The United States Supreme Court Clarifies Boundaries of Compensable Time Under FLSA
The Fair Labor Standards Act (“FLSA”) requires that employees be paid for all work and receive overtime pay for work that is part of the employee’s “principal activities” beyond 40 hours a week. However, the FLSA also states that employers do not have to compensate employees for work performed prior to or after the employee’s “principal activities.” (Also referred to as “preliminary” or “postliminary” work.)
Historically, the line between what work is compensable and what work is not has caused some confusion, because “principal activities” is not clearly defined by the statute. Moreover, courts have not uniformly interpreted the phrase. Fortunately for employers, the Supreme Court recently provided an answer .
In Integrity Staffing Solutions, Inc. v. Busk
, 135 S. Ct. 513 (2014), the Court articulated a new test for determining whether preliminary or postliminary work is part of an employee’s principal activities and therefore compensable. Employers need to understand this test because courts will use it in the future to help decide disputes regarding overtime pay.
Integrity provides nationwide warehouse staffing for Amazon.com. As part of a daily routine, Integrity required all employees to undergo a security screening after clocking out. Employees would wait in line to pass through metal detectors. Two employees sued Integrity, alleging they were entitled to overtime payment for the time they spent each day going through security, which they said was around 25 minutes.
The Court unanimously decided the employees were not entitled to overtime because going through security was not a part of their principal activities. In its explanation, the Court first reiterated that principal activities include all activities that are “integral and indispensable.” Then the Court gave employers a two-part test:
To determine whether an activity is a part of an employee’s principal activities, the employer should ask itself (1) is the activity something the employer hired the employee to do? and (2) could the employer eliminate the activity without impairing the employee’s ability to complete their work?
If the answers to these questions are yes, the employer likely does not have to pay overtime for the activity in question.
In ruling for Integrity, the Court explained the employees were not hired to undergo security screenings—they were hired to retrieve products from warehouse shelves and to package those products for shipment. Integrity Staffing could have eliminated the screenings altogether without impairing the employees’ ability to complete their work, said the Court. Since the screenings were not a part of the employees’ principal activities, they were not entitled to compensation for them.
Ability to Pay Cost of Speeding Up an Activity is Irrelevant
One argument raised in the matter was that Integrity should be liable for overtime pay because Integrity saved on personnel costs by electing not to establish a more efficient security screening process that would have eliminated any claim for overtime. The Court rejected this reasoning, saying such budgetary considerations are the domain of collective bargaining, not the FLSA.
is an important decision for employers because it provides a test for determining whether an employer is required to pay overtime for particular activities that occur at the beginning and end of the day. Employers now have a concrete test to use to determine if certain activities are compensable:
1. Is the activity something the employer hired the employee to do?
2. Could the employer eliminate the activity without impairing the employee’s ability to complete their work?
If the answer to both these is “yes,” the employer is likely in the clear. If not, the employer may be liable for paying overtime.
Please contact a Labor & Employment
attorney with questions about this or other pressing labor and employment issues.