Today, the California Supreme Court issued its much-anticipated opinion in Troester v. Starbucks Corp., No. S234969 (Cal. July 26, 2018), regarding whether the long-standing de minimis doctrine adopted under the federal Fair Labor Standards Act (FLSA) applies to claims for unpaid wages for minute increments of time under the California Labor Code.
The majority opinion held that the de minimis doctrine did not apply under the particular facts of the putative class action in which a Starbucks employee performed “store closing tasks” each closing shift that required him to work “four to 10 additional minutes each day.” Ultimately, the Court left undecided the possibility of applying the de minimis rule under different factual circumstances because it expressly refused to “decide whether there are circumstances where compensable time is so minute or irregular that it is unreasonable to expect the time to be recorded.”
The federal de minimis doctrine, as explained by the California Supreme Court, applies “in some circumstances to excuse the payment of wages for small amounts of otherwise compensable time upon showing that the bits of time are administratively difficult to record.” The question of whether the de minimis doctrine applies to California wage claims was submitted to the Court by the Ninth Circuit.
In its 35-page decision, the Court addressed the question of the applicability of the de minimis doctrine in two parts. First, it addressed whether California’s wage and hour statutes or regulations adopted the FLSA’s de minimis doctrine. The Court confirmed that it “liberally construe[s] the Labor Code and wage orders to favor the protection of employees,” which it describes as the purpose of the legislature and Industrial Welfare Commission (IWC). It explained that the language of the California Labor Code and IWC Wage Orders require that employees be paid for all work performed. As such, the “federal rule permitting employers under some circumstances to require employees to work as much as 10 minutes a day without compensation is less protective than a rule that an employee must be paid for ‘all hours worked.’” The Court concluded that neither the text nor the history of the California Labor Code or the IWC Wage Orders indicated any adoption of the de minimis doctrine. Interestingly, the Court recognized that the California Division of Labor Standards Enforcement adopted the de minimis doctrine in its Enforcement Policies and Interpretation Manual and opinion letters, but ignored the administrative guidance as non-binding.
Second, the Court addressed whether the de minimis principle itself, which has operated in California in other contexts, applies to state wage and hour claims. Once again, the Court responded in the negative. The Court declined “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” and instead decided “only whether the de minimis rule is applicable to the facts of this case” (emphasis added). Under the factual record before it, the Court concluded that the de minimis doctrine did not apply “[i]n light of the Wage Order’s remedial purpose requiring a liberal construction, its directive to compensate employees for all time worked, the evident priority it accorded that mandate notwithstanding customary employment arrangements, and its concern with small amounts of time.” According to the Court, 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,” and the Court further highlighted how “a few extra minutes of work each day can add up.” The Court acknowledged the issue of “the practical administrative difficulty of recording small amounts of time,” but stated that “employers are in a better position than employees to devise alternatives that would permit the tracking of small amounts of regularly occurring work time.”
The lack of clarity in the Court’s decision perpetuates the abyss in which California employers lack clarity on the scope of their obligation to capture infinitesimal and infrequent work performed by employees. In that regard, the Court’s decision gives rise to concerns among employers about the practical implications of paying for “all hours worked” without any consideration of the administrative difficulties of capturing such time. This question was raised by the concurring opinions from Justice Cuéllar and Justice Kruger, who discussed the “rule of reason” in light of the open question that remains following the majority opinion – “whether, in circumstances different from those presented in this case, the de minimis principle may apply to California wage and hour claims.” Therefore, this issue is far from decided and the applicability of the de minimis rule will continue to be a fact-intensive analysis.