Stores Lawfully Checked Bags of Exiting Employees Off the Clock

Tis the season to wait in line at brick-and-mortar stores—not just for customers but for employees trying to exit establishments that require bag checks. At many stores, employees are lining up without being paid for it.

Numerous major national retailers have been hit with class-action cases challenging uncompensated exit inspections, and most of these have settled for seven-figure payments. Nike Retail Services and Converse decided to fight the claims in court and won in decisions issued this past September and October. The companies maintained that the bag checks or the visual inspections of those who did not have bags took mere seconds, but the employees claimed they lasted minutes.

Employees said that the exit inspections took especially long during the holiday season. Some asserted that it took as long as 15 minutes to wait for a manager who could make the inspection, stand in line to exit and finally be inspected each time they departed the store, whether for a break or for the day. But the companies reviewed video footage, which showed the inspections were less than a minute, said Jon Meer, an attorney with Seyfarth Shaw in Los Angeles, who represented the two companies in their separate litigation.

The wage and hour action against Nike Retail Services, brought under California law, involved 12,000 workers in the company's 34 stores in the state. If 12,000 employees had prevailed on a claim that they were owed a minute's worth of compensation five days a week each year for four years, the company would have been stuck for damages exceeding $10 million, he said. And the damages could have been more if they prevailed on a claim of lengthier wait times.

The lawsuit against Converse, also brought under the state's law, involved 2,000 current and former employees in the company's 20 stores in California.

Inspections a Fact of Life

The court in both cases—the U.S. District Court for the Northern District of California—held that security inspections are a fact of life in today's business world and it is impossible for employers to eliminate all time spent off the clock, Meer noted. The court also decided that hourly employees should accept that up to 10 minutes per day may be uncompensated, based on the realities of the modern workplace, he added.

The bag checks rarely result in the discovery of a stolen item but act as a deterrent. Employees tend to overestimate the time they spend waiting, like people tend to overestimate time spent awaiting an elevator or a green light, he said.

Placement of Time Clocks

But the plaintiffs argued that time clocks, which were at the back of the stores, should be at the front so that the bag checks would be compensable. They noted that Dick's Sporting Goods and Under Armour decided to either place an additional time clock at the front of the store or let their employees clock out from the cash register so they could be paid for time spent on security checks.

Nike asserted, however, that time clocks are best placed off the sales floor to protect employees' private information. The company also noted that its timekeeping system does not allow time to be recorded in increments of less than a minute.
In addition to privacy concerns, Converse maintained that it did not want time clocks on its sales floors because they are technology for employees rather than customers.

In both cases, the court ruled that putting time clocks near the exit would be administratively difficult. The court said that the companies are not required to change the configuration of their time clocks simply because it is feasible and other retailers have done it.

A plaintiff in the Nike case said that, as an alternative, the company could perform the security checks at the back of the stores before employees clock out, then managers could escort employees as they exit. Another suggestion was that a set amount of time could be added to the paycheck of each employee to ensure everyone is compensated for time spent undergoing exit inspections.

'De Minimis' Doctrine

The court ruled in Nike's and Converse's favor, relying on the doctrine that trivial amounts of time spent working off the clock—"de minimis time"—are not compensable.

[SHRM members-only toolkit: Complying with U.S. Wage and Hour Laws and Wage Payment Laws]

The California Supreme Court soon will decide whether California recognizes the de minimis doctrine in an upcoming ruling in another case (Troester v. Starbucks Corp.).

"So while the Nike and Converse decisions are certainly helpful for employers generally, they are by no means the end of this issue as a litigation matter," said Brett Coburn, an attorney with Alston & Bird in Atlanta. In addition, the facts of any particular employer's security checks will be unique, which could lead to different judicial outcomes, he noted.

Employers, especially in California, "should continue to be thoughtful about how they implement security checks of their employees," he said. He noted that the safest approach is to compensate employees for time spent waiting for and undergoing security checks.

If a company does not want to pay for trivial amounts of time off the clock, it should ensure that time spent waiting for security checks truly is de minimis, he said.

Attorneys for the plaintiffs declined to comment for this article.

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