SAN FRANCISCO — Tort-reform advocates and business leaders are speaking out on a pending California Supreme Court review of a lawsuit that has potential serious implications for employers.
As previously reported in the Northern California Record, the California Supreme Court has agreed to review the plaintiff’s arguments in a wage and hours case after it was thrown out by the federal 9th Circuit Court of Appeals. A ruling is expected some time this year.
The Supreme Court will decide whether a long-standing federal rule — the de minimis doctrine that employees do not have to be paid for the small amount of time spent on premises before clocking in or after clocking out — applies to California labor law.
Douglas Troester filed suit alleging that Starbucks violated the California Labor Code by failing to pay him for the short periods of time he spent closing the store.
He alleged Starbucks failed to pay him for time spent walking out of the store after activating the security alarm, for the time he spent turning the lock on the store’s front door, and for the time he spent occasionally re-opening the door so that a co-worker could retrieve a coat.
The plaintiff, represented by attorney David Spivak of the Spivak Law Firm, filed a class action under the California Labor Code for failure to pay minimum and overtime wages, failure to provide accurate written wage statements, and failure to timely pay all final wages.
John Doherty, president of the Civil Justice Association of California, told the Northern California Record that is not unheard of for the state Supreme Court to be asked to decide on an issue already adjudicated at federal level.
“The 9th Circuit threw out the federal claims, but asked the California Supreme Court to review it in regards to state law,” he said. “It is not that usual to pop back and forth, but I think the 9th Circuit did not feel comfortable making a decision on California laws.”
Doherty added that it is a disappointment that this is a matter that is left ambiguous.
“It is a sensible rule consistently applied to California wage and hour laws and helps prevent frivolous and abusive lawsuits,” he said.
Right now, employers do not know the status of the “de minimis” as it applies to California. But there is a good reason these exist, Doherty said, because it is so difficult to weigh this small amount of activity against value.
“Until we hear a judgment on the case the rule does not apply, but I hope the court does end up concluding that this well-established and longtime rule stays in effect,” he said.
“If the court somehow does not apply, there will be significant hardship to employers, a very high cost and another against employers.
"It is a dangerous business trying to predict what the California Supreme Court will do, but certainly it would be a surprise if it went against the national trend, both at federal and state level."
On the reasoning behind the case taken in the first place, Doherty argues it is just one of the problems within the system “where there are right and just lawsuits.”
“This is a frivolous lawsuit saying the de minimis standard should not be used. The fact it can get up to the Supreme Court is challenging to the legal system,” he added.
Further, while the plaintiff did not succeed in federal court, the costs to Starbucks are likely substantial.
“It is a good example of the court not being put to good use,” Doherty said.
Erica Frank, general counsel for California Chamber of Commerce, took a slightly different view, arguing that is is good that this doctrine is going to be ruled on by the Supreme Court. Frank told the Northern California Record that she believes the court will back up the doctrine.
“It’s a federal standard, and we have numerous cases where courts have adopted the de minimis standard,” Frank said. “While there is no specific California law, it is in the Department of Labor Standards Enforcement manual. Nevertheless, employers are still exposed to being sued.”
Frank believes the California Supreme Court should clear up any ambiguity that still exists around this standard.
“If the court does not rule in favor of the standard the flood gates will open,” Frank added. “I am hoping the court will look at the precedent, the 9th Circuit and U.S. Supreme Court rulings and adopt it for California.”
It is dangerous for employers, who are concerned about what might happen, Frank said, adding that it is “ridiculous” for someone to be paid the minute you walk on to the property.
The 9th Circuit asked for the case to be reviewed because there is no statute in California law that requires the de minimis doctrine.
If the ruling is in favor of the plaintiff, it is “really hard to tell” whether the Legislature will introduce legislation to cover the loophole, Frank said.