by Michelle R. Ferber and Julie Ann Giammona
In a unanimous opinion, the California Supreme Court refused to apply the federal “de minimis” doctrine in a lawsuit brought by a former Starbucks employee alleging that he was not paid for approximately 13 hours over a 17-month period, totaling $102.67 (before penalties). The “de minimis” doctrine had its origins in a 1946 United States Supreme Court case, Anderson v. Mt. Clemens Pottery Co., and has since been applied by other courts to allow employers to avoid liability for small amounts of time worked by an employee where such time is often irregular and difficult to track. In 1961, the de minimis standard was codified as a federal regulation with the caveat that the doctrine be applied “sparingly and not arbitrarily.”
Starbucks argued that the amount of $102.67 was “de minimis”, but the high Court disagreed: “That is enough to pay a utility bill, buy a week of groceries, or cover a month of bus fares. What Starbucks calls ‘de minimis’ is not de minimis at all to many ordinary people who work for hourly wages.”
It is important to note that the specific facts of the Starbucks case did not involve an employee whose off the clock hours were unpredictable. Instead, Starbucks required the former supervisor to work several minutes off the clock after each shift to perform “close-out” tasks such as uploading store sales data, turning off computers and lights, setting the store alarm and escorting store employees to their cars. The Supreme Court determined that while the amount of money at issue may be small, the off the clock tasks were being performed on a regular basis: “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.”
Moreover, the Court held that there is no evidence in the language of the Wage Orders or the Labor Code showing an intent to adopt the federal de minimis standard, particularly since Anderson has been the law for 70 years, and such law has been incorporated into the federal regulations for over 50 years, yet neither the California Wage Orders nor the Labor Code has ever been amended to include the de minimis doctrine. Additionally, given the technological advances and availability of tracking employee time by smart phones or other devices, the Court questioned the applicability of the rationale in Anderson, which was partly based upon the difficulty in recording employee work time.
Notwithstanding, the Supreme Court explicitly limited its holding to the facts before it: “We decline to decide whether a de minimis principle may ever apply to wage and hour claims given the wide range of scenarios in which this issue arises.” Accordingly, the Court specifically left open whether other wage claims involving employee activities so irregular or brief in duration would require employers to compensate employees.
Examples given in the concurring opinion of situations where a requirement that the employer accurately account for every second spent on work tasks “may well be impractical and unreasonable” include:
1) employees required to turn on their computers and log into an application in order to start their shifts;
2) employees occasionally notified of schedule changes by email and expected to read and acknowledge messages; and
3) employees in a retail store remain in the store for several minutes waiting for transportation after shift has ended; on occasion, a customer asks an employee a question and the employee spends one or two minutes helping the customer.
Employers who utilize policies rounding employees time up or down, should review these policies to ensure compliance with California law. California allows an employer to round to the nearest-tenth of an hour so long as the rounding policy is neutral on its face, and as applied, such that “it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.”
As always, California wage and hour law is complex and fact specific. Ferber Law has the knowledge and experience to direct your business with this shifting trajectory.
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.