Today, one of Amazon’s staffing agencies, Integrity Staffing Solutions, went before the Supreme Court to argue that they should not be liable to employees for time spent waiting in line for the end-of-shift security check. This case matters a great deal to all retailers, because shrinkage is a thing, and it’s embarrassing to explain to your bankers that you lost 5% of the size of your profit to shrinkage.
Shrinkage matters much, much more to Amazon than, say, Abercrombie & Fitch. If A&F has historical retail margins, they make ~5% of their revenue as profits. They also have topless models at their entrances to control for shrinkage, which seems to work. Those models see a bulge in someone pants, and they’re going to demand to see what is in those pants. Amazon, however, makes ~1-2% margins. This means that every widget lost to shrinkage hurts the company 80% more. This means that Amazon must estopp shrinkage.
Dick jokes aside, the centrality to Amazon of not losing any money to any amount of shrinkage is what the plaintiffs in this case seemingly missed in their arguments before the Justices. I can’t say that for sure, but I read nearly every major outlet’s article on this case, and nobody mentioned margins and how shrinkage relates to margins.
Justice Kagan almost made the jump. It was there; it could’ve been her first big win as a Justice, but nope. She’s quoted as saying “What’s really important to Amazon is that it knows where every toothbrush in the warehouse is.” Yes, Madam Justice, this is part of the truth. The whole truth is that Amazon has the most sophisticated inventory management system in the business, and knowing where that toothbrush is, in the warehouse, is a foregone conclusion. But, when that toothbrush is removed from Amazon’s shelf or from a box to a customer, it’s shrinkage, and it’s a problem.
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Returning to facts, Amazon’s inventory management system; they commissioned robots to pick products from shelves to bring to workers to pack in boxes, because workers don’t start at 0900 and end at 1800 and work every second in between. When those robots were first introduced, they made WIRED’s cover. But, Justice Kagan failed epically to connect the dots when she related her anecdote about law clerks “coming in early to cut his grapefruit and otherwise make breakfast for him.” Assistant Solicitor General Gannon deftly hit that “curve” ball into the next term by pointing out that the clerks additional responsibilities were substantial in relation to their normal duties.
Turning to the application of the facts in the record to the law as developed, the employees will most probably lose. Employees aren’t paid for time standing in line to punch out, which I find to be most analogous to time standing in line to be checked by security. There keeps being mentions of “20 minutes in line” or “25 minutes in line” by the papers, and this is because any challenge to lack of proper compensation necessarily includes that the time spent on the activity for which compensation is demanded must be “not insubstantial or insignificant.” This is why Amazon broke their radio silence to say “data shows that employees walk thru post-shift screening with little or not wait.” The dispositive question of the case is whether standing in security lines is “integral and indispensable of the principal activities” of their position. Relevant here is that employees aren’t paid for standing in line to don protective gear, but they are paid for the time to put on their protective gear.
I think Integrity Staffing Solutions, Inc. will prevail because the plaintiffs have, as far as I can tell, failed to adequately connect preventing shrinkage to Amazon’s unique business model.