California has some of the strictest and most complicated wage and hour laws in the nation. And guess what? They’re even stricter and more complicated now after the California Supreme Court rejected the “de minimis” defense for employers in wage and hour disputes in California.
What’s the “de minimis” defense anyway?
Beginning in 1961, federal labor law began to recognize that certain wage errors committed by employers were so trivial that the law would not get involved. Employers could round down a few seconds here, or a few minutes there, in order to make payroll administration easier and more efficient. As explained by one Court, when an employer’s “failure to count such time is due to considerations justified by industrial realities,” the employer would be excused for under-paying the employee these trivial amounts owed.
But not anymore. Not in California anyway. And not when “minutes” are involved.
Troester v. Starbucks
On July 26, 2018, in a unanimous decision, the California Supreme Court ruled that “de minimis” doctrine could not be used by employers in California as a defense to wage and hour disputes. In reaching this decision, the Court ruled that California’s employment laws and wage orders have never adopted the de minimis doctrine. Moreover, the Court ruled, allowing a de minimis defense would run contrary to the state’s clear policy of interpreting California wage and hour laws in a manner that protects employees.
The issue in Troester was a Starbucks company policy that required the closing employee to clock out on a back office computer before the employee could initiate the store’s “closing procedures” on a separate computer. So the closing employee was not being paid for the brief time spent completing these closing procedures or activating the alarm, locking the doors, and walking co-workers to their cars “in compliance with Starbucks’ policy.” In addition, there were some evenings when the closing employee would have to re-open the store briefly so that another employee could retrieve a purse or other property that had been accidentally left behind. None of this was counted as “hours worked” by Starbucks and the closing employee was therefore never paid for this time.
Over the plaintiff’s 17-month period of employment, he calculated his unpaid time at 12 hours and 50 minutes. This translated to wages owing of $102.67 at the then-prevailing minimum wage. Even though this was a trivial amount of time lost per shift, and a small amount owed in total for a year and a half of work, the Court determined that Starbucks was obligated to count these minutes each shift and then pay the plaintiff for these minutes. When an employer “routinely” asks an employee to work “minutes” off the clock, the Court ruled, that is not de minimis. The employee was therefore entitled to be paid his full $102.67, plus interest, attorneys’ fees, liquidated damages, waiting time penalties, civil penalties, and other sums due.
In Troester, the California Supreme Court left open the possibility that in some future case there may be some rounding or other employer action that results in a truly insignificant loss to the employee — like the seconds involved in reading an email, for example. But, where the employer was not counting “several minutes” per shift, as in Troester, the law demands that employers properly account for and pay the employee for all of those minutes.
What Employers Should Do Now
As a result of the California Supreme Court’s ruling, employers should review their time-tracking system to ensure that employees are being paid for every minute they are working. If your company uses a POS or punch clock or some other time-tracking system, try to locate the device where employees clock out as close to the exits as possible. If your company rounds employees’ clock-in and/or clock-out times, now is probably a good time to end that policy and, instead, move to an electronic time-tracking system that tracks employees in and out times to the minute. Finally, if you have employees doing off-the-clock work, discipline them. Create a record that your company does not tolerate off-the-clock work.
You can read the California Supreme Court’s decision in Troester v. Starbucks here.