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Employment Law & Agricultural Law
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December 16, 2014

SCOTUS's Ruling on Non-compensable Time For Employee Security Screening Has Likely No Effect For California Employers


On December 9, 2014, the Supreme Court of the United States in Integrity Staffing Solutions, Inc. v. Busk, No. 13-433 (U.S. Dec. 9, 2014) held that under the federal Fair Labor Standards Act (FLSA) hourly employees in Amazon warehouses do not need to be compensated for the time they spend waiting in security screening lines at the end of their shifts.   Integrity (the staffing company for Amazon) required warehouse employees to undergo a security "bag check" screening before leaving the warehouse at the end of their shifts.  The employees spent approximately 25 minutes each workday waiting to have their belongings screened before being able to leave. 

Initially, the trial court denied compensation to the workers, while the Ninth Circuit Court of Appeals reversed.  The Supreme Court held that "an activity is integral and indispensable to the principal activities that an employee is employed to perform - and thus compensable under the FLSA - if it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities. . . .[T]he employee's time spent waiting to undergo and undergoing . . .  screenings does not meet these criteria...."


However, California employers are required to follow the applicable legal provision most favorable to employees in any given situation.  Under California law, "hours worked" in the Industrial Welfare Commission Orders means the time during which the employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so. State law does not distinguish between hours worked during the "normal" working hours or hours worked outside "normal" working hours.  Therefore, even though an employee performs no duties while waiting in line for security screening, an employee is still under the control of the employer and is not free to leave until passing clearance through the security check point.  Therefore, in California, employees must be compensated for time spent waiting to clear a security check. 


Take Away


In all likelihood under California law, California employers will be liable to pay their employees for time spent waiting for security clearance as they are required to remain on premises and are not free to leave the workplace for home until they are permitted to do so by the employer. Employers should also make efforts to reduce waiting times by staggering end-day shifts.  


California Commercial Code Finally Follows National Trend In Perfecting Security Interests Against Individuals


Are you an exclusive marketing agent who advances money to a grower to help finance the grower's crops for the season while taking a security interest in the crops and other personal property assets of the debtor?  Or, do you help finance the purchase of a high priced item and in turn, take back a purchase money security interest in the item?  If so, the following information will be of particular interest to you.


On January 1, 2015, provisions of AB 1858 take effect bringing California's individual debtor name filing rules into conformity with 40 other states.  The bill amends California Commercial Code Sections 9503(a)(4) and (5) by changing the filing rules to perfect a security interest against an individual debtor's personal property. In order to perfect a security interest in personal property against an individual, the secured creditor must file the financing statement in the state where the secured debtor is domiciled.  [UCC Section 9307(b)(1)].  For a California debtor, the place of filing is the California Secretary of State.   Under California's revised Article 9, Commercial Code Section 9503 now requires that a financing statement against an individual identify that person by the name on an unexpired driver's license or a DMV-issued personal identification card.  If the secured debtor's CA Driver's License reads "John Quincy Adams," then the UCC financing statement must identify the debtor as "John Quincy Adams" and not "John Adams" or even "John Q. Adams." 


If the person does not have either an unexpired driver's license or DMV-issued personal identification card, it is sufficient if his or her "individual name" or "surname and first personal name" is shown on the financing statement (which is the current standard).  Generally, the first personal name is the given name; and, the surname is considered the "family name;" however, in certain cultures, particularly Latin cultures, this is not necessary the case.  For example, Spain's former Primer Minister, Jose Luis Rodriguez Zapatero has two given names,Jose Luis, and two surnames - Rodriguez as his first paternal surname, and Zapatero as his second maternal surname. Under the revised rules, if the Prime Minister does not have an unexpired driver's license or a DMV-issued personal identification card, then the secured party should file under all possible variations of the name to account for the double first names and double surnames. 

Financing statements that were effective prior to the effective date of the amendment remain effective until they lapse.  At the five-year expiration of any existing financing statement, any continuation statement must contain an amendment to the debtor's name if necessary to comply with the statute as amended.

Take Away


If you are filing a secured lien against an individual to perfect a security interest in that individual's personal property assets, file the financing statement under the name identified in the unexpired driver's license or DMV-issued personal identification card. If neither is available, then file under the debtor's "individual name" or "surname and first personal name."  In addition, as a precaution, when filing or searching secured liens, file or search under all variations of the individual's name.  This effort will help identify senior secured liens and provide subsequent notice to junior lien holders.    

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