9 FAQs About De Minimis Doctrine After Troester v. Starbucks was first featured in the Employment section of Law360.
In Troester v. Starbucks Corporation, the California Supreme Court recently held that the federal de minimis doctrine does not apply to claims for unpaid wages under the California Labor Code. As a follow-up to our recent legal alert on this case, we took a deeper dive into some common questions.
For locations that have time clocks, what are best practices regarding placement? For example, if there is a short line (even one person) to clock in, should an employer be concerned about the length of time it takes to clock in and out?
This is a fact-intensive inquiry, and a good subject for review by the employer’s human resources or payroll representatives. Starbucks is especially critical of activities that occur regularly without compensation. If employees must regularly wait to clock in, or if the clock-in process regularly takes more than an insignificant amount of time without compensation, then compensation in some form should be considered. For example, at the minimum wage, a wait of 30 seconds per punch could add up to $30 per year, an amount that Starbucks might not consider “trifling.” On the other hand, if more than one person is in line for the time clock only five percent of the time, that would likely be acceptable.
What about time spent traveling from the parking lot to the clock-in location?
Starbucks does not change the normal rules regarding commuting. Time spent commuting is generally not compensable unless the employee is somehow under the control of the employer. There may be site-specific situations where employees who drive to work must park in remote lots and shuttle to the actual work location. Even then, as long as employees are allowed other options (e.g., public transportation, getting dropped off on-site, walking, biking, etc.) there is good legal authority that the time spent traveling from the parking lot to the worksite is non-compensable commute time.
Are employers now expected to implement some sort of auto clock-in as soon as employees hit a threshold?
Not necessarily. Starbucks doesn’t require employers to be at the cutting edge of technology—that may not even be wise or practical in many industries. For example, if employees use personal devices to clock in and out, that could raise questions about device reimbursement. Nonetheless, implementing technological advances as they become industry standards should be considered.
The opinion makes several suggestions for avoiding the issues faced by Starbucks. Employers can restructure work so employees do not have to work before or after clocking out. They can adopt technological fixes. If neither of these options are feasible, employers can reasonably estimate work time; for example, through surveys, time studies, or a fair rounding policy. Going beyond a typical policy prohibiting off-the-clock work, employers can and should require employees to report any time, no matter how small, not reflected on their clock-ins and clock-outs.
Should employers add a few minutes to each employee’s pay to mitigate risk? How would that work?
Starbucks suggests that adding estimated time could be a reasonable option. For example, an employer could perform a time study and augment employee time accordingly. However, Starbucks also suggests that time estimates should be a last resort if more precise options are not feasible.
We have a union. Should we bargain with the union regarding acceptance of de minimis time or acceptance of reasonable compensation for clock-in and clock-out time?
While there may be an argument that an employer can bargain over a reasonable estimate of time worked, it is unlikely an employer could bargain this time away entirely. Except for a few statutory exceptions (e.g., Cal. Lab. Code §§ 204(c), 514), an employer and union cannot bargain away an employee’s rights under state wage statutes. Some courts have held that the provisions of the California Industrial Welfare Commission Wage Orders are similarly protected.
That said, an employer might consider bargaining to agreement a reasonable estimate of additional time worked outside of clock-ins and clock-outs. This should give employers a favorable presumption in any subsequent litigation. In addition, the ability to invoke a collective bargaining agreement triggers an affirmative defense of federal preemption.
What are best practices for ensuring no interruptions during meal and rest breaks?
Some employers have their employees certify full, uninterrupted breaks at the time of a clock-out. This can be helpful as long as employees are being paid for this certification time. Employers should circulate policies and train managers on the importance of uninterrupted breaks, and require employees to promptly report if they have not had an uninterrupted meal or rest period. Where possible, employers should utilize designated “breakers” specifically tasked with covering employee breaks.
What are best practices for handling the inevitable texts, emails and calls to non-exempt supervisors when they are off-the-clock (for example, involving schedule changes)?
Employers should circulate policies requiring employees to report extra time not reflected during their on-duty shifts with an acknowledgment of receipt accompanied by reminders and training. The policy should list non-exclusive examples of extra time that must be reported.
As a practical matter, the importance of reporting increases with the frequency of the interruptions. For example, occasional receipt of a schedule change by text or email during off hours should be reasonable, but if they are regularly sent or received, an employer should consider either requiring such employees to record their time or pay for some reasonable estimate of the time spent.
Is rounding of time no longer legal?
No. The Starbucks decision favorably cites a well-established decision involving See’s Candy, which held that neutral rounding policies are permissible provided they do not result in a disadvantage to employees. The problem is that, in practice, it is very difficult to predict in advance whether a neutral rounding policy will disadvantage employees.
While it may not always be feasible, the best practice is to pay from clock-in to clock-out with no additional time spent on work tasks before or after that period. Starbucks also suggests a rounding policy that only advantages employees as a potential solution.
Must we now pay for seconds of time?
Perhaps. Starbucks makes clear that minutes must be counted. “Split-second absurdities” do not need to be counted. The middle ground—fractions of minutes—will likely be a source of litigation in the future, especially if the cumulative effect disadvantages employees. A big fight in Starbucks was about the plaintiff’s time measured in seconds (30 seconds to walk out of the store, 15 seconds to lock up, 35-45 seconds to walk his co-workers to their cars, etc.), so employers cannot dismiss seconds as irrelevant. A system that rounds to the nearest minute in favor of the employee might solve this problem.
Although in many respects the Starbucks case raises more questions than answers, one thing is abundantly clear: just a little bit of time can add up to a lot of liability. So while the effects of the Starbucks case work themselves out in the courts, employers in California would be wise to carefully assess their time-keeping practices and to think critically about the aggregate effects of otherwise small amounts of time on their workforce.
Do you have questions that are unanswered? We would be happy to hear from you. Email Daniel Fears at dffpaynefears.com or Laura Fleming at lfpaynefears.com.