California Supreme Court Curbs De Minimis Doctrine For Wage Claims

Linda Auerbach Allderdice is a Partner in the Los Angeles office and in the San Francisco office

Phillip Schreiber is a Partner in the Chicago office

HIGHLIGHTS:

In Troester v. Starbucks Corporation, the California Supreme Court on July 26, 2018, resoundingly rejected the de minimis doctrine commonly applied under the federal Fair Labor Standards Act (FLSA) to claims for unpaid wages. In addition, the Court announced that California would follow its own rules in deciding claims for unpaid wages arising under the California Labor Code. The Troester Court's rejection of the de minimis rule is a wake-up call for California employers to review and update their timekeeping and payroll practices to ensure that employees are paid for all "hours worked" and that there are no policies or practices in place that would yield a different result. In Troester v. Starbucks Corporation (S234969), the California Supreme Court on July 26, 2018, resoundingly rejected the de minimis doctrine commonly applied under the federal Fair Labor Standards Act (FLSA) to claims for unpaid wages, and announced that California would follow its own rules in deciding claims for unpaid wages arising under the California Labor Code.

Case Background

Troester was decided in response to a formal request by the U.S. Court of Appeals for the Ninth Circuit to answer the question whether the de minimis doctrine applied to claims under Labor Code sections 510 (overtime), 1194 (providing for remedies for failing to pay minimum wage or overtime) and 1197 (minimum wage). The Ninth Circuit had before it a putative class action, which was removed from California state court to federal court by Starbucks. The case involves a nonexempt shift supervisor suing for unpaid wages for time spent on performing store closing procedures after clocking out. These close-out procedures typically involved four to 10 minutes of additional work each day.

Under the FLSA, the Court noted, the de minimis doctrine has been used "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." The Troester Court held that California's wage and hour statutes and regulations do not adopt the de minimis doctrine. The Court found that nothing in the text or history of the relevant statutes or Industrial Welfare Commission (IWC) wage orders (here, IWC Order No. 5) indicated that California had adopted the doctrine. In...

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