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Fenwick Employment Brief - December 2015

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Bag Checks for Apple Employees Not Compensable Time

News Bites
Ninth Circuit Sides with EEOC’s Demand for Employee Contact Information
Court Upholds Use of Class Member Contact Info to Solicit Clients
Taking Too Long to Accommodate Disabled Employee Can Be Fatal to Summary Judgment
U.S. Supreme Court Supports Validity of Class-Action Waivers in Arbitration Agreements

Bag Checks for Apple Employees Not Compensable Time

Apple Inc. recently convinced a California federal district court to dismiss a certified class action alleging that Apple had a legal duty to pay store workers for time spent on bag checks at the end of shifts.

In Frlekin v. Apple, the named plaintiffs represented a class of all hourly Apple retail store employees who underwent exit searches pursuant to Apple’s written bag-search and technology-card search policies, which allowed the retailer to examine employees’ backpacks, purses, briefcases and devices for theft. Employees were not paid for the time it took to queue up for and to undergo the searches, and the plaintiffs sued claiming that this was compensable work time.

In 2014, following the U.S. Supreme Court’s decision in Integrity Staffing Solutions, Inc. v. Busk, which held that time spent undergoing mandatory security screenings was not compensable under the Fair Labor Standards Act, the federal claims were dismissed. This left the district court with one key question: did the bag and technology searches constitute “hours worked” under the applicable California Wage Order 4?

Since the California Supreme Court has held that “hours worked” can mean either time during which an employee is subject to the control of the employer or time the employee is suffered or permitted to work, the district court examined the application of both definitions to the Apple searches. The control theory requires proving both that the employer restrains the employee’s action during the activity and that the employee has no choice but to participate in the activity. Since Apple employees have a choice as to whether or not they will brings bags and phones to work with them, the court concluded that the searches were optional – meaning the employees were not subject to Apple’s control when they underwent them. Specifically, because Apple could have prohibited employees from bringing personal items to work, but instead “took a milder approach to theft prevention and offered its employees the option to bring bags and personal Apple devices into a store subject to the condition that such items must be searched,” employees could freely choose to avoid Apple’s control by declining to bring a bag. Furthermore, the employees were not “suffered or permitted to work” during the searches, since the searches had no relationship to plaintiffs’ job responsibilities; they were peripheral activities relating to Apple’s theft policies. As such, the court dismissed the lawsuit in favor of Apple.

Different facts, i.e., a scenario where workers are compelled to bring to work brief cases, large bags, heavy coats or other items where goods could be placed, could warrant a different outcome.  Nevertheless, this is a helpful ruling for employers, and not merely those in the retail space, but for all employers who may impose end of shift security measures that apply to hourly workers.

News Bites

Ninth Circuit Sides with EEOC’s Demand for Employee Contact Information

In EEOC v. McLane, the Ninth Circuit held that an employer must comply with an EEOC subpoena seeking “pedigree information” (name, social security number, last known address, and telephone number) for all employees relevant to the EEOC’s investigation into claims of Title VII violations by a former employee. 

Damiana Ochoa filed a charge with the EEOC for pregnancy discrimination against McLane Company, for whom she worked at a subsidiary as a cigarette selector.  The position required the employee to pass a strength test, which Ochoa failed three times after returning from maternity leave. McLane then terminated her employment. The company asserted that it requires all new employees and those returning from leave to pass the test, in response to which the EEOC demanded more information – namely, who was really taking (and passing or failing) the test. As part of its investigation, the EEOC wanted to reach out to those who had taken the test, and therefore needed their pedigree information. Citing privacy concerns, the employer refused to provide more than coded information (substituting names and social security numbers with specially-created ID numbers). The EEOC filed a subpoena enforcement action in district court, and the court declined to order the production of pedigree information. The Ninth Circuit reversed and, having weighed McLane’s interest in limiting the disclosure of highly sensitive personnel identification data against the EEOC’s investigation needs, ordered the production.

This decision is a reminder of the significant reach of the EEOC’s subpoena power in connection with its investigations of workplace discrimination.  

Court Upholds Use of Class Member Contact Info to Solicit Clients

In Hernandez v. Best Buy, a federal magistrate judge in Southern California denied Best Buy’s motion to impose sanctions on a plaintiff’s attorney who used putative class member contact information to solicit individuals for permissive joinder in an individual action against the retailer.

After a former Best Buy employee filed a putative class action alleging misclassification of store managers as exempt, his attorney collected contact information for all putative class members, but then decided not to pursue class certification. Instead, he sought to join 30 individuals, whose contact information he received as part of the certification process, as named plaintiffs. Best Buy asked the court to sanction plaintiffs’ attorney for allegedly violating the protective order and discovery order in the case, and the rules of legal ethics. The magistrate judge refused, finding that neither order expressly prohibited the use of such contact information to solicit, and that there was insufficient evidence of an ethical violation.

The case is a reminder that wage/hour and other employment class actions can allow counsel to gain access to potential litigants within an organization, even if efforts to certify a class fail.

Taking Too Long to Accommodate Disabled Employee Can Be Fatal to Summary Judgment

In Gupta v. IBM, a high-level IBM employee sought accommodations for his back problems, including business-class air travel and special ergonomic furniture. IBM complied with the travel request, but took over 3.5 months to process the furniture request, by which point Gupta had already been selected for retirement during a larger layoff process. Gupta filed suit in California state court, alleging disability discrimination, failure to engage in the interactive process, and failure to accommodate. The court denied IBM’s motion to dismiss the failure to engage in the interactive process and failure to accommodate claims because questions of fact remained as to whether IBM delayed the implementation of the new furniture. The Court was unpersuaded by IBM’s argument that the “routine processing” of an accommodation by a large corporation will take some time, and concluded that a jury must assess the lawfulness of IBM’s actions.

U.S. Supreme Court Supports Validity of Class-Action Waivers in Arbitration Agreements

On December 14th, the United States Supreme Court ruled in DirecTV v. Imburgia, in a 6-3 decision, that California consumers can be bound by the satellite-TV provider’s mandatory arbitration clause, which includes a class action waiver.  The clause itself provides that it will be unenforceable where class action waivers are unenforceable under “the law of your state.”  When the provision was drafted, class action waivers were impermissible in California under Discover Bank v. Superior Court.  But then the Supreme Court issued its landmark ruling in AT&T Mobility LLC v. Concepcion, invalidating Discover Bank as preempted by the Federal Arbitration Act.  This decision left the enforceability of DirecTV’s arbitration clause in flux in California, with an appellate court in California holding that the law at the time of drafting (i.e., Discover Bank) should control.  But the Supreme Court rejected that notion, stating that it can “find nothing in that opinion (nor in any other California case) suggesting that California would generally interpret words such as ‘law of your state’ to include state laws held invalid…”  This decision, the latest in a series of federal and state rulings lawfully and legally upholding class waivers in arbitration agreements, will have application beyond the consumer context and to employer–employee agreements.