Apple store on 3rd Street Promenade in Santa Monica, California. The retail chain owned and operated by Apple Inc is dealing with computers and electronics worldwide. Courtesy photo

Apple Inc. should have paid its store employees for time spent undergoing security checks of bags they bring to work, according to a California Supreme Court decision on Thursday.

The ruling comes more than two years after the U.S. Court of Appeals for the Ninth Circuit sought clarification in a class action brought by Apple store workers in California, who sought pay for the time spent waiting for and undergoing anti-theft searches of their bags and Apple devices before leaving work. Apple argued that the searches, while mandatory, were not required if employees simply did not bring bags to work.

But that argument is unrealistic, concluded the California Supreme Court in a ruling that is retroactive.

"Based on our review of the record, it is obvious that Apple's exit searches are, as a practical matter, required," wrote Chief Justice Tani Cantil-Sakauye. "Apple's proposed rule conditioning compensability on whether an employee can theoretically avoid bringing a bag, purse, or iPhone to work does not offer a workable standard, and certainly not an employee-protective one."

The court even cited Apple CEO Tim Cook's own statement on CNBC that the iPhone was "so integrated and integral to our lives, you wouldn't think about leaving home without it."

"The irony and inconsistency of Apple's argument must be noted," Cantil-Sakauye wrote. "Its characterization of the iPhone as unnecessary for its own employees is directly at odds with its description of the iPhone as an 'integrated and integral' part of the lives of everyone else."

Neither Apple nor its lawyer, Ted Boutrous of Gibson, Dunn & Crutcher in Los Angeles, who argued before the California Supreme Court, responded to a request for comment.

Plaintiffs' attorney, Kimberly Kralowec of San Francisco's Kralowec Law Group, praised the decision.

"The court carefully adhered to both the text and the purpose of the wage orders, which is to protect California employees and ensure employees are compensated for all time worked," she said. "This is a very good day for employees working in California."

'Hours worked'

In 2015, U.S. District Judge William Alsup of the Northern District of California granted Apple's motion for summary judgment after concluding that employees voluntarily chose to bring bags to work. The Ninth Circuit, acknowledging that employees could leave bags at home, certified a question to the California Supreme Court over whether Apple's security searches complied with California Industrial Welfare Commission Order No. 7, which requires employers to pay employees for "all hours worked." The definition of "all hours worked" is time in which the employees is "subject to the control of an employer" and "suffered or permitted to work."

Although employees could choose to bring bags to work, Apple's searches were on-site and under the employer's control. "That difference may matter," the Ninth Circuit panel wrote.

Apple got backing in amicus briefs by the U.S. Chamber of Commerce and the Washington Legal Foundation, among others. They cited the U.S. Supreme Court's 2014 decision in Integrity Staffing Solutions v. Busk, which held that contract workers for Amazon.com were not entitled to compensation for time spent in security screenings because they were not "integral and indispensable" parts of the job.

"Forcing employers to pay for this time would discourage them from accommodating employee convenience," wrote Horvitz & Levy's Eric Boorstin, for the U.S. Chamber of Commerce, the California Chamber of Commerce and the Civil Justice Association of California. "It would also place California further out of step with the rest of the country, increasing the cost of California's goods and services, and encouraging businesses to invest elsewhere."

But California law has some of the most liberal protections for workers, and in 2000, the California Supreme Court ruled in Morillion v. Royal Packaging that the employer had to pay employees for time spent riding mandatory buses to their agricultural fields.

Apple, in its brief before the California Supreme Court, cited Morillion, because in that case, employees were required to ride the buses. Apple's employees, the brief said, could choose whether to bring bags to work.

The Consumer Attorneys of California, in an amicus brief supporting the workers, said Apple's "gross misreading of Morillion" ignores its focus on an employer's control, not whether an activity is required.

The California Supreme Court, in a ruling that focused only on the law's control definition of "all hours worked," agreed.

"Redefining the control clause to cover only unavoidably required employer-controlled activities would limit the scope of compensable activities, resulting in a narrow interpretation at odds with the wage order's fundamental purpose of protecting and benefitting employees," Cantil-Sakauye wrote.

As to Morillion, the court found "inherent differences" between that case, which involved time traveling to and from work, and Apple's bag searches.

"In the present case, by contrast, Apple controls its employees at the workplace, where the employer's interest—here, deterring theft—is inherently greater," Cantil-Sakauye wrote. "Because Apple's business interests and level of control are greater in the context of an onsite search, the mandatory/voluntary distinction applied in Morillion is not dispositive in this context."

The court held there were other factors that employers should consider when determining whether an activity is compensable under California law: where the search takes place, the degree of the employer's control, whether it benefits the employee or employer, and whether there are disciplinary measures enforcing it.

Cantil-Sakauye wrote, "Apple's exit searches are required as a practical matter, occur at the workplace, involve a significant degree of control, are imposed primarily for Apple's benefit, and are enforced through threat of discipline."