Troester v. Starbucks: California Supreme Court Rules in Favor of Employees Again

On the Federal level, 2018 has not been a great year for employees’ rights. On May 21, 2018 the Supreme Court of the United States (“SCOTUS”) issued a ruling, which struck a significant blow to the rights of employees to pursue collective actions in response to legal violations surrounding their employment in Epic Systems Corp. v. Lewis (2018); employees across the nation collectively sighed in exasperation as a result.

In California however, 2018 has been an exceptional year for employees’ rights. On April 30, 2018 the California Supreme Court issued a ruling, which redefined how Courts determine whether an employee is properly classified as an independent contractor; the Court implemented what is known as the “ABC Test.” Dynamex Operations West v. Superior Court (2018) 4 Cal. 5^th 903 [Link to Dynamex Article]. Nearly two (2) months later, the California Supreme Court issued another ruling which would significantly aid California employees with grievances against their employers. On July 26, 2018 the Court issued their opinion in Troester v. Starbucks Corp. In this decision, California essentially disavowed the Federal “de minimis” principle as it applied to claims for violation of California employment laws; specifically, claims for unpaid time where the Defendant raised the defense that any time spent working was minimal and difficult to reasonably keep track of. (2018) Cal. LEXIS 512. It is important to note that the California Supreme Court did not say the “de minimis” principle is invalid entirely, it stated that on the facts before it, the “de minimis” principle was inapplicable, and specifically left for another day, the question of whether smaller increments of time might allow for the “de minimis” principle.

What is fascinating about these recent California Supreme Court decisions is that it reinforces state sovereignty; a major sticking point during the Constitutional Convention. Since the 4^th of July was not very long ago, this article will: (1) Briefly discuss the tension between the Constitution, preemption, and state sovereignty, (2) Discuss the “De Minimis” Principle, (3) Discuss the facts and analysis of the Troester decision, and (4) Discuss the practical implications of the Troester decision to California employees.

State Sovereignty and Application in the Employment Law 

During the found of the United States of America and the drafting of the Constitution, there were numerous points of contention. Most salient among those disagreements was whether or not the United States should operate as one strong central government, or a federal government of limited powers with the majority of the power left to the states. The compromise took the form of the Tenth Amendment and the Supremacy Clause. The Constitution itself set forth the specific powers that the Federal Government would have; no laws could be constitutionally enacted unless those laws were authorized by a specific enumerated Federal power. The Tenth Amendment, in turn, gave any powers not specifically granted to the Federal Government to the States themselves. Further, the Supremacy Clause stated that any properly created Federal laws would supersede conflicting state laws provided the Federal Government intended their laws to do so; this is known as “federal preemption.”

The practical effect of the principles discussed above today is encapsulated in the notion that the protections afforded to Citizens of the United States through the Constitution represent the floor of protections, not the ceiling. Put differently, no State was permitted to afford their citizens less protection that the U.S. Constitution, but they were free to provide more protection. In California, for example, Freedom of Speech is more protected than it is under the U.S. Constitution. In a similar vein, Federal laws (that are not intended to preempt state laws) represent the minimum protections a State must offer their citizens, but the state itself is free to provide even more protective laws for their citizens. In California, Labor Law has been decidedly in favor of California employees. 

In the Trouster case, the question at issue was whether the “de minimis” principle, which was applied to claims that employers violated the Federal labor laws by not compensating them for all time worked (e.g., FLSA), also applied to California’s admittedly similar labor laws regulating payment of employees for all time worked. Essentially, the question was “does the federal labor law, specifically the federal “De Minimis” principle, relating to payment for all hours worked preempt California’s labor law governing the same issue?”

What is the “De Minimis” Principle?

   As a matter of common sense, everyone understands that it would be unreasonable to require employers to pay their employees for every second that they work, especially when the employer cannot reasonably implement a method where they could measure that time; this is concept underlying the Federal “de minimis” principle.

“The de minimis doctrine is an application of the maxim de minimis non curat lex, which means ‘[t]he law does not concern itself with trifles.’ (Black’s Law Dict. (10th ed. 2014) p. 524.) Federal courts have applied the doctrine in some circumstances 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.”

“In 1961, the de minimis doctrine was codified as a federal regulation with a proviso that the doctrine was to be applied sparingly and not arbitrarily: “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 disregarded. The courts have held that such trifles are de minimis. Anderson v. Mt. Clemens Pottery Co., (1946) 328 U.S. 680. 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.” Troester v. Starbucks Corp. (2018) Cal. LEXIS 512.

In 1984, the Ninth Circuit explained that “in determining whether otherwise compensable time is de minimis under the FLSA, the Court considers: (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.

The “De Minimis” principle is well-established in Federal law, but California has been silent as to whether that policy applies to California labor claims.

What Was The Troester Decision

Courts will frequently issue semi-narrow decisions, or decisions “limited” to the facts of the case before them, in an effort to avoid creating sweeping rules with unforeseeable consequences; the Troester is one of those decisions.

To the normal reader and California employee, the facts of Troester probably sound very familiar to their employment – the very reason for this article. Daniel Troester worked as a shift supervisor for Starbucks. At trial, Mr. Troester submitted evidence that the Starbuck’s computer software required him to clock out prior to beginning the “close store procedure” as mandated by Starbuck’s policy. Given that the general principle is that employees should be paid for all time worked, any work done after clocking out would necessarily be compensable time provided the “De Minimis” principle does not apply.

After clocking out, Mr. Troester would initiate the “close store procedure”, which would transmit daily sales, profit and loss, and store inventory data to Starbucks’ corporate headquarters. After this was completed, Mr. Troester would activate the alarm, exit his store, and lock the door behind him. Mr. Troester also submitted showed that he would frequently walk employees to their vehicles in compliance with Starbucks’ policy, put patio furniture that was inadvertently left outside back in the store, and let employees back into the store to retrieve items they had forgotten; all of this occurred after Mr. Troester had clocked out, and took approximately 10 minutes every shift and amounted to a total of $102.67 in unpaid wages over the course of 17 months.

In a tacit acknowledgement of state sovereignty, the Ninth Circuit acknowledged that while the “De Minimis” principle has been a part of the federal law under the FLSA, the state of California has never determined whether the “De Minimis” principle applied to wage claims brought under California laws. The Ninth Circuit further acknowledged that in some instances California law has been interpreted to be more protective of employee wage claims than federal law. Against this background, the Ninth Circuit requested that the California Supreme Court clarify whether the “De Minimis” principle was applicable under California law.

The California Supreme Court briefly discussed what types of work constituted “compensable work time” and the legislative history of California’s labor laws and concluded the California Legislature did not intend to adopt the “De Minimis” principle when they drafted California’s labor laws.

What Does The Troester Decision Mean for the Employee?

As previously mentioned, the Troester decision was limited to the facts of the case, as discussed above. However, the Troester decision ostensibly provides California employees with guidance as to what types of “off-the-clock” work would be immune to the “de minimis” principle.

Notwithstanding the fact that employees are entitled to compensation for all time worked, many employers still fail to do so. Even trivial sums are sufficient to trigger employer liability in California, as little as 10 minutes a day over 17 months for a little over $100. This compensable time could take the form of a restaurant server being required to bus their section after their shift was over, a security officer being required to write Daily Activity Reports (“DARs”) after their scheduled shift has ended, and an office worker being required to tidy their workspace after they have clocked out for the day. As the law stands in California today, an employer who fails to pay an employee for off-the-clock activities like this are likely liable for violations of California Labor Law; these violations trigger other violations of California Labor Law as well.

If you or a loved one are being required to perform any work after clocking out, contact Yeremian Law today. Our veteran attorneys have experience standing up for employees who have been denied what they are entitled to under law and will fight your rights as well.