You Can Skim Milk But You Cannot Skim Wages

Harkavy, Michelle - 300dpi
Michelle Harkavy

Executive Summary:    On July 26, 2018, the California Supreme Court ruled that Starbucks must pay employees for minutes, maybe even seconds, spent on off-the-clock “work” by determining that the Plaintiff’s alleged class action state wage claims are not barred by the de minimis doctrine.

Background:    Douglas Troester, a shift supervisor who worked for Starbucks for 17 months, filed suit in California state court alleging that at times during his employment he was required to perform tasks after he clocked out for the day and was, therefore, not compensated for that time.  Starbucks removed the case to federal court and in 2013 moved for summary judgment on the grounds that the claims were de minimis.  The de minimis doctrine, which has existed in federal wage and hour jurisprudence since at least 1946 when the U.S. Supreme Court applied it in Anderson v. Mt. Clemens Potter Co., provides that compensable time “must be computed in light of the realities of the industrial world” and that small amounts of unrecorded time are not actionable.  The doctrine applies when time spent on a task is infrequent, insignificant or difficult to track.

The District Court granted Starbucks’ motion and Troester appealed the ruling.  The 9th Circuit sent the case to the California Supreme Court to answer the question of whether the FLSA de minimis doctrine applied to unpaid wages under the California Labor Code and Wage Orders.

coffee cupThe tasks that Troester alleged to have performed included, but were not limited to, activating the store alarm, locking the front door, and transmitting sales, profit and loss and inventory data to company headquarters.  It was estimated that these additional duties could take from four (4) to ten (10) minutes per day.  He alleged that over the course of his employment he spent twelve (12) hours and fifty (50) minutes performing these additional tasks.

The California Supreme Court noted that that California laws are often mirrored after federal law, but may, at times, deviate from those laws.  The California Supreme Court specifically analyzed two separate questions.  First, it evaluated whether the FLSA’s de minimis doctrine had been incorporated into California’s Labor Code or Wage Orders.  After analyzing the history of the laws and regulations, the Court found no evidence that the doctrine was incorporated into the applicable laws or regulations.

Second, the Court evaluated whether California’s own generally applicable de minimis doctrine applied.  On this point, the Court provided a more fact-specific answer.  Specifically, the Court held that California’s de minimis doctrine did not apply to the facts of the case, indicating that the few extra minutes every day at issue could “add-up” and that the $102.67 owed to Troester was not de minimis.  The Court, however, did not draw a line in the sand or apply a blanket rule that the de minimis doctrine does not apply in California and appeared to hold open the door for the application of the doctrine for activities that are so irregular or brief that it would not be reasonable to record or compensate the time.  Accordingly, such issues will have to be evaluated on a case-by-case basis in future lawsuits.

Bottom Line:    This case could have significant implications for California employers.  It may open the flood-gates to a new round of wage and hour class action lawsuits in California.  It is recommended that employers analyze their policies and time tracking systems to ensure they track and compensate employees for all working time, even time that may have previously been categorized as de minimis.

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