$2 Million Blue Apron Settlement Tells Two Stories

March 9, 2020, 6:30AM. By Anne Wallace

California court decision in Frlekin sets the table for more California prevailing wage settlements

Richmond, CABlue Apron workers have agreed to settle Bailey v. Blue Apron LLC, their lawsuit over the company’s practice of requiring workers to submit to security checks before clocking in for work and after clocking out. The time required for the security checks was unpaid and allegedly violated California labor laws requiring payment for all time during which an employee is under the employer’s control. 

The parties’ willingness to settle comes from two sources. The first is the February 3 decision handed down by the Supreme Court of California in Frlekin v. Apple Inc., which establishes that “hours worked,” under Wage Order 7 includes mandatory security checks. This decision is likely to have a long-lasting effect on California wage and hour lawsuits.

The second is business news about Blue Apron’s financial woes, so severe that the company threatens to cease operations. It is certainly of immediate importance to Blue Apron employees and investors but may have less legal significance.

Long waits, numbing cold, no pay

More than 3,800 workers at Blue Apron fulfillment facilities, including Terrance Bailey and others in Richmond, California, were required to go through a security check before entering the workspace. That included going through a metal detector and occasionally submitting to further security checks with a security wand. This often took several minutes.

Another security check was required when workers came back from unpaid 30-minute meal breaks. Workers were not permitted to eat in the warehouse, so they had to leave to eat. Further checks were required for rest and break periods taken outside the facility.

Workers were not paid for any of the time taken by these security procedures and, in addition, were often shorted on legally-required meal, rest and break time because of the time they had to budget for security checks. The Bailey Complaint also included an overtime claim based on undercounted work hours.

Although not included in the lawsuit, reports also suggest that Blue Apron workers were subjected to harsh working conditions that included 12-hour shifts in 40 degree warehouses and threats of physical violence. This was not a happy workplace.

Legal protection for California workers

The California labor code requires that employers provide workers with a 30-minute meal period for employees who work five hours a day, and a second 30-minute meal period for employees who work over ten hours per day. Meal periods must be free of all employer control and employees must be totally relieved of duty. In addition, employees are entitled to a ten-minute rest period for each four hours or substantial fraction thereof. California labor law also requires payment of overtime at one and a half times the regular rate for days longer than 8 hours or workweeks longer than 40 hours. Additional payment is required for longer periods.
 

Frlekin grinds along in the background

Bailey was originally filed in Superior Court in Alameda County in 2018 and ultimately removed to federal court. In the meantime, however, a similar bag check lawsuit, Frlekin v. Apple, Inc. was working its way through the California court system. In 2017, the Ninth Circuit had asked the California Supreme Court to determine whether time spent by workers waiting for and undergoing exit searches should be counted as “hours worked” for which payment was owed under California labor law.

On February 3, the California Supreme Court finally held that, on the basis of the facts presented in that case:

"time spent on Apple’s premises waiting for, and undergoing, mandatory exit searches of bags, packages, or personal Apple technology devices, such as iPhones, voluntarily brought to work purely for personal convenience is compensable as “hours worked” within the meaning of Wage Order 7.”

The facts are slightly different than the facts of Bailey. Frlekin involved bag checks and exit searches, whereas Bailey appears to focus on entrance checks and security searches that did not include personal bags. The distinctions may be without a difference, however. Frlekin certainly appears to have been a factor in hastening Blue Apron’s decision to settle rather than continue through a lawsuit.
 

What to expect next

From a legal perspective, it is actually somewhat disappointing that there was no opportunity for an opinion in Bailey that would make clear whether California courts will be willing to entertain a distinction between the two cases based on the differences in facts. But the other factor at work, Blue Apron’s apparent financial misfortunes, seems to have prompted the workers to accept the settlement offered. For the moment, it also foreclosed the opportunity for more legal clarity.

As it is, however, Frlekin and Bailey appear to build on the trend set in motion by Troester v. Starbucks that takes a very employee-friendly approach to questions about how to count compensable time. Prediction is a dangerous business, but if the trend continues, workers may expect to see more settlement offers in wage and hour lawsuits based on the undercounting of time spent during security checks.