Source: https://kknightlawblog.com/blog/2018/7/26/troester-v-starbucks-corp-court-rejects-de-minimis-doctrine-in-case-involving-state-law-unpaid-wage-claims-leaves-open-the-possibility-of-application-in-future-cases-with-caveats
Timestamp: 2019-09-20 22:42:16
Document Index: 363186487

Matched Legal Cases: ['§ 7', '§ 785', '§ 785', '§ 3533', '§ 251', '§ 785']

Troester v. Starbucks Corp.: court rejects de minimis doctrine in case involving state-law wage-and-hour claims, leaves open the possibility of application in future cases, with caveats — Kelly A. Knight Law Blog
The California Supreme Court just handed down its opinion in Troester v. Starbucks Corp., Cal. no. S234969 (July 26, 2018) (slip opinion linked here), holding that the federal "de minimis doctrine" does not apply to the plaintiff's unpaid-wage claims brought under the California Labor Code. The Cal. Supremes left open the question of whether the doctrine could apply in other cases.
The holding, in brief:
We hold that the relevant California statutes and wage order have not incorporated the de minimis doctrine found in the FLSA. We further conclude that although California has a de minimis rule that is a background principle of state law, the rule is not applicable here. The relevant statutes and wage order do not allow employers to require employees to routinely work for minutes off-theclock without compensation. We leave open whether there are wage claims involving employee activities that are so irregular or brief in duration that it would not be reasonable to require employers to compensate employees for the time spent on them.
Now to the opinion.
The de minimis doctrine (from de minimis non curat lex, meaning “the law does not concern itself with trifles” (slip op. at 1)) has been applied by federal courts to "excuse the payment of wages for small amounts of otherwise compensable time upon a showing that the bits of time are administratively difficult to record." Slip op. at 1.
This was a wage-and-hour class action pending in federal court (after removal by the defendant from the state-court proceeding). The plaintiff alleged that, as a shift supervisor, "Starbucks's computer software program required him to to clock out on every closing shift before initiating the software’s 'close store procedure' on a separate computer terminal in the back office." Id. at 2. The "close store procedure" involved transmitting daily sales, profit and loss, and inventory data to Starbucks's headquarters; after that, the plaintiff would activate the alarm, exit the store, and lock the front door. Id. He would also walk his coworkers to their cars in compliance with Starbucks's policy, and he "occasionally reopened the store to allow employees to retrieve items they left behind, waited with employees for their rides to arrive, or brought in store patio furniture mistakenly left outside." Id.
Undisputed evidence showed that the closing tasks required the plaintiff working four to ten additional minutes each day after clocking out. Id. at 3. Over the seventeen-month period of his employment, the plaintiff's unpaid time totaled approximately twelve hours and fifty minutes and added up to a total of $102.67 in minimum wages. Id. at 3. The district court determined that this unpaid time would be administratively difficult to capture. Id. On these facts, the district court ruled that the de minimis doctrine applied and granted Starbucks's motion for summary judgment. Id. at 3-4. On appeal, the Ninth Circuit recognized that while de minimis doctrine has long been a part of the FLSA, the Cal. Supremes have never addressed its application to wage claims under the California Labor Code, so the Ninth Circuit certified two questions to the Cal. Supremes: (1) has California's wage-and-hour statutes adopted the de minimis doctrine? (2) even if the statutes have not adopted the de minimis doctrine, "does some version of the doctrine nonetheless apply to wage and hour claims as a matter of state law?" Id. at 2, 4.
To start its analysis, the Cal. Supremes first summarized the de minimis doctrine as applied in the wage-and-hour context over seventy years ago in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946). When Anderson came down, although all time worked was compensable, the U.S. Supreme Court recognized that the "realities of the industrial world" required that certain "negligible" time, e.g., the "trifles" of "only a few seconds or minutes of work beyond the scheduled working hours," "may be disregarded":
“We do not, of course, preclude the application of a de minimis rule where the minimum walking time is such as to be negligible. The workweek contemplated by § 7(a) [of the FLSA] must be computed in light of the realities of the industrial world. When the matter in issue concerns only a few seconds or minutes of work beyond the scheduled working hours, such trifles may be disregarded. Split-second absurdities are not justified by the actualities of working conditions or by the policy of the Fair Labor Standards Act. It is only when an employee is required to give up a substantial measure of his time and effort that compensable working time is involved. The de minimis rule can doubtless be applied to much of the walking time involved in this case, but the precise scope of that application can be determined only after the trier of facts makes more definite findings as to the amount of walking time in issue.”
Troester, slip op. at 5 (quoting Anderson, 328 U.S. at 692).
The de minimis doctrine was codified in 1961 as a federal regulation:
§ 785.47. Where records show insubstantial or insignificant periods of time.
In recording working time under the FLSA, insubstantial or insignificant periods of time beyond the scheduled working hours, which cannot as a practical administrative matter be precisely recorded for payroll purposes, may be 6 disregarded. The courts have held that such trifles are de minimis. (Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946).) This rule applies only where there are uncertain and indefinite periods of time involved of a few seconds or minutes duration, and where the failure to count such time is due to considerations justified by industrial realities. An employer may not arbitrarily fail to count as hours worked any part, however small, of the employee’s fixed or regular working time or practically ascertainable period of time he is regularly required to spend on duties assigned to him. See Glenn L. Martin Nebraska Co. v. Culkin, 197 F. 2d 981, 987 (C.A. 8, 1952), cert. denied, 344 U.S. 866 (1952), rehearing denied, 344 U.S. 888 (1952), holding that working time amounting to $1 of additional compensation a week is ‘not a trivial matter to a workingman,’ and was not de minimis; Addison v. Huron Stevedoring Corp., 204 F. 2d 88, 95 (C.A. 2, 1953), cert. denied 346 U.S. 877, holding that ‘To disregard workweeks for which less than a dollar is due will produce capricious and unfair results.’ Hawkins v. E. I. du Pont de Nemours & Co., 12 W.H. Cases 448, 27 Labor Cases, para. 69,094 (E.D. Va. 1955), holding that 10 minutes a day is not de minimis.
29 C.F.R. § 785.47 (2018).
The Ninth Circuit laid out a test for the de minimis doctrine in Lindow v. U.S., 738 F.2d 1057 (9th Cir. 1984), that "has been widely used by federal courts":
"[I]n determining whether otherwise compensable time is de minimis [under the FLSA], we will consider (1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work."
Troester, slip op. at 6, quoting Lindow, 738 F.2d at 1063.
The Cal. Supremes discussed the application of the doctrine by federal courts, including that there is no rigid rule and that courts should consider the size of the aggregate claim in dollars to determine whether the doctrine should be applied. See id. at 7.
Holding 1: the de minimis doctrine is not adopted in the Labor Code or IWC Wage Orders.
Whether the de minimis doctrine applies to California state-law wage claims first requires looking to the Labor Code and Wage Orders of the Industrial Welfare Commission (IWC), the two sources of statutory and regulatory authority governing California's wage-and-hour laws. Id. at 7. Given that the purpose of these laws are to protect employees, courts must "liberally construe the Labor Code and wage orders to favor the protection of employees" when interpreting the Labor Code and wage orders. Id. at 7-8.
Federal regulations provide a floor of protection below which states may not fall below. Id. at 8. But nothing prevents states from offering greater protection. Id. Unless there is "convincing evidence" of the IWC's intent to adopt federal standards for determining whether time is compensable under state law, courts must decline to apply any federal standard that results in elimination of substantial protection of employees. Id.
IWC Wage Order 5-2001 (linked here), which governs the plaintiff's case, requires that wages must be paid to an employee "for all hours worked." Id. at 9. So does the Labor Code. Id. at 9-10.
Because the federal de minimis doctrine ("permitting employers under some circumstances to require employees to work as much as 10 minutes a day without compensation") is less protective than requiring compensation for "all hours worked," and at the same time there is no "convincing evidence of the IWC's intent to adopt the federal standard" (id. at 10), the Cal. Supremes held that the de minimis doctrine is not adopted in the Labor Code or IWC Wage Orders. See id. at 9-11.
(The Cal. Supremes noted that the state's Division of Labor Standards Enforcement recognizes the de minimis doctrine in its enforcement manual and in opinion letters. See id. at 10-11. But the DLSE's policy manual and opinion letters are not binding on the court. Id. at 11.)
Holding 2: the de minimis doctrine is not independently applicable to the state-law wage-and-hour claims in the plaintiff's case. But the court left open whether the doctrine could apply in other cases.
Starbucks argued that even if the Labor Code and IWC wage orders have not adopted the federal de minimis doctrine, nevertheless applies "as part of the 'established background of legal principles' against which the statutes and wage order have been enacted." Id. at 12.
This creates another possibility for application of the doctrine, because, as the Cal. Supremes recognized, the maxim de minimis non curat lex is "of ancient origin and may be incorporated by implication into statutes; it is a maxim of jurisprudence that is codified in the California Civil Code. See id. at 12; Civ. Code § 3533 (“The law disregards trifles.”).
Faced with hypothetical scenarios posited by Starbucks of employees glancing at a work email while off-work as arguably a de minimis activity and other examples such as paperwork involving one minute or less of an employee's time, the Cal. Supremes responded by declining to adopt a blanket rule rejecting application of the de minimis doctrine in all state-law unpaid-wage. See id. at 13, 14 ("Instead of prejudging these factual permutations, we decide only whether the de minimis rule is applicable to the facts of this case as described by the Ninth Circuit.").
Turning to this case, the Cal. Supremes held that the doctrine did not apply. The Cal. Supremes looked to Augustus v. ABM Security Services, Inc., 2 Cal. 5th 257 (2016), a case holding that, where security guards were required to remain on call for emergencies during breaks, the employer violated the requirement of Labor Code section 226.7 to provide control-free ten-minute rest periods. See Troester, slip op. at 15-16. While the de minimis doctrine was not invoked or even discussed in Augustus, the Cal. Supremes took from Augustus the principle that strict protection of employees' ten-minute rest period impliedly rejects a de minimis application to rest periods, and such a strict construction is "difficult to reconcile" with allowing a few minutes of compensable time per day to go unpaid as a "trifle." See id. at 15-16.
The Cal. Supremes also looked to an IWC amendment that addressed the federal Portal-to-Portal Act (29 U.S.C. § 251 et seq.) (making "activities which are preliminary to or postliminary" to employment not compensable) by broadening the definition of "hours worked" under the Wage Orders to include preliminary and postliminary activities that would be excluded under the FLSA. See id. at 16-17.
After discussing these authorities and the remedial purpose of the Wage Orders and Labor Code (which requires broad employee protection), the court held that the de minimis doctrine did not apply to bar the plaintiff's claims in this case:
In 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, we conclude that the de minimis doctrine has no application under the circumstances presented here. 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. 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.
Where there is difficulty in recording compensable time, employers may be in a position to figure out ways to track that time, including by utilizing modern technology, by estimating additional post-clock-out time, or by restructuring the work so that employees don't have to work after clocking out:
We recognize that one of the main impetuses behind the de minimis doctrine in wage cases is “the practical administrative difficulty of recording small amounts of time for payroll purposes.” (Lindow, supra, 738 F.2d at p. 1062; see 29 C.F.R. § 785.47 (2018) [insignificant periods of time “which cannot as a practical administrative matter be precisely recorded for payroll purposes, may be disregarded”].) But employers are in a better position than employees to devise alternatives that would permit the tracking of small amounts of regularly occurring work time. One such alternative, which it appears Starbucks eventually resorted to here, was to restructure the work so that employees would not have to work before or after clocking out. Moreover, as noted, technological advances may help with tracking small amounts of time. An employer may be able to customize and adapt available time tracking tools or develop new ones when no off-the-shelf product meets its needs. And even when neither a restructuring of work nor a technological fix is practical, it may be possible to reasonably estimate work time — for example, through surveys, time studies, or, as See’s Candy suggested, a fair rounding policy — and to compensate employees for that time. Under the circumstances of this case, we decline to adopt a rule that would require the employee to bear the entire burden of any difficulty in recording regularly occurring work time
So is it a totally open question whether the doctrine could apply in other state-law wage-and-hour cases? Technically yes, the question is open. But the Cal. Supremes included language undermining application of the doctrine in future wage-and-hour cases. For example, in the class-action context, the whole point of a class action is to recover for many small violations:
[T]he modern availability of class action lawsuits undermines to some extent the rationale behind a de minimis rule with respect to wage and hour actions. The very premise of such suits is that small individual recoveries worthy of neither the plaintiff’s nor the court’s time can be aggregated to vindicate an important public policy. As we explained in Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, a class action suit involving a 4 cents per gallon surcharge on gasoline customers using credit cards: “Setting aside the fact that class members who were repeat customers might be entitled to recover far more than the minimal 80-cent damage figure noted by the trial court, 18 it is firmly established that the benefits of certification are not measured by reference to individual recoveries alone. Not only do class actions offer consumers a means of recovery for modest individual damages, but such actions often produce ‘several salutary by-products, including a therapeutic effect upon those sellers who indulge in fraudulent practices, aid to legitimate business enterprises by curtailing illegitimate competition, and avoidance to the judicial process of the burden of multiple litigation involving identical claims.’ ” (Id. at p. 445.) As one Court of Appeal observed in a case involving alleged fraudulent practices against consumers, “[i]n this age of the consumer class action this maxim [de minimis non curat lex] usually has little value.” (Harris v. Time, Inc. (1987) 191 Cal.App.3d 449, 458.) The same is true of employee class actions.
The Cal. Supremes also discussed that the availability of modern technology may well impact what constitutes a difficulty in recording compensable time in future cases:
[M]any of the problems in recording employee work time discussed in Anderson 70 years ago, when time was often kept by punching a clock, may be cured or ameliorated by technological advances that enable employees to track and register their work time via smartphones, tablets, or other devices. We are reluctant to adopt a rule purportedly grounded in “the realities of the industrial world” (Anderson, supra, 328 U.S. at p. 692) when those realities have been materially altered in subsequent decades.
(If you have any question whether this is limiting language that, even if dicta, seems to create a high burden for application of the de minimis doctrine in state wage-and-hour cases involving regular occurrences of small amounts of work, Justice Cuellar in a concurring opinion also notes that the majority opinion's language regarding new technologies undercuts any rationale for application of the de minimis doctrine in wage-hour cases. See below.)
Unanimous opinion authored by Justice Liu.
Concurring opinion by Justice Kruger: the law should include application of a "rule of reason" to determine whether small amounts of irregular time worked is compensable
In a concurring opinion, Justice Kruger argues that while the language of the Labor Code and Wage Orders require compensation for "any" and "all" time worked, a fair application of the law "leaves room for application of a background rule of reason" that "does not encompass claims for negligible periods of time that cannot reasonably be measured or estimated with a fair degree of accuracy." Slip op. at 30-31.
While "[t]he overarching rule is, and must be, that employees are entitled to full compensation for time worked, and employers must make every reasonable effort to ensure they have adequately measured or estimated that time. . . . the law also recognizes that there may be some periods of time that are so brief, irregular of occurrence, or difficult to accurately measure or estimate, that it would neither be reasonable to require the employer to account for them nor sensible to devote judicial resources to litigating over them." Id. at 31-32.
Justice Kruger goes on to provide examples of hypothetical situations where an employee may be required to work an unforeseen extra minute, occasionally check a text or email message and acknowledge receipt of it, or respond to a customer question after the employee's shift ends and spend a minute or two helping the customer. See id. at 33-34. "In situations like these, a requirement that the employer accurately account for every second spent on work tasks may well be impractical and unreasonable; if so, a claim for wages and penalties based on the employer’s failure to do so would be inconsistent with California labor law, construed with the guidance of the background rule codified in Civil Code section 3533." Id. at 33.
"California law does, in short, make some allowances based on considerations of practicality and reasonableness. It does not, however, permit an employer to require an employee to regularly work for nontrivial periods of time without providing compensation." Id.
Concurring opinion by Justice Cuellar: as technology advances, employers may not be required to capture every fractional second, especially if doing so destroys all privacy.
In a concurring opinion, Justice Cuellar recognized that "the majority opinion . . . leaves unresolved whether an employee’s work may ever be so fleeting or irregular that such time is no longer compensable." Slip op. at 22. Justice Cuellar discusses that constantly evolving technology means that courts, employers, and employees should have an open, non-rigid approach to "what counts as too trifling a moment in the wage and hour context" and and who should bear the burden of recording those first or last bits of time worked. See id. at 22-23.
Justice Cuellar expressly approved the majority-opinion language that new technologies undercut any rationale for application of the de minimis doctrine in wage-hour cases:
The majority opinion rightly observes that computer and smartphone technologies undercut any rationale for a de minimis doctrine that would find minutes of work performed on a regular basis to not be compensable. (Maj. opn., ante, at p. 20.) More generally, the majority indicates that “technological advances” may increasingly facilitate tracking small amounts of regularly occurring work time. (Ibid.)
Id. at 23. But technology is advancing so rapidly and allows employers to record its workers' location via smartphones and sensors---what an employer can or will be able to routinely record will encompass what some employers now and employers in the past have argued are work time that is "too trifling" or too difficult to record:
Yet when it comes to monitoring the minutia of human behavior, the future and the present are converging. In a world with pervasively deployable (or already deployed) locative technology such as smartphones and sensors, what employers can routinely record — or will soon be able to — are precisely the “split-second absurdities” previously deemed impossible to track. (See Tippett et al., When Timekeeping Software Undermines Compliance (2017) 19 Yale J.L. & Tech. 1, 2–3 [“In place of the old punch-card time clock, employees now log onto a computer or mobile device, swipe a radio frequency identification (RFID) badge, scan a fingerprint, or gaze into an iris recognition device. These and similar systems enable employers easily to record employees’ hours worked, breaks taken, and other information used to determine compensation.” (fn. omitted)].)
Justice Cuellar argues for some sort of "rule of reason," as opposed to a de minimis rule. "[O]nce claimed time is established as compensable, the onus is on the employer to demonstrate that 'reason' requires the employee to go uncompensated for the time she worked given California’s strong policy favoring compensation." Id. at 25-26.
According to Justice Cuellar, what is reasonable under a limiting "rule of reason" will depend on "whether such chronological morsels [i.e., split seconds or small amounts of time worked] can be meaningfully perceived at all at the time they occur." Id. at 26. Citing that computer screens generally operate at 60 hertz (the screen refreshing every 0.0167 seconds) because humans won't see screen flicker and citing studies that average human reaction time is 0.19 or 0.25 seconds, Justice Cuellar reasoned that "[i]t seems unlikely the Legislature’s purpose in enacting California’s fair compensation laws encompassed compensation of employees for additional work performed on such a time scale." See id. at 25-26. In other words, if the amount of time claimed as compensable yet unrecorded and unpaid is smaller than the amount of time that a human being can meaningfully perceive, a "rule of reason" may be applied to rule that such time may not be claimed as compensable under state wage-and-hour laws.
So, too, must we be cognizant of privacy protections that will limit how small the increment of work time we can measure will be (e.g., we can't be putting microchips in people for purposes of capturing compensable time). See id. at 26-27. Justice Cuellar cautioned that the Cal. Supremes should be careful not to issue a future holding that would incent employers to monitor employees so closely that all privacy is destroyed. Id. at 27. But the majority opinion "does not reach such a troubling result." Id. at 28.
"[W]hatever the merits of sophisticated employee monitoring schemes, California law stops well short of requiring employer analysis of every fractional second as part of an unsparing effort to discern what time is compensable." Id. at 29.