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California Supreme Court Rejects Federal “de minimus” Rule

On July 26, 2018, the California Supreme Court issued its opinion in Troester v. Starbucks. The Court held that the federal “de minimis” doctrine under the Fair Labor Standards Act, which excuses the payment of wages for small amounts of otherwise compensable time upon a showing that the bits of time are administratively difficult to record, has not been adopted by California Labor Code statutes and Industrial Welfare Commission Wage Orders. The Court also held that the de minimis doctrine did not apply to the facts of the case in question. The Court stopped short of holding that the de minimis doctrine cannot be applied to any circumstance in California, leaving for another day the question of what types of off-the-clock activities may be appropriately classified as de minimis and thus need not be compensated.

The plaintiff in the case, Douglas Troester, was a shift supervisor for Starbucks in Los Angeles. Troester performed a variety of tasks for Starbucks after clocking out. Such tasks included transmitting data to corporate headquarters, activating the store’s alarm system, locking the doors, walking employees to their cars, occasionally taking down outdoor equipment, and various other tasks. The tasks took Troester four to ten minutes on average to complete, amounting to approximately $100 of uncompensated, off-the-clock work over his 17-month employment. Troester brought a class action lawsuit for the unpaid time. Starbucks removed the case to federal court, where the district court granted summary judgment for Starbucks and on appeal, the Ninth Circuit certified the question to the California Supreme Court.

The California Supreme Court’s opinion traced the origins of the de minimis doctrine under the FLSA. Under federal law, the de minimis doctrine holds that insubstantial or insignificant periods of time beyond the scheduled working hours, which cannot be precisely recorded for payroll purposes as a practical administrative matter, may be disregarded under some circumstances. The doctrine applies under federal law only where recording the time is administratively difficult, the aggregate amount of time spent on activities is low, and the regularity of the unscheduled work.

The Court held that the text and legislative history of California’s Labor Code and Wage Orders show no intent to approve or adopt the de minimis standard accepted by the FLSA. In a departure from other recent cases it has issued, the Court also declined to follow the DLSE Enforcement Manual and opinion letters from the Labor Commissioner, which adopted the federal de mini

mis doctrine. After holding that the statutory and regulatory scheme makes no provision for the de minimis doctrine, the Court then held that the doctrine was inapplicable to the specific facts of Troester’s case.

The Court expressly declined to decide whether the de minimis doctrine could ever apply in California. Justice Cuellar wrote a concurring opinion acknowledging that the intersection of technological advances and industry will make it increasingly common for employees to perform split-second work tasks, and correspondingly difficult for employers to track those activities and pay employees for them. Justice Kruger also wrote a concurrence which is more specific, pointing out that things like logging into a computer and incidentally talking to customers after clocking out should not be considered compensable under “sensible applications” of wage and hour law.

Employers should keep in mind that, as a general proposition, all time the employee works on the employer’s behalf is compensable. Employment practitioners have long cautioned that employees should not be working before clocking in or after clocking out. This decision highlights the importance of robust policies, put into practice through regular training for management personnel, prohibiting off-the-clock work. Policies should clearly state that working off the clock is strictly prohibited and any employee asked to do so should immediately report it up the chain of command and take measures to report their time worked. While there may be situations in which an employee who has clocked out but is briefly and incidentally engaged in work activities need not be compensated, employers seeking to rely on an exception to the general rule should contact their legal counsel for further advice.

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