Except in limited circumstances, Employers in California can no longer avoid liability for unpaid wages even if the unpaid amounts are de minimus, or “trivially small.” Despite never being officially enacted into law, many California employers have relied on the federal Fair Labor Standards Act (“FLSA”) de minimus doctrine in defending claims brought by employees claiming to have worked off-the-clock. The de minimus doctrine is an application of the maxim de minimus non curate lex, meaning “the law does not concern itself with trifles.” The de minimis doctrine holds that “alleged working time need not be paid if it is trivially small: ‘[A] few seconds or minutes of work beyond the scheduled working hours… may be disregarded.’” In the context of off-the-clock claims, employers have used it to defend compensating employees for work performed off the clock in such small amounts that it would be administratively difficult to record. Most commonly, this applied to work time of fewer than 10 minutes.
In Troester v. Starbucks Corp. (2018 Cal. LEXIS 5312 (July 26, 2018) the California Supreme Court dealt with the question of whether the de minimus doctrine applied to certain wage and hour claims. Although California has never actually adopted the FLSA’s de minimis doctrine, the Court in Troester did not wholly reject this defense in all instances. Indeed, the Court specifically declined to “decide whether there are circumstances where compensable time is so minute or irregular that it is unreasonable to expect the time to be recorded.”
Troester, a former Starbucks employee, brought wage and hour claims on behalf of himself and all non-managerial California Starbucks employees. He claimed that Starbucks’ computer software required him to clock out every closing shift before he could initiate the software’s “close store procedure.” After clocking out, Troester was required to transmit the daily sales and inventory data to Starbucks headquarters using the computer in the back of the store, activate the alarm, exit and lock the front door. He alleged that the procedure would cause him to work an additional four to ten minutes every closing shift after he had clocked out. Starbucks conceded that this time was time spent working, but argued that under the de minimus rule, this time did not need to be compensated.
The Court found that the de minimis rule would not be applicable, holding that, under California law generally, 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.” (Emphasis added.) The key words in that conclusion appear to be “minutes” and “regular.” In other words, while significant, regular time would not be de minimis, insignificant and irregular time could be.
The Court also addressed the practice of rounding time. It noted that California law allows for employers to round minimal amounts of employee time, so long as the practice is “used in a manner that did not result over a period of time in the failure to compensate the employees for all the time they actually worked.” In other words, the practice must fairly round time up and down in equal fashion. This decision did not change employer’s ability to engage a rounding time practice.
Employers’ Next Steps
The Troester decision emphasizes the importance of tracking all employee time worked, particularly in California, regardless of how minimal, both on and off the clock. All working time must be captured and compensated and failure to do so will subject employers to significant penalties.
What To Do
- Employers should review their wage and hour policies to ensure that they have prohibited off-the-clock work.
- Notify employees that working off the clock is strictly prohibited and doing so will subject them to discipline.
- Employers should establish and regularly communicate a timekeeping policy to employees and stress that all work time must be recorded.
- Employees should be required to sign-off on a time keeping/wage and hour policy acknowledgment to ensure full understanding of company policies and procedures.
- To the extent possible, any tasks that must be performed before clocking in or after clocking out should be assigned to exempt employees.
- Where non-exempt employees must perform tasks before clocking in or after clocking out (such as computer prep, locking up, bank deposits, etc.), employers should implement procedures whereby employees’ time records are automatically adjusted to accurately reflect the time required to accomplish off the clock tasks.
- Employees should be advised to review wage statements and promptly report any discrepancies, and employers should immediately correct any errors when brought to their attention.
- In some cases, an employer may benefit from a time work study to determine what tasks are being performed off-the-clock by non-exempt employees and for how long.
By taking the above steps to review and understand timekeeping practices, employers can minimize wage and hour compliance risks and help ensure that employees are paid for all hours worked. In light of the ever-changing legal landscape in California, employers should contact California counsel to ensure their practices and policies are up to date.