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The Ninth Circuit has revived two class actions against Nike Retail Services, Inc. and Converse, Inc. and they both will now have to face employee allegations that they violated the California Labor Code by failing to pay employees for time spent during “off the clock” exit inspections when leaving the stores.

In Rodriguez, et al. v. Nike Retailers, Inc., the lead plaintiff, Isaac Rodriguez (“Rodriguez”) alleged that employees should have been compensated for the time spent “off the clock” when waiting for the manager to check their bags for stolen items prior to leaving for the day. Similarly, in Chavez, et al. v. Converse, Inc. the lead plaintiff, Eric Chavez sought compensation for time spent submitting to “off the clock” exit inspections every time employees left the store.

In Rodriguez, the District Court on September 12, 2017 originally granted summary judgment in favor of Nike holding that Rodriguez’s claims were barred by the federal “de minimis” doctrine, which precludes payments of wages for small amounts of otherwise compensable time upon a showing that capturing that time is administratively difficult to record. Likewise, in October 2017, Converse was granted summary judgment after the District Court similarly concluded that the off the clock time spent during security checks was “de minimis.” Plaintiffs in both cases appealed the orders because at the time these orders were issued, the question of whether the federal “de minimis” standard applies to California Labor Code claims was pending before the California Supreme Court in Troester v. Starbucks Corp.

In 2018, the California Supreme Court issued its long-awaited decision in Troester and ruled that California wage and hour laws do not support the federal “de minimis” argument to excuse payments of wages over very short periods of unpaid time that are administratively difficult to track. For more information regarding the Troester decision, see our previous report here.

Following that decision, the Ninth Circuit reversed the summary judgment orders in the cases against Nike and Converse and sent the cases back to the District Courts for further analysis consistent with the Troester decision. The Ninth Circuit explained it understands “the rule in Troester as mandating compensation where employees are regularly required to work off the clock for more than ‘minute’ or ‘brief' periods of time.’” The Ninth Circuit further stated that this mandate may not apply in cases where the employee tasks at issue are “so irregular that it is unreasonable to expect the time to be recorded.” However, the Ninth Circuit made clear that employers cannot rely on the “de minimis” defense when employees have to regularly perform tasks “for more than trifling amounts of time.” Given the ruling in Troester, it would not be surprising for Nike and Converse to consider settling their cases rather than proceeding with continued litigation on a likely losing issue.

COUNSEL TO MANAGEMENT:

In light of the Troester decision, decisions such as these are unsurprising and we expect more employee-friendly decisions on this issue and a significant increase in cases asserting off-the-clock claims. As we have previously stated, the trickiest times for employers to cover are at the beginning and end of shifts when the line of “compensable hours” worked blends with unavoidable part of the job when employees are required to show up and/or leave the premises. While the Ninth Circuit still did not provide much clarification of when the “de minimis” standard could apply, employers must still do their best to track their employees time and ensure that employees are paid for all hours worked by meticulously tracking their start and stop times including in-and-out times for meal periods.

If you have questions regarding your compensation policies and are concerned about potential off-the-clock claims being asserted, please contact the experts at Dowling Aaron Incorporated.

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