Temporary workers may be deemed to be the employees of the hiring company as well as the temp agency for state and federal wage and hour liability.
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Wage and Hour Update
Company Sued By Its Temp Workers
For Time Spent At Security Checkpoint
By Christopher W. Olmsted
A recent California federal district court ruling in a case titled Cervantes v. Celestica Corporation addresses two wage and hour issues: (1) Must employees be compensated for pre- and post-shift time spent waiting in line at a security checkpoint? (2) Under California and federal wage and hour law, may temporary workers sue their temp agency as well as the company to whom they are assigned?
The district court ruling is a trial court level decision, and therefore it is not binding precedent on other California courts. Nevertheless, it provides a useful illustration for employers to consider when reviewing their own policies and practices.
The Lawsuit
Celestica Corporation hired temporary workers to work at its Fontana facility through a temp agency named Adecco USA, Inc. On any given day, between one hundred and six hundred employees would work at Celestica's Fontana facility, in different departments and shifts.
Attorneys representing some of the temporary workers filed a lawsuit against the temporary agency and Celestica, alleging wage and hour law violations. The workers alleged that they were not paid for the time spent waiting in line while passing through security before and after shifts. The workers claimed that they were owed pay at overtime rates for this time.
A Mandatory Security Checkpoint
The parties presented evidence regarding time spent at the security checkpoints. Before the temporary workers enter the Celestica Fontana facility, they must pass through security screening. Passing through the screening may take as little as one minute, or as much as ten minutes. After passing through the security screening, the temporary workers clock in at one of the time clocks within the facility. According to the temporary workers, out of fear of clocking in late and losing pay, they are forced to remain waiting in the security line and within the building after they have passed through security, restricting the activities in which they can engage during this uncompensated pre-shift period. At the end of their shifts, the workers must clock out at one of the time clocks within the facility and pass through security screening, a measure required by Celestica, before they may leave the facility.
Celestica’s defense was that it was not the employer of the temporary workers. Rather, the temporary agency employed them. It also argued that the time spent in line was so minimal that the company should not be required to track it and pay wages.
During the course of the litigation, both the workers and the companies filed motions for summary judgment, arguing that the evidence supported the entry of judgment in their favor. The ruling is described below.
Legal Definition of Employer
The court began by considering this question: Is Celestica a “joint employer?” In other words, does it share liability with the temporary agency for wage and hour violations?
A business cannot be held liable for wage and hour violations unless it is an “employer” of the affected workers. To be held liable for violations of the California Labor Code as an “employer,” a business must “employ or exercise control over the wages, hours, or working conditions” of the worker. Cal.Code Regs. tit. 8 § 11010(2)(f). There is no precise definition of “control.” It depends on the facts. As the district court noted, courts will consider “the totality of the circumstances, reflecting upon the nature of the work relationship between the parties, and placing emphasis on the control exercised by the employer over the employee's performance of employment duties.”
Employees Argue Control
The temporary workers pointed to evidence that Celestica is their employer because it controlled their work hours and working conditions. Although the agency, Adecco, provided temporary employees to Celestica, Celestica had contractual right to approve employee base pay rate and determine schedules and work hours. The temporary workers worked in the Celestica warehouse using Celestica equipment. Celestica required its supervisors to oversee the workers. Celestica obligated the workers to comply with its production specification requirements. The workers therefore contended that Celestica and the temp agency were joint employers
Company Denies Control
Celestica argued to the contrary; it claimed that it did not control the workers. Adecco employed the workers and supplied them to Celestica. The temporary workers themselves believed that only Adecco is their employer. Adecco managed the temp workers’ timekeeping practices. The services agreement between Celestica and Adecco stated Adecco employees “shall not, for any purpose, be considered employees of Celestica.” Celestica was not required to verify employment eligibility or identification of new employees under Services Agreement. Celestica was not responsible for paying wages and did not determine wage rates of Adecco employees. Adecco employees never received paycheck from Celestica. Adecco employees did not know anyone in Celestica's human resources department and always went to Adecco managers with any concerns.
Court Finds Company Control
The court ruled that the temp workers were joint employees of Celestica and Adecco. Celestica’s day to day supervision of the workers was sufficient to establish an employer-employee relationship. The statement in the temp agency contract, and the subjective beliefs of the workers did not negate this control. Moreover, although Celestica could show that the temp agency controlled the timekeeping, Celestica otherwise still had enough control over the workers to be deemed their employer. The bottom line: the temp workers were joint employees of both the agency and the company.
Pay For Time In Security Line
Having decided that the temp workers presented sufficient evidence that they were employees of Celestica, the court turned to the question of whether the workers should be compensated for time spent waiting before and after shift in the security line. On this issue, the court denied the employees’ motions for summary judgment, and left the matter to be decided at trial.
The issue turned on whether the employees were under the control of the employer while waiting in line, or, alternatively, whether they were free to use the time effectively for their own purposes. The court found evidence supporting the former. While waiting in line and waiting inside the Celestica facility before their shift starts, the workers may engage in limited personal activities, such as conversing with other co-workers socially or drinking a cup of coffee. But this is not sufficient. “Allowing the workers these circumscribed activities, wrote the court, “does not affect, much less eliminate, the control the employer exercises.” The court noted that “workers commonly listen to music, drink coffee, and converse with coworkers while working, and yet are not denied pay for doing so.” The workers’ evidence, concluded the court, shows they were under the control of their employer during this pre-shift period.
The court rejected the company’s argument that it did not require the workers to show up early. As a practical reality, in order to clock in on time, the workers had to show up early in order to first pass through the mandatory security check.
The court made a similar determination with respect clearing security post-shift. The temp workers were required to pass through security and were not free to use the time for their own purposes.
De Minimus Defense Applicable?
The Good News
Celestica argued that even if the time spent pre- and post-shift in the security line counted as time worked it should not be compensable because it was such a minimal part of the workday. This argument, known as the “de minimis” defense, has been recognized in a federal Ninth Circuit case titled Lindow v. United States. The relevant factors are: (1) the high practical administrative difficulty of recording the additional time; (2) the minimal aggregate amount of compensable time; and (3) the irregularity of the additional work.
Here the court found that the defense might apply, and it denied the plaintiffs’ motion to dispose of the defense. The court acknowledged the employer’s evidence that: (1) capturing the pre-shift time in the security line would be burdensome; and (2) workers spend as little as one minute going through the check.
Accordingly, as the case moves forward through trial, the employer may yet avoid liability.
Practical Tips
Who Are Your Employees?Depending on the circumstances, temp employees may be deemed employees of the hiring company. If you hire temps, consult with the temp agency regarding time keeping practices and take steps to ensure compliance with applicable wage and hour laws.
Are You Paying For All Time Worked?Do your employees regularly engage in pre- and post- shift activities, such as waiting in line, taking company transportation, and donning or doffing uniforms? Consider whether employees should be compensated for such activities. Seek legal advice to determine whether the “de minimus” defense applies. Over time, a few minutes here and there can add up to substantial liability.
More Legal Update articles.
Download entire July 2009 Legal Update in PDF format.
This article is intended as a brief overview of the law and are not intended to substitute as legal advice. Any questions or concerns regarding any statute or case law should be addressed to a licensed attorney. Copyright © 2009 by Barker Olmsted & Barnier, APLC. San Diego, California. All rights reserved.
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