De Minimis” May Be Down, but It’s Not Out—And What Does It Mean for Employer Rounding Policies in California?

Laura Reathaford, Caroline Powell Donelan, and Caitlin I. Sanders

On July 26, 2018, the California Supreme Court issued its long-awaited opinion in Troester v. Starbucks Corp., __ P.3d __ (2018). In the days that have followed, legal headlines have lamented the presumed “death” of the de minimis doctrine. But is Troester really that simple? And what does it mean for employer rounding policies?

The issue in Troester was whether the federal Fair Labor Standards Act’s (“FLSA”) de minimis doctrine applies to claims for unpaid wages under certain provisions of the California Labor Code. For the better half of the past century, the de minimis doctrine has been applied in the federal wage and hour context to excuse payment of wages under the FLSA for insubstantial or insignificant periods of time.

The underlying facts of the case were fairly straightforward. A shift supervisor, Douglas Troester, filed a class action complaint against Starbucks, claiming that he and other employees were not compensated for post-shift store closing procedures. The evidence showed that these post-shift activities required Troester to work between four and 10 minutes “off-the-clock” each day and, had he been compensated for this time, he would have earned an additional $102.67 over the 17-month period of his employment.

The Court very carefully limited its holding to these facts, ultimately concluding that the de minimis doctrine does not apply under California law to insulate Starbucks from responsibility for paying its employees for small amounts of work regularly performed off-the-clock, i.e., work that is predictable and otherwise easy to account for.

Notably, the Court did not go so far as to reject the application of the de minimis doctrine outright to all wage and hour claims in California. Indeed, the Court expressly declined to decide whether it would be appropriate to require employers to compensate employees for the time spent on activities that are fleeting or irregular.

In a concurring opinion, for instance, Justices Kruger and Grimes elaborated on certain instances where the de minimis doctrine arguably should apply, such as when employees have to turn on and log onto their computers at the start of a shift or address a computer glitch, check their schedules off-hours, or have to respond to a quick customer question after they have clocked out. In such cases, they acknowledged the administrative difficulty in capturing this time might justify applying the de minimis doctrine.

An open question the Court did not discuss was whether the de minimis doctrine might apply to situations where an employee has not been paid for every minute of time due to the employer’s rounding policy. If an employee has lost mere seconds a day due to rounding, for instance, could the employer rely on the de minimis defense to excuse the nonpayment of wages for these seconds?

While confirming that California permits the use of an even-handed rounding system, the Court emphasized that such a system must compensate employees for all hours worked. While the Court had the opportunity to discuss de minimis in the context of rounding, it did not do so. Justice Cuellar, in a separate and concurring opinion acknowledged that “[i]t is far from clear that a reasonable rounding strategy, even one rounding to the nearest second, would cut in favor of counting such amounts of time.”

The bottom line: In determining whether a work activity may properly be considered as de minimis, California employers should ask three questions: (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 an employer answers “yes” to any of these three questions, it should not assume that the time may be discounted as de minimis. That said, the question of whether de minimis applies to rounding claims remains open, and employers may still rely on this method of tracking time (as long as it is even-handed) pending further direction from either the Supreme Court or the California legislature.

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: