IS SECURITY SCREENING TIME COMPENSABLE?

Security screening time is not compensable under the Fair Labor Standards Act. The Supreme Court reversed the Ninth Circuit in Integrity Staffing Solutions, Inc. v. Busk. In this class action, plaintiff warehousemen sought compensation for time spent undergoing security screening at the end of their shift. The purpose of the screening was to ensure against employee theft. The Supreme Court reasoned that security clearance was not an activity “related” to the work performed by the employees. Just as “walking, riding, or traveling to and from” the place of work is not compensable, neither is an “unrelated” activity such as “postliminary” security screening. See 2014 WL 6885951 (USSC 12/9/14).

Our opinion is that this does not bode well for wage and hour claims under the Fair Labor Standards Act. The decision was unanimous, and its reasoning appears highly suspect. Security screening is required by the employer, whereas commuting to and from the place of employment is a voluntary action by the employee.

In Laffitte v. Robert Half International, Inc., the court approved class counsel’s contingency fees of one-third of a $19 million “common fund” awarded to a class of employees. A putative class member objected to the settlement, claiming that the attorneys’ fee was excessive. The court disallowed the objection and upheld the contingency fee. It noted that the percentage of common fund monies remains viable under California law. 2014 WL 5470463 (10/29/14).

Note that under federal law, this award would likely not have survived challenge. In the Ninth Circuit there is a 25% “benchmark.” Moreover, federal courts generally compare a percentage recovery specified in an attorney-class fee agreement against the attorney fee that would be recovered under the Lodestar method. (The “Lodestar” method of calculating attorney fees is arrived at by multiplying the number of hours worked by each attorney against that attorney’s reasonable hourly rate. That total – which is subject to enhancement or reduction – is expected to bear a “reasonable relationship” to the award recovered under a common fund contingency.)

In Ferrick v. Santa Clara University (6th Dis. 12/1/14) 2014 WL 6748938, the Court of Appeal reinstated a cause of action for retaliatory discharge under Labor Code § 1102.5(b). Plaintiff’s complaint made numerous allegations that a member of administration and plaintiff’s immediate supervisor had engaged in extensive wrongdoing and inappropriate behavior. During discovery, it transpired that plaintiff had made only limited disclosures of allegedly inappropriate financial dealings to Santa Clara University (“SCU”) management. The trial court reasoned that because the injury was only to the pecuniary interests of SCU, a private institution, and not to the public at large, the public could not have sustained an injury; therefore, there could be no determination of violation of public policy.

The Court of Appeal disagreed and reinstated the claim. Plaintiff modified the claim to assert that she reasonably believed the behavior of her supervisor violated Penal Code § 641.3 (commercial bribery), California Code of Regulations, Title 2, Section 926-3 (taxable value of lodging), and other laws.

The Court of Appeal held that, “On this very narrow basis, the complaint states a cause of action for wrongful termination in violation of public policy embodied in section 1102.5(b).” Id., citing Foley v. Interactive Data (1988) 47 Cal.3d 654.

Perhaps most significantly, this court (which is the Court of Appeal for Santa Clara County) discussed the split of opinion between American Computer Corp. v. Superior Court (1989) 213 Cal.App.3d 664 on the one hand, and Collier v. Superior Court (1991) 228 Cal.App.3d 1117 on the other hand. Where American Computer expressly required that there can be no claim for retaliation where an employee simply complains to a supervisor, the court found that the decision in Collier, which held that an action may be stated where the employee only complains to the employer, rather than to a government entity, does state a cause of action. The Ferrick court noted, “We concluded that Collier is better reasoned. As observed in that case, Foley concerned an employee’s disclosures that the FBI was investigating a co-worker’s suspected embezzlement from a former employer … The Legislature’s recent amendment to section 1102.5 to protect disclosures to employees buttresses Collier’s analysis. Here … , the alleged misconduct did not affect only SCU’s private interest; it also implicated the public policy embodied in section 1102.5.” Id.