California Pay Requirements & De Minimis

by Jill Schaefer on October 4, 2018

In Troester v. Starbucks Corp., the California Supreme Court ruled on a narrow aspect of the federal Fair Labor Standards Act’s (FLSA) de minimis doctrine and how it applies to off-the-clock work. The Court ruled that Starbucks specifically, and California employers in general, must pay employees for time regularly worked off-the-clock. However, California employers have unanswered questions and uncertainty.

Before we get too far, let’s review what de minimis means. It comes from the Latin phrase, de minimis non curat lex. This translates as “The law does not concern itself with trifles.” This FLSA provision excuses employers in certain circumstances from paying employees for small amounts of time that are administratively difficult to track.

Regular Off-the-clock Time

Douglas Troester, the plaintiff in the case and a former, non-exempt (hourly) Starbucks employee, alleged that after he clocked out, he spent 4-10 minutes after each shift doing work-related activities. These included such as sending data to the corporate headquarters, walking other employees to their cars per Starbucks’ policy, and setting the alarm. However, he wasn’t paid for this time.

The California Supreme Court rejected the de minimis defense. The Court’s opinion stated:

“As the facts here demonstrate, a few extra minutes of work each day can add up. According to the Ninth Circuit, Troester is seeking payment for 12 hours and 50 minutes of compensable work over a 17-month period, which amounts to $102.67 at a wage of $8 per hour. 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.”

The Court suggested that employers could restructure the work, adopt new timekeeping technologies, or reasonably estimate work time to properly pay employees.

Compliance Tip: KPA’s partnering law firm, FordHarrison, recommends that if you haven’t already, employers should 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.

Irregular Off-the-clock Time

Since the Court only ruled on one aspect of de minimis in California, it left gray areas for employers. Among them is what to do when off-the-clock time happens only rarely.

In Justices Kruger’s and Grimes’ concurring opinion, they said that de minimis may apply in certain, fleeting situations, such as an employee checking his/her schedule after hours or responding to a quick client question after clocking out.

Rounding Up or Down

Employers often have employees round up or down to the nearest 5 minutes or quarter hour (0.25) when recording their time. The Court reaffirmed that California employers can use rounding. However, employers must use an “even-handed” approach and fairly compensate employees for all hours worked.

The U.S. Department of Labor’s Wage and Hour Division provides this guidance, “…for enforcement purposes, the payment of wages based on recording and computing time to the nearest five minutes, or the nearest one tenth or quarter of an hour, will be accepted provided 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.”

When De Minimis Applies

Clear as mud, right? Fortunately, California employers can use these 3 questions, courtesy of Mondaq, to verify if a work activity falls under de minimis:

  1. Can the time be feasibly captured or estimated?
  2. Is the aggregate amount of compensable time substantial?
  3. Does the work activity occur regularly before or after work?

If you answer “yes” to any of these questions, it most likely doesn’t count as de minimis. Find a way to pay employees for that time.

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Jill SchaeferCalifornia Pay Requirements & De Minimis