Applying the De Minimis Rule to California Wage and Hour

There has long been an unresolved issue of California law regarding whether the de minimis rule, a Federal employment law rule allowing for employers to avoid recording small bits of otherwise compensable time applies under California law for wage and hour purposes.  Many California employees apply rounding techniques based upon this rule that have been approved by Federal courts on the assumption that the same rules are acceptable under state law.  Other employers provide that employees must do some very short mundane tasks before or after clocking in/out under the same principle.  The California Supreme Court has now ruled that requiring any “off the clock” work, no matter how short, is not allowed under California law.  Furthermore, the decision casts serious doubt on the propriety of rounding practices in California.

Case Background and the Ninth Circuit

On July 26, 2017, in Troester v. Starbucks Corporation, the California Supreme Court, in answer to a question by the Ninth Circuit Court of Appeals, held :  “We hold that the relevant wage order and statutes do not permit application of the de minimis rule on the facts given to us by the Ninth Circuit, where the employer required the employee to work ‘off the clock’ several minutes per shift.”  This statement was accompanied by others indicating that California’s statutes, regulations and Wage Orders had not adopted the standard.  In Troester, the employee was required to do short mundane tasks after clocking out, usually a minute here or a minute there.  In this situation, the California Supreme Court made clear that no uncompensated time, no matter how short, is acceptable and that Starbucks’ practice violated California wage and hour laws.

“Off the Clock” Issue Still not Resolved

The facts of the Troester case did not present a time rounding issue.  This was recognized by the California Supreme Court, so that leaves an argument that perhaps reasonable and fair rounding might be allowed under California rules.  Still, with this decision in place, there is even greater risk than before that rounding policies might be found ultimately illegal in California, particularly in instances where a policy is neutral on its face but statistics indicate it may not be neutral in practice. To avoid litigation, employers should consider stopping the application of rounding policies for time keeping unless and until the matter is finally resolved by the California Supreme Court.

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