Last Thursday, July 26, the California Supreme Court issued an opinion concluding that coffee retailer Starbucks must pay its employees for off-the-clock duties that take several minutes per shift. In issuing its opinion, the Court rejected Starbucks’ request to invoke a federal wage rule (known as the de minimis doctrine) that excuses employers from paying employees for small, hard-to-measure increments of time.
The facts of the case are as follows. As a supervisor on the closing shift, plaintiff Douglas Troester had to “clock out” on a computer terminal in the back office before activating an alarm, exiting the store, locking the front door, and walking his co-workers to their cars in accordance with Starbucks policy. These “off-the-clock” tasks took between four and 10 minutes per shift. All told, Troester claimed that Starbucks owed him about $100 in unpaid time, accumulated over 17 months of employment.
Starbucks invoked the de minimis rule to contend that Troester’s closing duties took such a small amount of time that the company was not required to pay him for those duties. The Court disagreed, however, concluding that the state’s wage laws have neither adopted the federal de minimis rule nor recognize some other version of it to excuse payment for regularly occurring extra minutes of off-the-clock work.
In coming to this conclusion, the Court noted that California’s definition of compensable time is more expansive than federal law, and the state has not amended its wage rules or suggested an intent to incorporate the de minimis exception, even though that exception has been on the federal books for over 50 years. In contrast to federal law, the Court noted that California wage law in fact does place importance on small amounts of time. For example, the state mandates that employees receive two ten-minute rest breaks per day. According to the Court, this focus on a small period of time indicates that applying the de minimis rule to excuse payment for up to 10 minutes of work would be inappropriate.
Beyond citing these key distinctions, the Court criticized the de minimis doctrine generally, at least to the extent that it forgives more than “split-second absurdities” and penalizes employees for the administrative challenge of tracking time worked. Moreover, the Court cited technological advances that have eliminated the difficulties in capturing smaller increments of time that helped justify the de minimis rule back when employees generally punched a physical clock.
What does this ruling mean for employers? The Court offered its own take on what employers in the state can do to properly compensate California workers, suggesting measures such as:
- restructuring tasks so that employees do not perform work after clocking out (as Starbucks eventually did);
- implementing or customizing time-tracking tools to accurately capture all employees time; or
- even reasonably estimating work time and compensating employees accordingly.
The decision’s impact on federal wage cases and employers outside of California is up for debate.
Some of the Court’s points may offer ammunition for arguing that the de minimis rule should not apply in general. For example, employees may argue that technology obviates the administrative challenges necessary to justify the rule, or that the rule can only apply if the unpaid work is unpredictable and not regularly occurring. On the other hand, employers may rightly note the limited scope of the decision, which cited heavily to the differences between federal and California law.
One thing is certain – wage and hour litigation remains a lucrative focus area for plaintiffs’ attorneys. To minimize potential exposure to claims for unpaid wages and associated penalties, employers should review their time-keeping policies and consult with counsel as necessary to ensure that they properly compensate employees for all required and recurring duties.