The California Supreme Court unanimously decided that the legal maxim “de minimis non curat lex,” or “the law does not care for trifles.”  does not apply to California wage-hour law.  What does that mean in English?  Well, it means that when the law says to pay for all hours worked, it means “all” and not “all except for a few minutes after employees punch out.”  Justice Goodwin Liu penned the opinion for the unanimous court. 

So, the case began at Starbucks, which employed Douglas Troester as a shift supervisor in LA. He claimed in a class action lawsuit that  

Starbucks’s computer software required him to clock out on every closing shift before initiating the software’s “close store procedure” on a separate computer terminal in the back office. The close store procedure transmitted daily sales, profit and loss, and store inventory data to Starbucks’s corporate headquarters. After Troester completed this task, he activated the alarm, exited the store, and locked the front door. Troester also submitted evidence that he walked his coworkers to their cars in compliance with Starbucks’s policy. In addition, Troester submitted evidence that he occasionally reopened the store to allow employees to retrieve items they left behind, waited with employees for their rides to arrive, or brought in store patio furniture mistakenly left outside.

In essence, Troester claimed he had to punch out before his day’s work was 100% done.  In fact, Troester submitted evidence that these tasks took from four to 10 minutes each day.  Here’s how the Court broke down the time and how much wages Troester allegedly lost by following the above procedures: 

on average, Plaintiff activated the alarm approximately one minute after he clocked out. Moreover, he did so within two minutes on 90 percent of the shifts and within five minutes on every shift. Once he set the alarm, Plaintiff needed to exit the store within one minute to avoid triggering the alarm. And Plaintiff testified that 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 coworkers to their cars, which took 35 to 45 seconds. On rare occasions—once every couple of months—Plaintiff spent a few minutes letting coworkers back inside the store or bringing in patio furniture that he forgot to retrieve before clocking out.” 

Over the 17-month period of his employment, Troester’s unpaid time totaled approximately 12 hours and 50 minutes. At the then-applicable minimum wage of $8 per hour, this unpaid time added up to $102.67, exclusive of any penalties or other remedies.

To sum up the background, Troester filed a class action lawsuit over his $102.67 of unpaid wages over the course of 17 months of work, as well as the mountain of penalties, costs and fees that would flow from the underpayment.  As a class action of course, thousands of Starbucks employees potentially could be compensated for lose wages and penalties.  Hey…wasn’t there a post a couple weeks ago about why class action waivers in arbitration agreements are lawful and very interesting?  Yes. Yes there was. (Here). 

Starbucks “removed” the case to federal court, based on a federal law called the Class Action Fairness Act.  The district court granted Starbuck’s motion for summary judgment, holding that Troester’s lost wages were de minimis, impliedly adopting the de minimis doctrine as part of California wage and hour law. Troester appealed. 

The Ninth Circuit could not find authority for whether California would adopt the “de minimis” principal in wage and hour cases. To be fair, the doctrine is considered “ancient” and is recognized in federal law (including the Fair Labor Standards Act), as well as in a variety of other areas of California law). The Ninth Circuit submitted questions to the California Supreme Court. And that brings us to today’s California Supreme Court decision.

The California high Court examined the Labor Code and Wage Orders, and found no evidence that the law would accommodate a “de minimis” exception to the requirement that employers pay for “all hours worked.”  The Court therefore declined to adopt the federal rule, as applied in the FLSA.  

Some of you may know that the state’s Division of Labor Standards Enforcement has repeatedly recognized the “de minimis” principle. You may remember that just a few months ago, the Court deferred to the Division of Labor Standards Enforcement’s Enforcement and Interpretations Manual, concerning calculation of the regular rate of pay for flat-sum bonuses.  Post here.  Welp, although the DLSE Manual, and opinion letters adopt the federal de minimis doctrine, the Court found this section of the Manual unpersuasive: 

Here, the DLSE’s adoption of the federal de minimis rule appears to be based on the general proposition that federal case law construing the FLSA “may sometimes provide guidance to state courts in interpreting the IWC Orders.” (DLSE Opn. Letter No. 1988.05.16. at p. 1.) But we will not presume the IWC intended to incorporate a less protective federal rule without evidence of such intent, and we see no sign of such intent here.

The Court also was unpersuaded that the de minimis rule should apply to wage and hour law because several other areas of California law apply the rule. In fact, the rule is contained in the Civil Code (section 3533).  However, perhaps because de minimis principles apply all over California law, the Court refused to completely foreclose a “de minimis” argument in wage and hour cases. This is the Court’s latest effort at providing full employment to lawyers.  In most cases, the doctrine will not apply. But, the Court said,

We leave open whether there are wage claims involving employee activities that are so irregular or brief in duration that it would not be reasonable to require employers to compensate employees for the time spent on them. 

If there is anything to the de minimis rule, it will apply only when uncompensated time occurs because of  “irregular”  and very brief events. In this case, the time spent after punching out was daily and required by policy.  Even a minute of uncompensated time may be too much when it happens every day, or policy requires it.

At the end of the opinion, the Court addressed whether “rounding” is consistent with not having a de minimis doctrine. I still don’t know. The Court appears to accept that a “fair” rounding policy that accounts for all hours worked is lawful.  The Court spoke favorably about See’s Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th 889, the case that approved of a rounding timekeeping system. The court even suggested that a rounding scheme might have fully compensated Troester by capturing the few minutes he  spent working after punching out. But even rounding policies found to be lawful don’t account for 100% of work time for every employee, every pay period. I am not sure that rounding will survive this case. But as of now, rounding is lawful if it does not result in failure to pay for all hours worked on average.  Unless your organization periodically studies how the rounding program treats each employee, be careful.

Besides rounding issues, this case is going to result in many claims based on seemingly innocent business policies. Employers must plan for compensating employees for any pre- or post- punching activity that counts as work.  To the extent possible, the employee’s last act has to be punching out, or the Company has to add time to pay for post-punching work activities.  As stated, there may be occasional, unreported bits of time that could be deemed ‘de minimis” some day. But the Court did not explain what that would be. So for now, don’t count on it.

Adding on –

I forgot to write that Justice Cuellar and Justice Krueger (joined by Justice Grimes who was specially assigned) wrote concurring opinions.  These opinions lament the majority’s concession that de minimis could apply in appropriate cases is vague and unhelpful to clarify matters for employers.  Justice Cuellar advocated for a “rule of reason” and some sort of line that would exclude minuscule amounts of time.  He also seemed to question whether rounding would survive the majority’s opinion if it resulted in any underpayment.  

Justice Krueger in particular gave some helpful examples of how de minimis might apply, although she only garnered two votes for her view:

it is not difficult to imagine a number of scenarios in which such a rule might apply, depending on the circumstances: 

-An employer requires workers to turn on their computers and log in to an application in order to start their shifts. Ordinarily this process takes employees no more than a minute (and often far less, depending on the employee’s typing speed), but on rare and unpredictable occasions a software glitch delays workers’ log-ins for as long as two to three minutes. 

  • An employer ordinarily distributes work schedules and schedule changes during working hours at the place of employment. But occasionally employees are notified of schedule changes by e-mail or text message during their off hours and are expected to read and acknowledge the messages. 
  • After their shifts have ended, employees in a retail store sometimes remain in the store for several minutes waiting for transportation. On occasion, a customer will ask a waiting employee a question, not realizing the employee is off duty. The employee — with the employer’s knowledge (see maj. opn, ante, at p. 9) — spends a minute or two helping the customer. 

In situations like these, a requirement that the employer accurately account for every second spent on work tasks may well be impractical and unreasonable; if so, a claim for wages and penalties based on the employer’s failure to do so would be inconsistent with California labor law, construed with the guidance of the background rule codified in Civil Code section 3533. 

A glimmer of hope from the concurring Justices.  But not enough to prevent litigation over small amounts of time, for now. 

This case is Troester v. Starbucks Corp. and the opinion is here. 

 

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