Today, the California Supreme Court dealt a potentially huge blow to employers as it ruled that California wage and hour laws do not support a “de minimis” argument to excuse payments of wages for small amounts of otherwise compensable time upon a showing that capturing that time, typically at the beginning or end of work shifts, is administratively difficult to record. 

As reported here earlier, the California Supreme Court agreed to hear a case sent over from the federal Ninth Circuit Court regarding whether employees can bring wage and hour lawsuits over very short periods of unpaid time, referred to by defense attorneys as “de minimis” time. In Troester v. Starbucks Corp., a former Starbucks employee sued over unpaid time for completing tasks to close up the store after he had clocked out, such as shutting down the store computer system and locking the doors. Between 2008 and 2010, the former employee spent about twelve hours and fifty minutes off the clock (about four minutes per shift), or about $102.67 worth of unpaid time per the minimum wage at the time.

The California Supreme Court ruled that California law had not adopted the de minimis doctrine which requires businesses to account and pay for de minimis work and further held that nothing in California’s laws would support a finding otherwise. Starbucks had argued that the federal Fair Labor Standards Act’s de minimis doctrine should apply to claims for unpaid wages under California Labor Code, citing See’s Candy Shops, Inc. v. Superior Court, 210 Cal.App. 4th 889 (2012), which was a case that concerned the rounding of hours. However, the California Supreme Court ruled otherwise, citing that the Wage Order’s purpose, amongst other things, is to compensate employees for all time worked. Further, the Court noted that a few extra minutes of time can add up and that the $102.67 of unpaid time at issue here is “enough to pay a utility bill, buy a week of groceries, or cover a month of bus fares” and that what “Starbucks calls ‘de minimis’ is not de minimis at all to many ordinary people who work for hourly wages.”

In an interesting note, the California Supreme Court also said that it was only ruling that the de minimis doctrine did not apply to the facts presented in this matter (where an employer required an employee to work “off the clock”) and was not making a ruling on whether there are circumstances where compensable time is so minute or irregular that it is unreasonable to expect the time to be recorded.

Counsel to Management:

This case will now be sent back to the Ninth Circuit and that court will make a ruling based upon the California Supreme Court’s interpretation as outlined above. This is a damaging ruling for employers. According to the California Retailers Association, one uncompensated minute for an employee who earns minimum wage could potentially cost a business up to $2,520 in penalties!

As we previously stated, the trickiest times for employers to cover are at the beginning and ends of shifts when the line of compensable “hours worked” blends with the unavoidable part of the job which requires employees to simply show up and/or leave the premises. While the California Supreme Court recognized that one of the main purposes behind the de minimis doctrine in wage cases is the practical administrative difficulty of recording small amounts of time for payroll purpose, it also noted employers are in a better position than employees to devise alternatives that would permit the tracking of small amounts of regularly occurring work time, whether that be by technology or simply estimating the unpaid time.

Going forward, employers must do their best to always ensure that employees are paid for all hours worked by having systems in place that accurately track start and stop times of the shift, including in-and-out times for meal breaks. Please contact The Saqui Law Group with any and all wage and hour questions regarding what is considered compensable work time.

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