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Where is our Portal to Portal Act of 2014? Supreme Court Decision in Integrity Staffing v. Busk

By Michael W. Fox, Esq.

First, the good news. The Supreme Court today unanimously held that post-shift security checks, even when required by the employer were noncompensable postliminary activities under the Portal to Portal Act, reversing a determination by the 9th Circuit. Integrity Staffing Solutions v. Busk, (S.Ct. 12/10/14).

I was wrong by at least a month on the timing, I had predicted early 2015, but at least I got the results right, and more importantly so did the Supreme Court. Back in September in an Employment Law 360 article I was quoted:

While he said it wouldn't be a slam dunk, Fox said the justices are more likely than not to reverse the Ninth Circuit, which he said "doesn't have a great track record" at the Supreme Court. Fox said it's likely a decision, if it is strongly in favor of retailers, would be issued in early 2015.

A longer wait for a decision would likely jangle nerves among defense lawyers since it would suggest the justices are more divided on the issue ? and perhaps more likely to side with the Ninth Circuit, he said.

"I'll really begin to get nervous if it hangs around to June of next year," Fox said. "If it's hanging around until June I think there are going to be more and more people moving closer to the cliff."

Justice Thomas wrote the decision, and as he often did, looked closely at the language of the statute in question, the Portal to Portal Act of 1947.  Specifically the term "principal activity or activities" as it had been interpreted by the Supreme Court, to mean 'integral or indispensable' and basically concluded that since going through a security screening had nothing to do with the job in question, pulling products and packing them for shipping to Amazon consumers, it was clearly not intended to be compensable under the FLSA as amended by the Portal to Portal Act.

He also rejected the 9th Circuit's emphasis on the fact that it was required by and benefited the employer, noting making the only requirement would totally undo the whole Portal to Portal Act.

As a small aside, Justice Thomas may have made himself more popular with organized labor, as he discounted one of plaintiffs' arguments, that the employer could have reduced the time spent in the screening to a de minimis amount by adding more security stations or staggering the shifts noting:

These arguments are properly presented to the employer at the bargaining table, see 29 U. S. C. §254(b)(1), not to a court in an FLSA claim.

This decision, like many for employers at the Supreme Court is a welcome relief, not because it greatly advances any particular argument for employers, but because an adverse determination could have been so bad.

Now to the rant.  Notwithstanding Justice Thomas' well known dislike of legislative history, he does understand the importance of context and so he set out the background of what happened from the the FLSA's passage in 1938 to the early expansive readings of the language by the Supreme Court, and the need for reaction by Congress, which happened in the Portal to Portal Act of 1947:

These decisions provoked a flood of litigation. In the six months following this Court?s decision in Anderson, unions and employees filed more than 1,500 lawsuits under the FLSA. S. Rep. No. 37, 80th Cong., 1st Sess., pp. 2?3 (1947). These suits sought nearly $6 billion in back pay and liquidated damages for various preshift and postshift activities. Ibid.

Congress responded swiftly. It found that the FLSA had ?been interpreted judicially in disregard of long established customs, practices, and contracts between employers and employees, thereby creating wholly unexpected liabilities, immense in amount and retroactive in operation, upon employers.? 29 U. S. C. §251(a). Declaring the situation to be an ?emergency,? Congress found that, if such interpretations ?were permitted to stand, . . . the payment of such liabilities would bring about financial ruin of many employers? and ?employees would receive windfall payments . . . for activities performed by them without any expectation of reward beyond that included in their agreed rates of pay.? §§251(a)?(b).

Congress met this emergency with the Portal-to-PortalAct.

Although the current epidemic of FLSA collective actions which has been well documented perhaps took a little longer to ramp up, you could use almost identical language to Judge Thomas first paragraph above, only the number of lawsuit and the amounts being claimed would be much larger.

Certainly the same harms have been visited on business for the last 15 years. And of course the political chance of a modern Portal to Portal Act which would deal with those issues is not even slim and none, it is just none.

But the courts, including the Supreme Court could act, if they just would by changing the standards for collective action certification. Currently we have a kabuki process where with only minimal evidence, or sometimes not even evidence, just allegations, large classes are 'conditionally certified' and employers are extorted to settle to avoid the expense and uncertainty of  large scale, expensive litigation.

Windfalls are created not only for numerous employees who knew full well what the economics of the job they were being asked to do was, but also for lawyers, on both sides of the docket who prosper greatly.

It's a crazy system, that in a better functioning world would have been solved directly. Instead, the best the courts have come up with so far is to allow employers to escape the problem by opting out of the judicial system into the world of private arbitration.

I am really not one who believes that the world was better in 1947 than today. Heck, even I am not that old. But there is no question that some things were handled better.

Full post as published by Jottings By An Employer's Lawyer on December 09, 2014 (boomark / email).