Late last year, the U.S. Supreme Court unanimously ruled that employees are not entitled to compensation for time spent waiting for and participating in mandatory security screenings at the end of their shifts. This decision is a victory for the increasing number of employers who screen employees to prevent theft. In addition, the Court provided essential guidance in an area of wage and hour law that is consistently a subject of litigation: when does the compensable workday begin and end?
In the restaurant and hospitality industries, preventing and minimizing employee theft is critical. So too, is ensuring that employees are properly compensated for the pre- and post-shift activities that are all too common in these industries.
Basic Wage Rules
Restaurant owners know that the Fair Labor Standards Act (FLSA) requires employers to compensate their employees a minimum hourly wage for their work and one and one-half times their regular wage for hours worked in excess of 40 per week. However, the tougher question to answer is what constitutes the compensable day? Travel to and from work, for example, is not compensable time. But what about activities that occur once on company premises?
The statute says that acts that are done before or after the employee’s principal work activities are not compensable. The next question is what constitutes an employee’s principal work activities.
Post-Shift Security Screening
Although the question presented to the Supreme Court related to wages for post-shift screening for warehouse workers, the Court’s decision and its implications extend beyond those narrow circumstances. The employer in the case, Integrity Staffing Solutions, provides warehouse staffing and space to clients. It requires its hourly warehouse employees to undergo a security screening at the end of their shifts as part of its measures to prevent employee theft. Two employees brought suit against the company seeking compensation for the time spent waiting and screening, a process that could take up to 25 minutes per day. Their class action lawsuit made its way to the U.S. Supreme Court.
The employees in this case argued that they should be compensated for time spent waiting for and participating in the security screening because the screening was mandatory. They asserted that because the security screening is mandated by, and only benefits Integrity Staffing, it is a part of their work assignment and thus, a principal activity for which they must be compensated.
The company insisted that the screening had no relationship with what the employees ordinarily do while on the job and, therefore, the time was not compensable. It argued that the security screening was a classic postliminary activity that is neither integral nor indispensable to the work of the employees. It further asserted that the screening is simply a logical part of the exit process and is similar to a requirement that an employee clock-out after finishing a day’s shift, an activity which is not compensable.
The Supreme Court unanimously rejected the employee’s arguments, and denied compensation for the time spent for their post-shift security screenings. The ruling essentially gives employers the ability to conduct screening on employees outside the parameters of the payable work day.
Application to the Full-Service Restaurant Industry
Before waiters, bus boys, kitchen help, and other hourly workers leave their place of employment, restaurants and employers often require that they comply with certain exiting procedures. Whether it is balancing the cash register, conducting a security screening, tallying breakage, assessing payment, or other daily demands, there is often an expectation by employees that they will get paid up until the moment they enter their car to go home. Many of these activities are compensable. However, the Supreme Court has ruled that routine screening to prevent theft, at least, need not be part of the payable work day.
Whether a restaurant is family-owned or part of a large chain, this ruling can have wide-reaching effects. Employees who work in businesses where there are numerous cash transactions and easily pilfered items may be screened. Many companies find such screening critical to the integrity of the business and a means to discourage employees who would consider a minor pocketing of cash or items “no big deal.”
The Supreme Court’s decision has appropriately narrowed the definition of compensable pre- and post-shift activities and avoided a potential flood of wage claims for employers nationwide. Despite this opinion, it is imperative that employers analyze any preliminary and postliminary activities engaged in by their employees to determine whether they are compensable based on the Court’s rationale.