Compensable Time Is Not De Minimis

On July 26, 2018, the California Supreme Court issued its long-awaited decision in Troester v. Starbucks Corporation (S234969). In a nutshell, 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 asserting that the time is minute or administratively difficult to capture.

In Troester, the federal Ninth Circuit Court of Appeals asked the California Supreme Court to answer whether de minimis doctrine of the federal Fair Labor Standards Act applies to California wage litigation. The de minimis doctrine stands for the legal maxim that “the law does not concern itself with trifles” and it is used as an affirmative defense to claims of small amounts of time that are administratively difficult to capture and therefore unpaid. The doctrine has been successfully used by employers in cases brought under the FLSA. When determining whether the time at issue is de minimis, courts consider the practical administrative difficulty of recording the unpaid time, the aggregate amount of compensable time, and the regularity of the unpaid work.

The California Supreme Court declined to answer whether the de minimis principle ever applied to California wage and hour claims given the wide range of scenarios in which this issue arises. Instead, held that neither the Labor Code nor the wage orders have incorporated the de minimis doctrine of the FLSA. This finding was based on the purpose of enacting the Labor Code and the applicable wage order, which is to protect employees. The Court chose to offer greater protection than the federal regulations that have adopted the de minimis doctrine. Moreover, on the facts before it, the Court held that the de minimis doctrine did not apply. The parties had agreed that all the time involved was compensable. The Court held that the Labor Code and wage order are concerned even with “small things” or trifles of compensable time. It noted 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” and technology advances may be of help.

In Troester, the plaintiff was a former shift supervisor, filed a class action lawsuit against Starbucks, alleging he and other shift supervisors were not paid for all hours worked. He alleged and submitted evidence that he performed closing procedures at the store, which required him to clock out, initiate the store’s software closing procedure on a separate computer in the back office, activate the alarm, exit the store, lock the front door, and at times walk other employees to their cars or wait for employees to be picked up from work, all in accordance to Starbucks’ policy. The evidence showed the plaintiff completed the procedures within two minutes 90 percent of the shifts and the tasks at issue amounted to approximately 12 hours and 50 minutes of unpaid time, equivalent to about $102.67 in minimum wages.

Application to Employers

The California Supreme Court once again affirmed that employees must be compensated for all the time the employer knew or should have known that the employee was working on its behalf. It now includes even the smallest amount of time that occurs regularly. It is the employer who bears the burden of any difficulty in recording regularly-occurring compensable time. As such, employers should consider evaluating their written timekeeping policies and timekeeping systems and strategically address any concerns that could result in wage and hour claims by any current or former employee. Employers should keep in mind that wage and hour claims are commonly brought as class actions or Private Attorney General Act (PAGA) actions. In a class action, employees may recover unpaid wages, penalties, and interest for themselves and other similarly situated employees for up to four years from the date the lawsuit is filed, in addition to attorney’s fees.

Questions

If you have any questions concerning this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.

Susana Solano
ssolano@kmtg.com | 916.321.4595

Stephanie Pham
spham@kmtg.com | 916.321.4375