Not so Trivial: California Supreme Court Rejects the Federal De Minimis Doctrine

07.27.2018

On Thursday, July 26, 2018, the California Supreme Court issued its decision in Troester v. Starbucks Corporation, S234969 (“Troester”). The Court held that Starbucks must pay its employees for minutes spent regularly performing off-the-clock tasks. The former employee suing Starbucks, Douglas Troester, alleged that he and other employees were required to engage in off-the-clock work for closing shifts. Troester alleged that employees were required to clock out before shutting down the computer system, activating the alarm, and turning the lock on the store’s front door, and occasionally reopen the door so that a co-worker could retrieve personal items from the store, usually taking no more than 4 to 10 minutes per day. Starbucks argued that the claim was barred by the de minimis doctrine adopted by federal courts in wage and hour lawsuits. The federal district court agreed and threw out the claims under the de minimis doctrine. The California Supreme Court disagreed holding that under the facts before them, Troester’s case should not have been dismissed.

The De Minimis Rule

California and federal law generally require an employer to compensate an employee for all time the employee is “suffered or permitted” to work, whether or not the employee is required to do so. 29 C.F.R. § 778.223; 29 U.S.C. § 203(g); Cal. Code Regs., tit. 8, § 11010 et seq., Sect. 2.

The de minimis rule is a doctrine of federal case law that relieves an employer of its obligation to pay an employee for working time that is trivially small. Under the federal de minimis rule, “a few seconds or minutes of work beyond the scheduled working hours . . . may be disregarded.” Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 692 (1946). To determine whether work time is de minimis, courts consider: (1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work. Lindow v. United States, 738 F.2d 1057, 1063 (9th Cir. 1984).

Background

Troester worked for Starbucks as a shift supervisor. In August 2012, Troester filed a proposed class action complaint against Starbucks, claiming the coffee company violated the California Labor Code by failing to pay him for the brief time he spent closing up the store after he clocked out at the conclusion of certain shifts. Based upon this alleged uncompensated time worked, Troester asserted claims under the California Labor Code for failure to pay minimum and overtime wages, failure to provide accurate written wage statements, and failure to timely pay all final wages.

Starbucks removed the case to federal court, and moved for summary judgment. Starbucks argued Troester’s first claim for unpaid wages was barred as a matter of law because the time he spent in and around the store after clocking out was de minimis.

The District Court agreed and granted summary judgment, concluding the de minimis doctrine barred Troester’s claims. The District Court reasoned that Troester’s post-closing activities were so brief that “Starbucks could not feasibly capture the time at issue in [the] case.” For example, Troester activated the alarm approximately one minute after he clocked out. Moreover, he did so within two minutes on 90% of the shifts and within five minutes on every shift. Once he set the alarm, Troester needed to exit the store within one minute to avoid triggering the alarm. Troester testified it took 30 seconds to walk out of the store. He then locked the door, which took 15 seconds to “a couple minutes,” and walked his co-workers to their cars, which took 35 to 45 seconds. On rare occasions, Troester spent a few minutes letting co-workers back inside the store or bringing in patio furniture mistakenly left out. All of this work generally totaled less than four minutes, and nearly always was less than ten minutes per day. Troester v. Starbucks Corp., No. CV 12-7677 GAF PJWX, 2014 WL 1004098, at *4 (C.D. Cal. Mar. 7, 2014).

Troester appealed the decision to the United States Court of Appeals for the Ninth Circuit. Following oral argument, the Ninth Circuit certified the following question to the California Supreme Court: Does the FLSA’s de minimis doctrine apply to claims for unpaid wages under the California Labor Code?

The California Supreme Court granted the Ninth Circuit’s request to answer the certified question.

The Supreme Court’s Decision

The Court reversed the District Court’s decision, holding that the relevant California statutes and wage orders do not incorporate the federal de minimis doctrine, and finding that the de minimis doctrine has no application under the circumstances presented in the instant case. The Court ruled 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 observed that Troester is seeking payment for 12 hours and 50 minutes of compensable work over a 17-month period, which amounts to $102.67 at a wage of $8 per hour. The Court reasoned this amount “is enough to pay a utility bill, buy a week of groceries, or cover a month of bus fares.” The Court concluded “[w]hat Starbucks calls ‘de minimis’ is not de minimis at all to many ordinary people who work for hourly wages.”

The Court also examined See’s Candy Shops, Inc. v. Superior Court, 210 Cal. App. 4th 889 where the California Court of Appeal approved employer rounding policies that rounded time card punches up and down to the nearest tenth of an hour. The Court noted that See’s Candy accepted the validity of a rounding policy only “if the rounding policy is fair and neutral on its face and it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.” See’s Candy Shops, Inc., 210 Cal. App. 4th at 907 (internal quotation marks omitted).

The Court distinguished the rounding policy in See’s Candy from the de minimis doctrine on the grounds that a rounding practice that is neutral over time is lawful where its net effect does not withhold wages, while the de minimis rule operates only to undercut work time by requiring the employee to bear the burden of any difficulty in recording regularly occurring work time.

Despite holding that the de minimis doctrine did not apply to Troester’s claim, the Court declined to decide whether the de minimis doctrine may ever apply to California wage and hour claims given the wide range of scenarios in which this issue may arise.

Concurring Opinions

Two of the justices wrote concurring opinions, emphasizing their agreement with the majority opinion, while acknowledging its failure to resolve the issue of whether an employee’s work may ever be so fleeting or irregular that such time is no longer compensable.

For example, Justice Leondra R. Kruger wrote, “[a] sensible application of our law does not encompass claims for negligible periods of time that cannot reasonably be measured or estimated with a fair degree of accuracy.” Justice Krueger suggested the de minimis rule might apply in the following hypothetical scenarios:

An employee spending no more than one minute turning on their computer to log in and start their shift.
An employer occasionally notifying employees of schedule changes by e-mail or text message during off-hours.
A retail store employee spending one minute on occasion to answer a customer question while clocked out and waiting in the store for transportation.

While employers may still be able to assert the de minimis doctrine as a defense to certain claims for uncompensated employee time, the ultimate success of such a defense is significantly impacted by the California Supreme Court’s decision in this case.

Impact on California Employers

The Court’s decision did not go so far as to expressly prohibit application of the de minimis rule in all California wage and hour claims. Nonetheless, employers should continue to take proactive steps to deter off-the-clock work, such as requiring employees to review and certify the accuracy of their time records for each pay period. Written policies should be implemented and maintained that make clear the employer does not tolerate off-the-clock work. Employers should provide a means for employees to record their time worked, including pre-shift, and post-shift activities, no matter how trivial they think the time may be. Employers should recognize that seemingly trivial work activity must be compensated, especially when required to be performed regularly or on many occasions. Employers should also ensure that any rounding policies are fair to employees on their face, and do not have the effect of undercutting hours of work over a period of time in actual practice.