On May 1, the California Supreme Court will hold oral arguments in the much anticipated case Troester v. Starbucks Corporation. The case is currently pending before the U.S. Court of Appeals for the Ninth Circuit, but that case is on hold awaiting an answer from the California high court, which has been asked to answer a key question for the Ninth Circuit—does the de minimis doctrine, traditionally applied in both California and federal Fair Labor Standards Act (FLSA) cases, apply to wage claims made under the California Labor Code? The California Supreme Court's answer to this question could dramatically change the landscape for businesses with employees in California.

What Is the De Minimis Rule?

The de minimis doctrine is asserted by employers as a defense under the FLSA. The doctrine states that employers are not responsible for compensating employees for small amounts of time (less than 10 minutes) spent off the clock preparing for or concluding a work shift. Under the doctrine, to analyze whether the employee claim is de minimis, courts will consider the practical administrative difficulty of recording the additional time, the aggregate amount of compensable time and the regularity of the additional work, according to Lindow v. United States.

What Has Been the Law Until Troester?

Until the California Supreme Court agreed to hear the Troester case, state and federal courts in California had applied the de minimis doctrine, concluding in a number of cases that California employers were not responsible for compensating employees for the time spent by those employees off the clock either preparing for a shift (booting up computers, turning on lights) or wrapping up shifts (turning off computers, locking stores, etc.). In one case in 2012, a federal court in the Central District of California held that the few minutes required daily to turn on and log in to a computer were de minimis. Gillings v. Time Warner Cable, (C.D. Cal. Mar. 26, 2012). In another case, in 2007, a federal court in San Diego determined that putting on and taking off safety gear before and after a shift was de minimis and noncompensable, as in Abbe v. City of San Diego (S.D. Cal. Nov. 9, 2007).

What Is Troester's Argument and Starbucks' Response on Appeal?

Douglas Troester is a former Starbucks shift supervisor who sued in state court in California in 2012, claiming that Starbucks violated the California Labor Code because Troester allegedly was not compensated for time he spent off the clock closing the store he worked at. Troester alleged that in order to close the store as a shift manager, he turned off computers and lights and activated the store alarm. After activating the alarm, Troester alleges he then locked the front door of the store. Further, following Starbucks' safety protocols, Troester would also walk with his co-workers to their cars and stay outside the store with one employee who was waiting for a car ride home. Troester claimed he should have been compensated for these additional few minutes of time he spent at the end of each shift, even though he had already clocked out from work.

Troester brought a putative class action lawsuit in state court against Starbucks for unpaid wages under California law. Starbucks then removed the case to federal court. The federal trial court granted summary judgment for Starbucks in 2014, concluding that Troester's off-the-clock work was de minimis and that the plaintiff was not owed compensation. Troester appealed the ruling to the Ninth Circuit, contending that the de minimis doctrine is not a defense to wage claims asserted under the California Labor Code. Starbucks has argued that the de minimis doctrine does indeed apply, as numerous state and federal courts have applied the doctrine in the past.

The Ninth Circuit withheld a decision on the merits of Troester's appeal, instead asking the California Supreme Court to decide the state law issue of whether the federal Fair Labor Standards Act's de minimis doctrine applies wage claims in California under the California Labor Code.

What Happens Now and What Should Employers Do?

On May 1, the California Supreme Court will hear oral argument from both Troester and Starbucks and will consider whether the federal de minimis doctrine is an appropriate defense to California wage claims—a question the California Supreme Court has never answered. If the California Supreme Court holds that the de minimis doctrine applies to Troester's claims, there will not be any substantial changes in how wage and hour claims are litigated in California, especially for claims made for small amounts of time spent off the clock.

If, however, the California Supreme Court declines to apply the de minimis rule to wage claims made under California law, employers doing business in California will be facing a new wave of wage and hour class action lawsuits by employees who claim that, as a result of Troester, the time they spend off the clock preparing for or wrapping up a shift of work must be compensated under the California Labor Code. Employees will also likely argue that as a result of the employer's failure to timely pay those wages at the end of each pay period, the employer is subject to waiting time penalties, attorney fees and costs. Any employer that has employees open or close retail or office locations to begin or end a work day, which would include unlocking or locking store or office space, turning on and off the phones, lights, computers and electronics, and turning off and on alarm systems and security measures, will undoubtedly face renewed risk of liability if the de minimis doctrine is no longer available as a defense.

While we await the ruling, employers should consult with human resources professionals and outside employment counsel regarding the review and implementation of their wage-and-hour policies for employee compensation for de minimis off-the-clock work. Ensuring that you have updated wage-and-hour policies, and ensuring that employees are aware of those policies, is the first step in preparing for what could be a sea change in how companies with employees like Douglas Troester will need to track time and compensate employees for time spent off the clock preparing for and concluding shifts.

Grant Alexander is a partner in Alston & Bird's litigation & trial practice group. He is based in Los Angeles and focuses his practice on employment, class action litigation and misappropriation of trade secret matters.