Apple uses an “Employee Package and Bag Searches” policy. This policy imposes mandatory, thorough searches of employees’ bags, packages, purses, briefcases, and personal Apple technology devices before the employees can leave an Apple retail store for any reason.
Under the policy, Apple employees must clock out before the exit search. Employees estimate that exit searches range from five to 20 minutes, depending on manager or security guard availability.
A number of Apple employees filed a lawsuit in federal court alleging that Apple failed to pay them minimum and overtime wages for their time spent waiting for and undergoing exit searches in violation of California law. Industrial Welfare Commission Wage Order 7 (“Wage Order 7”) requires employers to pay their employees a minimum wage for all “hours worked,” which 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.” The first clause of the definition – “the time during which an employee is subject to the control of an employer” – is known as the “control clause”.
The district court concluded that the time spent by employees waiting for and undergoing exit searches was not compensable as “hours worked” under California law. The court determined that the control clause required the employees to prove that: (1) the employer restrains the employees’ action during the activity in question; and (2) the employees had no plausible way to avoid the activity. The employees appealed to the U.S. Court of Appeals for the Ninth Circuit. The Ninth Circuit asked the California Supreme Court to address the state law issue.
The California Supreme Court, however, determined that the employees’ time related to exit searches was true “hours worked” under the control clause. The Court reasoned that the employees are clearly under Apple’s control while waiting for and undergoing the exit searches. Apple employees are subject to discipline if they refuse the searches. Apple also confines its employees to the premises while they wait for and undergo the search, and requires employees to perform specific tasks such as locating a manager and unzipping compartments and removing items for inspection.
While Apple argued that the employee’s activity had to be “required” or “unavoidable” in order to be compensable, the Court disagreed. The Court noted that those words did not appear in the control clause and that such a definition would be at odds with the wage order’s fundamental purpose of protecting and benefitting employees. The Court also rejected Apple’s argument that California precedent supports the notion that an activity has to be “unavoidable” in order to be compensable because the Court was not aware of any California case discussing the precise issue of whether time spent at the worksite relating to searches is compensable as “hours worked.”
The Court noted that while exit searches may not be “required” in a formal sense because employees could choose not to bring personal belongings to work, as a practical matter they are. Employees have little genuine choice concerning whether to bring ordinary, everyday items such as a wallet, keys, and a cell phone to work. Indeed, Apple markets its iPhone as an “integrated and integral” part of the lives of its customers.
Ultimately, the Court concluded that the level of the employer’s control over its employees, rather than the mere fact that the employer requires the employees’ activity, is determinative of whether an activity is compensable under the “hours worked” control clause. The Court also concluded that courts should consider additional relevant factors, including the location of the activity, the degree of the employer’s control, whether the activity primarily benefits the employee or employer, and whether the activity is enforced through disciplinary measures. Applying these factors to this case, the Court determined that it was clear the employees were subject to Apple’s control during the exit searches and must be compensated for their time.
Frlekin v. Apple Inc., 2020 WL 727813 (Cal. Feb, 13, 2020).
Note:
While Wage Order 7 does not apply to the public sector, the hours worked section of Wage Order 4 is applicable to public agencies and contains the same language the Court interpreted in this case. Accordingly, this decision offers guidance to public agencies as to how California courts would interpret the “hours worked” language in Wage Order 4.