Paying Employees for Their Time

Not many laws governing the workplace can function well for nearly 70 years, at least without significant amendment; the world simply changes too much and too fast. But courts must interpret the laws we have, and if changes need to be made, it is up to Congress to make them.

For a recent example, consider the Supreme Court’s decision in the case of Integrity Staffing Solutions, Inc. v. Busk. Integrity Staffing, a temp agency that provides workers to a pair of Amazon fulfillment warehouses in Nevada, requires workers to wait on site for a security screening when leaving work, as a measure to prevent shoplifting. Workers are not paid for the time they spend waiting to be screened. The workers who brought the class-action lawsuit contended that they must wait up to 25 minutes daily for these screenings. Their lawyers argued that because screenings are a mandatory condition of the job, imposed by the employer, workers are entitled to be paid for the time they devote to the process.

The high court did not agree. In a unanimous decision, the Court declared that screenings are not an “integral” part of the job, and therefore Integrity is not obligated to pay workers to undergo them. In other words, because warehouse workers are not hired to undergo screenings, the screenings are merely incidental to the work. It does not matter whether employers mandate such screenings or not.

The Court’s decision rested largely on its view of the 1947 Portal-to-Portal Act. The law specifies that companies need not pay their workers for “preliminary” or “postliminary” activities, which take place before or after the workday proper. For instance, employers don’t need to pay their employees for their commute time. Prior interpretations of Portal-to-Portal, especially the Court’s 1956 decision in Steiner v. Mitchell, gave rise to the test that considers whether a task is integral to a job’s function.

The Obama administration sided with Integrity in the dispute, which means that every branch of government has now concluded that Integrity’s actions fall within the scope of the law that Congress passed shortly after World War II ended. Our economy and workforce, needless to say, is quite different today than it was then, which is why the matter probably should not rest here.

It seems patently unreasonable for employers to demand their employees submit to time-consuming pre-and post-work security procedures and not pay them for it. Such screenings are for the employer’s protection, not the workers’, making it a shaky parallel to workers donning protective gear in a chemical plant, for instance. Integrity, and other employers who require security checks, do not allow workers to opt out of them, and have no particular incentive to make such checks quick or efficient. In fact, they have the opposite incentive, if slow processes are cheaper.

Demanding that workers submit without compensation may be legal, but in many situations it is probably not fair. I would not conduct business that way. Yet under our current framework, employees have little recourse.

Congress can remedy the situation by amending the Portal-to-Portal Act. It would be a good opportunity for Congress to take a good, long look at the law as a whole. Lawmakers can then address modern labor questions, such as how to compensate time employees spend at home checking their emails.

We live in a different world today than we did in 1947. This decision proves that it is past time the law caught up.

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About Larry M. Elkin 564 Articles

Affiliation: Palisades Hudson Financial Group

Larry M. Elkin, CPA, CFP®, has provided personal financial and tax counseling to a sophisticated client base since 1986. After six years with Arthur Andersen, where he was a senior manager for personal financial planning and family wealth planning, he founded his own firm in Hastings on Hudson, New York in 1992. That firm grew steadily and became the Palisades Hudson organization, which moved to Scarsdale, New York in 2002. The firm expanded to Fort Lauderdale, Florida, in 2005, and to Atlanta, Georgia, in 2008.

Larry received his B.A. in journalism from the University of Montana in 1978, and his M.B.A. in accounting from New York University in 1986. Larry was a reporter and editor for The Associated Press from 1978 to 1986. He covered government, business and legal affairs for the wire service, with assignments in Helena, Montana; Albany, New York; Washington, D.C.; and New York City’s federal courts in Brooklyn and Manhattan.

Larry established the organization’s investment advisory business, which now manages more than $800 million, in 1997. As president of Palisades Hudson, Larry maintains individual professional relationships with many of the firm’s clients, who reside in more than 25 states from Maine to California as well as in several foreign countries. He is the author of Financial Self-Defense for Unmarried Couples (Currency Doubleday, 1995), which was the first comprehensive financial planning guide for unmarried couples. He also is the editor and publisher of Sentinel, a quarterly newsletter on personal financial planning.

Larry has written many Sentinel articles, including several that anticipated future events. In “The Economic Case Against Tobacco Stocks” (February 1995), he forecast that litigation losses would eventually undermine cigarette manufacturers’ financial position. He concluded in “Is This the Beginning Of The End?” (May 1998) that there was a better-than-even chance that estate taxes would be repealed by 2010, three years before Congress enacted legislation to repeal the tax in 2010. In “IRS Takes A Shot At Split-Dollar Life” (June 1996), Larry predicted that the IRS would be able to treat split dollar arrangements as below-market loans, which came to pass with new rules issued by the Service in 2001 and 2002.

More recently, Larry has addressed the causes and consequences of the “Panic of 2008″ in his Sentinel articles. In “Have We Learned Our Lending Lesson At Last” (October 2007) and “Mortgage Lending Lessons Remain Unlearned” (October 2008), Larry questioned whether or not America has learned any lessons from the savings and loan crisis of the 1980s. In addition, he offered some practical changes that should have been made to amend the situation. In “Take Advantage Of The Panic Of 2008” (January 2009), Larry offered ways to capitalize on the wealth of opportunity that the panic presented.

Larry served as president of the Estate Planning Council of New York City, Inc., in 2005-2006. In 2009 the Council presented Larry with its first-ever Lifetime Achievement Award, citing his service to the organization and “his tireless efforts in promoting our industry by word and by personal example as a consummate estate planning professional.” He is regularly interviewed by national and regional publications, and has made nearly 100 radio and television appearances.

Visit: Palisades Hudson

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