Integrity Staffing Solutions, Inc., v. Busk et al.

Under the FLSA as amended by the Portal-to Portal Act, employers are granted limited immunity from liability for employee actions seeking compensation for time traveling “(1) to and from the actual place of performance” and (2) any “activities which are preliminary to or postliminary to [] principal” activities of their employment.

Integrity argues that the Court in Steiner v. Mitchell determined that employees can only recover compensation for activities that are “an integral and indispensable part of the principal activities” under the Portal-to-Portal Act. On the contrary, Busk and Castro argue that even without satisfying the integral and indispensable standard in Steiner, an employee activity is still compensable under the Court’s standard in Tennessee Coal, Iron & R. Co. v. Muscoda Local No. 123 if such activity was required by and benefitted the employer.

WHAT STANDARD SHOULD APPLY TO DETERMINE IF PRELIMINARY OR POSTLIMINARY ACTIVITIES QUALIFY AS COMPENSABLE WORK?

Integrity argues that under the Court’s interpretation of the Portal-to-Portal act in Steiner, preliminary or postliminary employee activities may be deemed compensable only if such an activity is “an integral and indispensable part of the principal activities.” Accordingly, Integrity contends that undergoing security clearances is not integral and indispensable to its employees’ principal activities as warehouse workers and thus must be deemed non-compensable.

Specifically, Integrity maintains that Busk and Castro’s jobs were processing and filling online orders which consisted of such principal activities as finding, delivering, and packing various merchandise for distribution to online customers. Integrity emphasizes that the security clearances at issue occurred away from the warehouse, and after Busk and Castro had completed the principal activities of the workday, and thus could not have been integral and indispensable to Busk and Castro’s principal job responsibilities. To illustrate this point, Integrity argues that even if employees somehow circumvent the security screening “by sneaking out the side door,” they would nonetheless fulfill their principal activities of employment.

Integrity also argues that undergoing security clearances is “indistinguishable” from employee activities deemed non-compensable in other cases, such as clocking in and out, traveling to the workplace, and waiting in line to pick up protective gear. For example, Integrity points to the Court’s holding in IBP, Inc. v. Alvarez where the Court distinguished between activities that are only incidental to productive work, such as waiting in line to pick up protective gear, and activities that are essential to the worker’s job responsibilities, such as putting on protective gear. Following this distinction by the Court, Integrity maintains that undergoing security clearances is sufficiently similar to waiting in line to pick up protective gear and thus must be deemed non-compensable.

On the other hand, Busk and Castro argue that Integrity’s standard to determine compensable work under Steiner unduly narrows the scope of the FLSA as amended by the Portal-to-Portal act. Busk and Castro contend that the integral and indispensable standard determined in Steiner is only one of many ways to identify compensable work, and that under the Court’s holding in Tennessee Coal, any activity required by and pursued for the benefit of the employer qualifies as compensable work. Busk and Castro point out that Integrity required its employees to undergo security clearances before leaving the warehouse after the workday and as a result benefitted from it. Therefore, Busk and Castro argue, even without satisfying the integral and indispensable standard, undergoing security clearances is a compensable activity under the Court’s holding in Tennessee Coal. Busk and Castro maintain that if Integrity had ordered its employees to come to work on an off day to undergo similar security screenings, employees would clearly be compensated and that requiring workers to undergo security clearances after work is no different.

Busk and Castro also argue that undergoing security clearances is a compensable principal activity under the Portal-to-Portal Act because the activity was required by the employer and necessary to perform principal job responsibilities. Therefore, Busk and Castro assert that because the worker’s principal activities had not been completed by the time employees were undergoing security clearances, doing so must be compensable as part of the continuous workday.

Moreover, Busk and Castro assert that undergoing security clearances is analogous to waiting in line to remove protective gear at the end of a workday, which the Court in IBP held to be compensable as part of the continuous workday. Busk and Castro also emphasize that although the Court in IBP held that waiting in line to pick up protective gear was non-compensable, it specifically recognized that its analysis would differ if such activity had been explicitly required by the employer.

IS THE NINTH CIRCUIT’S DECISION CONSISTENT WITH THE LEGISLATIVE HISTORY OF THE PORTAL-TO-PORTAL ACT AND RELEVANT CASE LAW?

Integrity maintains that the legislative history behind the Portal-to-Portal Act further supports its position that undergoing security clearances is a non-compensable activity. Integrity contends that Congress enacted the Portal-to-Portal Act to “repudiate expansive interpretations of the FLSA” enabled by the Court’s rulings in Anderson v. Mt. Clemens Pottery Co. and Tennessee Coal, which allowed compensation for activities that “allowed employees to recover massive damages for pre- or post-shift activities.” Integrity argues that Congress, recognizing the expanding liability to employers under this new standard, responded by designating “preliminary” and “postliminary” activities as non-compensable under the Portal-to-Portal Act.

Moreover, Integrity argues that the Ninth Circuit’s decision breaks from goes against the decisions of other courts. For example, Integrity cites the Second Circuit’s decision in Gorman v. Consol. Edison Corp., where the court denied compensation to nuclear-plant employees who were required to undergo radiation detectors and security checks when exiting the plant. In Gorman, the court denied the workers’ claim for compensation because the required security screenings were not “integral to principal work activities.” Integrity also points to the Eleventh Circuit’s decision in Bonilla v. Baker Concrete Construction Inc. where construction workers were denied compensation for the time waiting in line for security screenings. In Bonilla, the Eleventh Circuit held that mere causal necessity between the employee activity and the workers’ principal job responsibility cannot satisfy the “integral and indispensable” standard required by the Portal-to-Portal Act.

In contrast, Busk and Castro contend that the Ninth Circuit’s decision is consistent with Congress’s limited purpose in enacting the Portal-to-Portal Act and can be reconciled with existing case law. Busk and Castro argue that existing government regulations and nearly all circuit courts of appeals continue to define work as activities “required by and pursued for the benefit of the employer,” as set forth in Tennessee Coal. Directly disagreeing with Integrity’s assertion that Congress rebuffed the Tennessee Coal standard, Busk and Castro argue that the Court in IBP as well as the Government agree that Congress excluded certain activities only, and thus the other parts of Tennessee Coal’s definition of “work” is still viable.

Busk and Castro also assert, as the Ninth Circuit did below, that decisions from other courts of appeals regarding security clearances can be sufficiently distinguished and thus do not undermine its position that undergoing security clearances is compensable under the Portal-to-Portal Act. Busk and Castro argue that security clearances in those cases were distinguishable because they were directed towards the general public, whereas those required by Integrity applied exclusively to employees. Busk and Castro contend this distinction is important because security clearances directed at the general public must be viewed as being imposed by the “proprietor of the premises,” not the employer, and thus do not impose any specific burden on employees.