving ownership of such items.
The Court further considered whether the employer-controlled activity benefits primarily the employer or the employee. For example, in Overton v. Walt Disney Co. (2006), 136 Cal. App. 4th 263, the Appellate Court held that time spent waiting for an employer-provided shuttle bus was not compensable as hours worked, because the shuttle was an optional benefit for employees parked at the most distant parking lot. The Court noted that, in the case of Apple's exit search policy, the employer-controlled activity served primarily Apple's interest—namely to detect and deter theft.
Third, the Court noted that an employee's failure to comply with the bag-search policy could lead to disciplinary action, up to and including termination. The Court concluded that this factor strongly suggests that the employees remained under Apple's control while waiting for, and undergoing, the exit searches.
Finally, the Court rejected Apple's arguments that the search policy was not required because it applied only to individuals who chose to bring a bag or Apple device purely for personal convenience. The Court recognized that employees may bring a bag to hold any number of ordinary, everyday items, which leaves little genuine choice about whether to bring a bag to work. The Court further observed that Apple devices, such as an iPhone, are so pervasive in modern life that employees have little true choice in deciding whether to bring their personal iPhones to work.
Based on consideration of these various factors, the Court concluded that time spent on Apple's premises waiting for, and undergoing, mandatory exit searches is compensable as "hours worked" within the meaning of the applicable Wage Order.
Employer Takeaways
Payment for employer-controlled time as "hours worked" is not new. Frlekin merely clarifies additional factors to consider when determining whether employees must be compensated for employment-related activities that occur outside of work hours. Of course, not all activities are compensable. For example, activities that benefit primarily the employee or commuting time may not be compensable as hours worked. However, employers should remain vigilant to ensure that employees are fully compensated for all employment-related activity, even when they occur outside of work hours. Thus, Frlekin underscores the importance to employers of seeking legal counsel when unsure if an activity qualifies as "hours worked" and is thus compensable.