LawFlash

California Supreme Court Holds That Employees Must Be Paid for Routinely Worked Minutes Off the Clock

July 30, 2018

In Troester v. Starbucks Corp., the California Supreme Court held that the Fair Labor Standards Act’s de minimis doctrine does not apply to wage claims under California law. However, the court left open the question of whether some version of the doctrine could apply where compensable time is so minute or irregular that it is unreasonable to expect the time to be recorded. Employers should consider time tracking alternatives identified by the court to address this issue.

Background

Troester, an hourly shift supervisor, filed a class action alleging that certain nonexempt Starbucks employees were due unpaid wages for the store closing tasks they performed after clocking out. The federal district court granted Starbucks’ motion for summary judgment on the basis that Troester’s uncompensated time was de minimis, applying the Fair Labor Standards Act’s (FLSA’s) de minimis doctrine to California claims. The undisputed facts showed that Troester worked 4–10 minutes each day after he clocked out, totaling almost 13 hours over a 17-month period. The parties stipulated that the time in question constituted “work.”

On appeal, the US Court of Appeals for the Ninth Circuit requested the California Supreme Court, and the court agreed, to answer the following question: “Does the federal Fair Labor Standards Act’s de minimis doctrine, as stated in Anderson v. Mt. Clemens Pottery Co. (1946) 328 U.S. 680, 692, and Lindow v. United States (9th Cir. 1984) 738 F.2d 1057, 1063, apply to claims for unpaid wages under California Labor Code sections 510, 1194, and 1197?”

Decision

First, the California Supreme Court found that neither the Labor Code nor any Industrial Wage Commission (IWC) wage orders recognize a de minimis exception. The court observed that the federal de minimis rule permitting as much as 10 minutes a day of uncompensated work is less protective of employees than the California requirement that employees must be paid for “all hours worked.” The court recognized that the California Division of Labor Standards Enforcement (DLSE) has for many years adopted the FLSA de minimis regulation and test in the DLSE manual and opinion letters, but found that those statements were not binding or persuasive because there was no evidence the IWC intended to incorporate a less protective federal rule.

Although the court ruled that California had not adopted the federal de minimis doctrine, it next considered the employer’s argument that the de minimis rule was independently a principle of California law applicable to wage and hour cases. The court declined to decide “whether a de minimis principle may ever apply to wage and hour claims given the wide range of scenarios in which this issue arises.” Instead, the court decided only whether the de minimis rule was applicable to the facts of this case, and concluded that it was not. The court held that an “employer that requires its employees to work minutes off the clock on a regular basis or as a regular feature of the job may not evade the obligation to compensate the employee for that time by invoking the de minimis doctrine.” The court opined that Troester was seeking payment for at least $102.67, which “is not de minimis at all to many ordinary people who work for hourly wages.”

The court recognized that one of the main reasons for the de minimis doctrine is the practical administrative difficulty of recording small amounts of time, but stated that “employers are in a better position than employees to devise alternatives that would permit the tracking of small amounts of regularly occurring work time.” These alternatives include restructuring the work so that employees do not have to work before or after clocking out, customizing and adapting available time tracking tools or developing new ones, and reasonably estimating work time through surveys, time studies, or “a fair rounding policy” and compensating employees for that time. Finally, the court left open the question of “whether there are wage claims involving employee activities that are so irregular or brief in duration that it would not be reasonable to require employers to compensate employees for the time spent on them.”

Practical Considerations

In light of the court’s rejection of the federal de minimis rule, California employers whose timekeeping practices do not capture all time that meets the definition of hours worked should revisit those practices and consider alternatives to track and pay for even small amounts of regularly occurring work time. These include the alternatives identified in Troester. In this regard, the court did not reject all rounding policies, but emphasized that a rounding policy must be facially fair and neutral and used in a way that will not result, over a period of time, in the failure to compensate employees for all time actually worked.

Because the court did not rule on whether employees must be compensated for time spent on activities that are so irregular or brief in duration that it would not be reasonable to require employers to compensate employees for that time, the viability of this defense will be determined by future court decisions. A concurring opinion in Troester suggested that depending on the circumstances, a de minimis rule might apply in certain scenarios, including the time spent to turn on computers at the start of the shift, reading emails or text messages about schedule changes during off hours, and occasionally spending a minute or two to help a customer after a shift has ended.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Los Angeles
John S. Battenfeld
Kathryn McGuigan

Orange County
Carrie A. Gonell
Daryl S. Landy
Barbara J. Miller 

San Francisco
Robert Jon Hendricks
Eric Meckley

Silicon Valley
Melinda S. Riechert
Michael D. Schlemmer