This month’s key California employment law cases are from the California Supreme Court and from the California Court of Appeal.

Troester v. Starbucks Corp., 235 Cal. Rptr. 3d 820 (2018)

Summary: Employer that requires employees to work minutes off-the-clock on regular basis or as regular feature of job may not evade obligation to compensate that time by invoking de minimis doctrine.

Facts: Plaintiff filed a complaint in state court for unpaid wages under the California Labor Code on behalf of himself and a putative class of all non-managerial California employees of defendant Starbucks Corporation who performed store closing tasks from mid-2009 to October 2010. Defendant removed the action to federal district court and moved for summary judgment on the ground that plaintiff’s uncompensated time was so minimal that under the federal de minimis doctrine, defendant was not required to compensate him. Plaintiff submitted evidence that defendant’s computer system required him to clock out before performing certain store closing activities constituting four to ten additional minutes of work each day. The district court granted defendant’s motion for summary judgment, concluding that the de minimis doctrine applied to plaintiff’s claim for unpaid wages. On appeal, the Court of Appeals for the Ninth Circuit recognized that although the de minimis doctrine has long been part of the federal Fair Labor Standards Act (“FLSA”), the Ninth Circuit had not addressed whether the doctrine applied to wage claims brought under California law. 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 California Labor Code sections 510, 1194 and 1197?

Court’s Decision: The California Supreme Court answered the certified question in the negative. The court found that California’s wage and hour statutes and regulations have not incorporated the de minimis doctrine. Nothing in the Industrial Welfare Commission’s (“IWC”) wage orders or the Labor Code shows an intent to incorporate the federal de minimis rule. Instead, the wage orders and the Labor Code contemplate that employees will be paid for all hours worked and all work performed. In addition, although the de minimis rule was a background principle of state law, the rule was not applicable to defendant in this case. In light of the regulatory scheme of the relevant statutes and wage order provisions, defendant could not require its employees to work minutes off the clock on a regular basis or as a regular feature of the job and evade the obligation to compensate them for that time by invoking the de minimis doctrine. The court, however, acknowledged there might be scenarios where an employee’s activities are so irregular or brief in duration that it would not be reasonable to require an employer to compensate that time.

Practical Implications: This case will trigger more litigation testing whether minimal off-the-clock activities are “so irregular or brief” that employers are excused from paying employees for them. Employers should carefully evaluate their timekeeping practices to determine whether any work is being performed before or after employees clock in and out, especially work done regularly and amounting to more than just a few seconds.

Juarez v. Wash Depot Holdings, Inc., 24 Cal. App. 5th 1197, 235 Cal. Rptr. 3d 250 (2018)

Summary: Employer’s arbitration agreement was unenforceable as against public policy where provisions waiving employee’s right to bring action under PAGA conflicted between English and Spanish versions of agreement.

Facts: Plaintiff, a car wash employee, brought a wage and hour lawsuit against his employer, defendant Wash Depot Holdings, Inc., alleging both individual claims and a representative action under the California Private Attorneys General Act (“PAGA”). Defendant’s employment handbook was provided to all employees in English and Spanish. The handbook required arbitration of employment disputes and denied an employee’s right to bring a PAGA action. The English version stated that the denial of the right to bring a PAGA action was severable if such denial was found by a court to be unenforceable, while the Spanish version provided that the PAGA denial was not severable. Plaintiff signed two acknowledgements, one in Spanish and one in English acknowledging receipt of the handbook and agreeing to its terms. Defendant sought to compel arbitration of plaintiff’s wage and hour claims. The trial court denied the motion, finding that the arbitration agreement was unenforceable.

Court’s Decision: The California Court of Appeal affirmed, finding that the arbitration agreement was unenforceable under Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348, 73 Cal. Rptr. 3d 289 (2014). In Iskanian, the California Supreme Court held that an employee’s right to bring a PAGA action may not be waived since such waiver indirectly exempts the employer from responsibility for its violation of law. Here, the difference between the English and Spanish versions of the handbook was at best negligent, and at worst, deceptive. The ambiguity created by the different versions was to be construed against the drafting party, particularly in the case of a contract of adhesion.

Practical Implications: Employers should regularly review and update handbooks and policies to keep current with changes in the law. This case demonstrates the importance of ensuring that handbooks and polices are consistently updated so that employees don’t have different versions. Courts are reluctant to enforce ambiguous provisions in employment policies given the disparity in bargaining power between employers and prospective employees.

Caldera v. Dept. of Corrections & Rehab., 25 Cal. App. 5th 31, 235 Cal. Rptr. 3d 262 (2018)

Summary: Evidence of numerous incidents of objectively and subjectively offensive conduct directed at and personally witnessed by target of conduct was sufficient to support jury’s finding that harassment was severe and pervasive.

Facts: Plaintiff, a state correctional officer employee, brought an action against defendants Department of Corrections and Rehabilitation and his supervisor alleging disability harassment, failure to prevent harassment, and related claims. Plaintiff stutters when he speaks, and he was mocked or mimicked by his coworkers and a supervisor at least a dozen times over a period of about two years. Such conduct reflected the prison’s culture, according to a senior official. A jury found the harassment to be both severe and pervasive and awarded plaintiff noneconomic damages. Defendants appealed, arguing there was insufficient evidence to establish that the harassment was either severe or pervasive.

Court’s Decision: The California Court of Appeal affirmed, finding that based on the totality of circumstances, a jury could reasonably find that the harassing conduct was severe since the harassing conduct was subjectively and objectively offensive and was always done in front of others. In addition, several witnesses testified to witnessing the harassing conduct on a regular basis, and that it was so pervasive it was regarded a part of the culture of the prison. Thus, a jury could reasonably find that these numerous incidents of harassing conduct specifically directed at and personally witnessed by plaintiff was both severe and pervasive.

Practical Implications: Employers need to be diligent in investigating and remedying complaints of harassment regardless of whether the reports seem harmless or mere incidents of simple teasing and offhand remarks. Harassment claims are determined based on a totality of the circumstances, meaning that seemingly isolated incidents, when taken as a whole, can constitute actionable conduct.