Starbucks Case Gives Employers a Jolt

August 8, 2018

Supreme Court Rejection of De Minimis Doctrine May Significantly Impact Employers Who Require Employees to Perform Miniscule Periods of Work Off the Clock

Much to the chagrin of employers, the California Supreme Court recently held that the federal de minimis rule, which excuses the payment of wages for minute periods of otherwise compensable time upon showing that the bits of time are administratively difficult to record, is not applicable in California.

The class action, Troester v. Starbucks Corp., was brought by a Starbucks employee who claimed that Starbucks’ time-keeping system required him to clock out before uploading the day’s sales records to the company’s central computers, locking up, and bringing outdoor furniture into the store, amongst other tasks. The employee alleged that these duties would often take up to 10 minutes per day, a calculation that Starbucks did not dispute. Over 17 months, the employee claimed to have worked 12 hours and 50 minutes of unpaid time, which would be worth $102.67 at the minimum wage in effect in 2008 and 2009.

The Court sided with the employee, ruling that “[n]othing in the language of the [IWC] wage orders or [California] Labor Code shows an intent to incorporate the federal de minimis rule.” The court noted that the administrative difficulty of recording such small amounts of time that underlie the federal de minimis rule has largely eroded, as recordation of time worked has been made easier by “technical advances that enable employees to track and register their work time via smart phones, tablets or other devices.” Noting that “a few extra minutes of work each day can add up,” the Court held that “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.”

As a result of this case, California employers may now face liability for this “unpaid work” in the form of back wages/potential overtime obligations, penalties for violations of employee pay stub requirements, and waiting time penalties for late payment of former employees’ full final wages. Accordingly, California employers must carefully review their time-keeping policies and practices to ensure that the employer is paying each non-exempt employee for all time worked (even incidental and trivial amounts of time).

It remains to be seen how Troester will be applied under other facts, such as when employees only occasionally work off the clock for fractions of time or where the employee provides such services without the employer’s knowledge or consent. The Court specifically stated, “We do not decide whether there are circumstances where compensable time is so minute or irregular that it is unreasonable to expect the time to be recorded.” One of the Justices noted that there needs to be some “rule of reason” to avoid forcing employers to track every fraction of a second of employee time, while another Justice stated that the Court should avoid any future decisions that would force employers to adopt intensive employee monitoring that “might systematically erode employees’ ability to find even a moment of privacy in their lives.”

In the meantime, however, employers are encouraged to follow the Court’s suggestions as to how to best comply with this decision. Specifically, the Court recommended structuring work so that employees would not have to work before or after clocking out, using technologically-advanced time tracking tools to more accurately record employee’s time, and/or estimating the time it takes employees to perform this “de minimis” work and compensating the employees accordingly.

Please feel free to call any member of Greenberg Glusker’s Employment Department if you have questions about how this case may affect you.