Starbucks

In a unanimous opinion, California's high court found that the state's wage-and-hour laws don't endorse a rule that federal courts often apply to excuse businesses' failure to pay wages for small amounts of time that are difficult to track.

“There is no indication in the text or history of the relevant statutes and Industrial Welfare Commission (IWC) wage orders of such adoption” of the so-called “de minimis” doctrine, wrote Justice Goodwin Liu, in a 21-page opinion joined by his six colleagues.

“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,” he wrote.

The ruling came in the closely watched case of Douglas Troester, a former Starbucks shift supervisor who sued Starbucks in state court in 2012, claiming the company violated the California Labor Code because it failed to pay him for time he spent closing the store where he worked.

Troester claimed that after clocking out he still was required to upload store sales data, turn off computers and lights, lock up, activate the store alarm, escort employees to their cars or wait with them for their rides, and occasionally put away patio furniture that had been left outside. The case was removed to federal court where Troester lost on summary judgment.

On appeal, the U.S. Court of Appeals for the Ninth Circuit referred the case to the California Supreme Court to determine whether the de minimis defense, which Starbucks won on at the district court, applied under California law.

“Nothing in the language of the wage orders or Labor Code shows an intent to incorporate the federal de minimis rule articulated in [the case law] or the federal regulation,” Liu wrote.

The decision noted that Troester's unpaid time totaled about 12 hours and 50 minutes over 17 months. At $8 per hour, that time amounted to about $102.67 before penalties.

“That is enough to pay a utility bill, buy a week of groceries, or cover a month of bus fares,” Liu wrote. “What Starbucks calls 'de minimis' is not de minimis at all to many ordinary people who work for hourly wages.”

Stanley Saltzman of Marlin & Saltzman, who argued on behalf of Troester at the state's high court, pointed to that passage in saying that he was “overwhelmed” by the decision.  

“We are heartened that employers are now being told, very clearly, that they cannot require their workers to regularly perform minutes per day of unpaid labor,” he added in an email shortly after the decision was handed down.

Starbucks' counsel, Rex Heinke of Akin Gump Strauss Hauer & Feld, referred a request for comment to the company. A Starbucks representative said the company was “disappointed” by the decision and “will await further disposition of the case before the 9th circuit as the appeal process continues.”

Kirstin Muller, a management-side employment litigator at Hirschfeld Kraemer in Los Angeles, said though the case didn't specifically address employers with policies of rounding employees' time up or down, those employers should take note. She said employers should make sure they are rounding to the smallest time increment possible and conducting regular audits to make sure that employees aren't bearing the brunt of those policies.

Muller added that there “is still some hope” for employers in the decision, particularly in a concurrence from Justice Leondra Kruger, which said that there had to be some “rule of reason” to avoid forcing employers to track every fraction of a second of employee time.

“I still think there are arguments for employers that if it really is a small and discrete period of time that is difficult to capture or is pretty irregular, that there are arguments that some sort of de minimis rule could apply in California,” Muller said. She also noted that the decisions “could lead to more cultural changes” in workplaces, with employers more strictly tracking that employees are working once they clock in.

In a separate concurrence to Thursday's decision, Justice Mariano-Florentino Cuéllar wrote that the court should avoid any future holding causing employers to adopt intensive employee monitoring that “might systematically erode employees' ability to find even a moment of privacy in their lives.”

Read the decision below:

Read more:

In Starbucks Case, Calif. Supremes Chew on Value of Slivers of Off-the-Clock Time

Employers Hold Their Breath as Calif. Supreme Court Reconsiders Off-The-Clock Laws