CALIFORNIA SUPREME COURT REJECTS THE DE MINIMIS DOCTRINE IN STARBUCKS WAGE AND HOUR CLAIM

In a July 2018 decision, the California Supreme Court rejected the idea that the Federal Fair Labor Standards Act (FLSA) inherently applied to a California Starbucks employee’s class action wage claim. This ruling could have a wide-ranging impact in states that have not expressly adopted the FLSA’s de minimis rule into their state labor code. Specifically, this decision could affect hourly employees who often have to do limited amounts of work off the clock for their employers, such as food service and retail workers. Employees could potentially seek damages from employers who required them to work off the clock for no pay.

The employee in Troester v. Starbucks Corporation was a Starbucks manager that had to do 4-10 minutes of additional work after clocking out for every shift. Pursuant to company policy, Troester had to clock out before completing closing-up procedures. The unaccounted for time included activating the alarm, locking the front door and walking employees to their cars pursuant to company policy. According to discovery in the case, Troester spent approximately 12 hours and 50 minutes working off the clock for Starbucks over a year and a half period.

Starbucks argued in their defense that the Federal FLSA’s de minimis rule did not require the company to pay for the time that Troester worked after clocking out. The de minimis rule states that employers are not required to pay employees for unpaid work that is minimal and difficult to measure. The Court disagreed with Starbucks’ conclusion, stating that California’s Wage Code and the Industrial Welfare Commission (IWC) did not explicitly adopt the FLSA’s de minimis rule. In fact, the Court found that California’s employment laws provided for more worker protection than the FLSA’s federal minimum. The Court found that California’s legislative history, along with California statutory language, specifically requires employers to pay employees for “all time the employee is suffered or permitted to work.”  Since paying workers for all their time offers more worker protection then paying them for most of their time, the Court ruled that the federal de minimis standard was not adopted by the state of California.

Starbucks also argued that the de minimis rule should be recognized under California law because it is a part of the “established background of legal principles” upon which the Labor Code and IWC Wage Orders had been enacted. The Court found this unconvincing, stating that the IWC and Labor Code are specifically concerned about payments for small amounts of worker time. The IWC had also been amended in the past to specifically break from federal law. The Federal Portal-to-Portal Act allowed employers not to pay for small amounts of time that employees were on the job. California specifically changed the IWC to allow more protection to employees than the Portal-to-Portal Act. The Court used this as evidence that the federal de minimis rule should not be automatically recognized under California law and the de minimis rule was not intended to be recognized when the California statutes were enacted.

This legislation could have a profound effect in states that have not specifically adopted the FLSA’s de minimis standard. It can expose employers to large class action lawsuits from groups of employees who have had to work for unaccounted amounts of time off the clock. Class-action lawsuits allow for groups of employees to file their grievances in Court jointly to allow for greater verdicts. Employees with valid legal cases could bring legal actions against their employers and receive damages, in the form of back pay, for previous unpaid work time.