California employers must pay non-exempt employees at least minimum wage for all time they work on their employers’ behalf. The California Supreme Court recently decided that employers are obligated to pay workers for even small amounts of unrecorded work time. To comply with California law, and avoid significant financial liability, employers must ensure employees do not perform compensable work “off the clock.”
Measuring/Recording Work Hours
Small amounts of working time that are difficult to measure and record present challenges for employers. For example, non-exempt employees might briefly review work-related e-mails outside of their normal working hours or drop off a work package on their way home from work. Non-exempt employees may spend time logging in to the computer before they can electronically “clock in,” or could lock the doors at the worksite after they have “clocked out.” These tasks may take just a minute or less of time and be difficult to capture accurately in the employer’s time-keeping system.
The FLSA Approach
The federal Fair Labor Standards Act (FLSA) recognizes a “de minimis” exception to the general requirement that all working time must be compensated. This exception comes from the ancient maxim that “the law does not concern itself with trifles.” Under the de minimis principle, in certain circumstances an employer need not pay wages for “insubstantial and insignificant periods of time” that “cannot as a practical administrative matter be precisely recorded for payroll periods.”
To determine whether the de minimis exception applies under federal law, the courts look at (1) the practical difficulty of recording the time, (2) the aggregate amount of the time, and (3) the regularity of the unrecorded working time. Some federal courts have concluded that daily periods of up to 10 minutes per day of unrecorded working time need not be compensated under the FLSA’s de minimis exception.
The California Approach
Recently, in contrast to federal law, the California Supreme held that claims for unpaid wages under California law ordinarily may not be rejected as de minimis. In Troester v. Starbucks, the plaintiff was a shift supervisor at Starbucks. Starbucks’ computer software required him to clock out on every closing shift before initiating the “close store” procedure” on a separate computer terminal in the back office. The “close store” procedure transmitted daily sales data to corporate headquarters. After the plaintiff completed this task, he activated the alarm, exited the store, locked the door, and walked his coworkers to their cars. These tasks that Troester routinely performed after he clocked out took from four to ten minutes each day, for which he was not compensated.
Starbucks argued that the few minutes of time the supervisors spent on those closing tasks could be disregarded as de minimis. Starbucks pointed out that the de minimis principle not only was well-established under the Fair Labor Standards Act, but also was acknowledged by the California Division of Labor Standards Enforcement. Additionally, Starbucks pointed out that the California Civil Code, section 3353, codifies the legal maxim (“the law disregards trifles.), and that the de minimis doctrine was applied in many California law contexts.
The California Supreme Court, however, rejected a general application of de minimis principles to wage claims. The Court primarily focused on two factors. First, Starbucks required its closing supervisors to work minutes off the clock on a regular basis. That is, the timekeeping procedures were designed so that the supervisor clocked out before performing certain closing activities.
Second, the Court noted that technological advances in time tracking tools address the difficulty of capturing time, which generally obviates the need for a de minimis exception. For example, Starbucks could provide closing supervisors a remote time tracking tool to permit them to “clock out” on smart phones once they finished all closing tasks. So, the practical difficulty in capturing time that inspired the federal de minimis rule 70 years ago has limited application in the modern workplace.
The California Supreme Court did not categorically preclude application of the de minimis rule in every wage and hour case. The Court left open the possibility that employee activities could be “so irregular or brief in duration that it would not be reasonable to require employers to compensate employees for the time spent on them.” The situation in the Starbucks case, however, did not fall within that set of circumstances, because off-the-clock work was routine, predictable, and measurable.
Although the Court theoretically left open the possibility of a de minimis exception to the general rule that employees must be paid for all work time, those circumstances will likely be few and far between. California employers therefore should plan to compensate workers for all working time, in particular those small increments of work time that occur before and after employees clock in or out.
Improved compliance starts with policies and practices that recognize and accept that all work time is compensable. Employers then must put that recognition into practice. Some employers can address uncompensated time by changing locations of time clocks, or rules governing how employees use the timekeeping systems. For those work activities that occur before or after employees clock in or out, employers must devise ways to account for unrecorded time, such as manual adjustment procedures, adding realistic estimated time to the beginning or end of the shift, “portable” timekeeping (such as via an app), or other technological solutions. Some employers use “rounding” to account for variations at the beginning and end of the shift. However, rounding is a legally thorny subject, which we will address in a future article.