Cal. Supreme Court to Clarify Whether De Minimis Rule Applies in CA

In recent years, one of the most active areas in wage-and-hour litigation has been “off-the-clock” cases, in which retail employees are required to perform certain job-related tasks, such as closing down the store or undergoing a security check before exiting the store, but after clocking out. Plaintiffs’ lawyers generally take the position that, since these tasks occur off-the-clock, but under the control of and for the benefit of the employer, employees are entitled to compensation for the time spent performing these job-related activities. Defense counsel generally argue that the time spent on these tasks is “de minimis” and therefore non-compensable. The de minimis doctrine emerged in federal actions under the FLSA, and provides that when the time spent off-the-clock is so brief that recording it is impractical, the employee need not be compensated for it. See Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 692 (1946); Lindow v. United States, 738 F.2d 1057, 1063 (9th Cir. 1984).

On July 3, 2016, the California Supreme Court granted a request from the Ninth Circuit Court of Appeals to decide whether the de minimis doctrine applies to cases brought under the California Labor Code. In Troester v. Starbucks Corp., the plaintiff, suing under California law, alleged that he was not compensated for the time he and other employees spent performing “closing” tasks at the end of the day after clocking out, such as electronically sending the “close out” data to corporate headquarters, setting the store alarm, putting away patio furniture, and walking co-workers to their cars or staying with them until their rides arrived, per Starbucks’ safety policy. No. 14-55530 (9th Cir. June 2, 2016) (slip op. available here). Applying the FLSA standards from Lindow, 738 F.2d 1057, 1063 (9th Cir. 1984), in which a court determines the applicability of the de minimis doctrine based on “(1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work,” the district court granted summary judgment in Starbucks’ favor, finding that the plaintiff’s claim for unpaid wages failed because the time spent in or around the store after clocking out was de minimis (id. at 4-5). The plaintiff appealed, arguing that the de minimis doctrine does not apply to claims brought under California wage-and-hour law. The Ninth Circuit responded by certifying the issue to the California Supreme Court in an unpublished order, requesting that it answer the following question: “Does the federal Fair Labor Standards Act’s de minimis doctrine, as stated in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 692 (1946) and Lindow v. United States, 738 F.2d 1057, 1063 (9th Cir. 1984), apply to claims for unpaid wages under the California Labor Code sections 510, 1194, and 1197?” Slip op. at 3.

In its request, the Ninth Circuit stated that the California Supreme Court has not yet addressed this particular question. The Troester federal appellate panel noted that, although different panels of the Ninth Circuit and California Court of Appeal have occasionally applied the federal de minimis standard to state law claims, it has not been squarely or definitively decided. “The California Supreme Court has long held that state wage and hour laws, ‘although at times patterned after federal regulations, also sometimes provide greater protection than is provided under federal law in the Fair Labor Standards Act and accompanying federal regulations,’” the panel wrote. Slip op. at 8-10 (internal citations omitted). Thus, “[t]he federal de minimis rule could be seen as less employee-protective than California’s wage-and-hour laws and, therefore, at odds with those laws.” Id. at 9. Indeed, the panel noted that very recently, in Mendiola v. CPS Sec. Solutions, Inc., 60 Cal.4th 833, 842-43 (2015), the California Supreme Court had held that FLSA regulations did not apply to California Labor Code claims, distinguishing California’s wage laws from federal regulations. Id. at 8.

The California Supreme Court is unlikely to find in the defendant’s favor. First, it is not administratively difficult to capture the off-the-clock time; for instance, employers could simply move the timekeeping systems to a location where the employee may clock-out after performing all necessary duties, such as near the store exit. Second, even though the time spent on off-the-clock tasks is often brief, the tasks occur regularly. Accordingly, because the off-the-clock tasks are not an occasional, but a regular occurrence, the aggregate amount of unpaid compensable time can be substantial. If the California Supreme Court were to rule that the de minimis doctrine does not apply, that decision will have important consequences for employers. Specifically, employers may need to rethink where and how employees may clock out, and consider introducing procedures through which employees may manually record additional time worked after clocking out. If employers fail to do so, they risk exposing themselves to substantial damage awards, not only for off-the-clock work, but also to derivative claims under Labor Code section 203 (failure to pay wages on termination) and section 226 (inaccurate wage statements) as well as penalties under the Private Attorneys General Act, Labor Code section 2698, et seq.

Authored By:
Stan Karas, Senior Counsel
CAPSTONE LAW APC