Are customers who use self-checkout entitled to be paid for it?

NOTE FROM ROBIN: At least one California lawyer thinks so. He recently filed a lawsuit contending that his client, a supermarket customer, and other California customers of the same supermarket chain, are entitled to wages for using the self-checkout option. Zan Blue of our Nashville Office thinks the lawsuit is creative and needs to be watched based on the definition of “employ” in the federal Fair Labor Standards Act and California law. But Jim Coleman, co-chair of our Wage and Hour Practice Group, thinks it’s baloney. And the last word comes from Steve Katz, co-chair of our Appellate Practice Group, who also happens to be from California. We present, you decide. 

From Zan:

My economics professor in college, Professor Linstromberg, had a glass eye. He was one of my favorite professors ever. I was questioning something one day in his office. We were arguing and laughing and enjoying ourselves. I kept objecting to what he was telling me. So he suddenly pulled out his glass eye, rolled it on the desk, and said, “Sometimes, Zan, you just have to have a keen eye for the obvious.” That’s a true story. Keep reading.

A lawsuit recently filed in Superior Court in San Francisco may or may not survive, but it makes one think about the obvious. Sophia shops at the grocery. She is steered to the ubiquitous self-checkout lanes. She checks her groceries, pays the machine, and notices other customers being checked out by cashiers. She ponders this.

Perhaps Sophia thinks about how over the last decade or so many companies have used technology to replace employees, from ATMs to online reservations systems to self-checkout lanes in grocery stores. Perhaps Sophia thinks about how the companies have, in effect, figured out how to get their customers to do things their employees used to do, or perhaps still do, and thus reduced the number of employees they need. Perhaps Sophia thinks, “Well, I’m doing their work for them, am I not?”

Sophia talks with an employment lawyer about this, perhaps someone she doesn’t really know but meets at a cocktail party. Perhaps the lawyer thinks about the definition of “employ” in the Fair Labor Standards Act –“employ” means “to suffer or permit to work.” Perhaps the lawyer knows the Supreme Court once said, “A broader or more comprehensive coverage of employees would be difficult to frame.” (Scroll to Section 4.) And California law uses the same phrase. (Scroll to page three, “Definitions” section.)

Perhaps the lawyer thinks, “Huh, I’m in San Francisco, what’s the worst that can happen?”

So the lawyer, on behalf of Sophia and lots of other people who have been doing self-checkout, files a lawsuit claiming the grocery store chain has “suffered or permitted” Sophia and all those other people to “work” and therefore that the class members should be paid for that work. The lawyer points out that using the self-checkout lanes provides a substantial economic benefit to the store because it can employ fewer people. The lawyer goes on to say that because the customers are doing the “work,” there are fewer cashiers, more unemployment, lower wage rates, and so on. But let’s just stick with the basics—the lawyer focuses on the fact the statute does in fact define “employ” as “suffer or permit to work,” and the customers are doing something that cashiers otherwise would be paid to do.

At first blush this looks crazy. Think about what this would mean. Think how far this theory could extend. Surely this can’t be a viable legal theory.

Can it?

Jim says “No.”

Self-service gas stations have been around for 40+ years. Self-service car washes, even longer. There is “work” involved in everything we do. My local supermarket makes me “work” in driving my car to the store, walking up and down the aisles picking out what I want, waiting in line to check out (either self-check-out or traditional), loading my car, and driving home and unloading. Should the supermarket be on the hook to pay me minimum wage for all that time? How about the time I spend in my kitchen preparing the food I buy? If the supermarket has to pay me for my time in the self-check-out process, then all the rest would be compensable time, too. Perhaps even the time I spend sitting at my dining room table stuffing my face with the cookies I purchased.

If an employer offers a self-serve option, that’s a smart employer. Doing so does not make the employer responsible for paying the customers who voluntarily choose to patronize the store and to use self-service instead of a cashier.

In my view, this lawsuit gives new meaning to the term “frivolous.” If I were the judge, I would dismiss it with prejudice and sentence the plaintiff’s attorney to neatly writing 5,000 times, “I will never waste the court’s valuable time again by filing complaints that are utterly devoid of legal merit, not to mention common sense.”

Like Zan’s college professor said many years ago, “Sometimes, Zan, you just have to have a keen eye for the obvious.”

Steve says, “Ehhh — gotta go with Jim.”

Zan has a real point here — but I think Jim is right.

The FLSA doesn’t really define “employment,” except in circles. An “employee” is someone “employed . . . by an employer”; and “employer” is someone who employs an “employee”; “employ” means “to suffer or permit work,” but “work” is not defined. Scroll to subsections (d), (e)(1), and (g).) I guess, as with Justice Potter Stewart and smut, we’re supposed to know “work” when we see it. The Supreme Court holds that the ultimate “test of employment” is the “economic reality” of the relationship. The Court has consistently held that a major strand of “economic reality” is an “express or implied compensation agreement.” That agreement need not contemplate pay in cash — even an expectation of material support is sufficient to find employment.

That only makes sense, given the plain meaning of the FLSA’s text. And, to quote Justice Elena Kagan’s 2015 lecture at Harvard Law School, “We’re all textualists now.” (Skip to about 8:10.) Black’s Law Dictionary (3rd) — published just five years before the FLSA was enacted — defined “employ” as “equivalent to hiring, which implies a request and a contract for compensation.” The First Edition of the Oxford English Dictionary — published in the same year — lists “business,” “occupation,” and “trade or profession” as synonyms of “employment.”

It is hard to see where there is even an arguable implied compensation bargain here. The grocery store is offering customers the option of self-checkout if they would rather not wait for a cashier. Remember the days when groceries were small shops where you told the shopkeeper what you wanted, and then they pulled the items off the shelves, bagged them, and rang you up? Was it “employment” when those shops gave way to large groceries where you have to push a cart around and pick your items off the shelves? Nope. Self-checkout isn’t any different.

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