Starbucks requests rehearing following Supreme Court 'off the clock' wage decision

By John Breslin | Aug 20, 2018

SACRAMENTO - Starbucks has filed a request for a rehearing by the California Supreme Court after it ruled hourly employees that regularly work extra time off the clock must be paid.

The state Supreme Court, in a July 26 opinion, said the federal "de minimis" is not applicable to California's wage and hours laws.

The coffee shop giant filed the request for the rehearing Aug. 13, and a decision will be handed down before the end of October.

Douglas Troester, a shift supervisor who worked for the company for 17 months, sued for unpaid wages after clocking off. He had to activate the store alarm, lock the front door and walk workers to their cars, which took him an additional four to 10 minutes a shift.

It was calculated he worked an extra 13 hours, with lost wages amounting to just over $100.

While the de minimis doctrine under the federal Fair Labor Standards Act, in place for 70 years, allows for some unpaid time if it so minimal it is hugely difficult to calculate, and generally accepted to be 10 minutes of less per shift.

The Supreme Court, in a unanimous 7-0 opinion stated that California's laws do not include the doctrine. Indeed, the laws bar employers from not paying employees who routinely work off the clock without pay.

But the court left "open whether there are wage claims involving employee activities that are so irregular or brief in duration that it would not be reasonable to require employers to compensate employees for the time spent on them."

While the plaintiff in the case is likely to receive some payout, and the cost to Starbucks going forward may be relatively low given its size, small business owners could face problems calculating and paying rates.

Betty Jo Toccoli, president of the California Small Business Association, told the Northern California Record: "We oppose anything that is going to affect ability of small business to create jobs, and there there has already been a big drop off in small businesses creating jobs due to regulations."

A bigger question is whether the ruling could lead to plaintiff lawyers fishing for class actions, and, further, whether it will be made it easier to receive class certification.

In the hours after the Supreme Court handed down its opinion, lawyers for the plaintiffs in a suit against the H&M retail chain filed a motion in support of class certification, and cited the decision. The suit centers on workers who are required to go through an off the clock security check.

In a post published by the California Chamber of Commerce, Gail Cecchettini Whaley, the organization's employment law counsel, and Bianca Saad, an expert in the field, warned of a surge of "wage and hour lawsuits."

They advised, "Employers who routinely have employees engage in tasks before or after the employees clock in and out for their scheduled shift should ensure employees are compensated for all time — no matter how small the amount may seem."

But defense lawyers Michael S. Kan and Kevin D. Phillips, of Epstein, Becker and Green, argued that while there may be an increase in class action lawsuits, the Supreme Court "rejected the application of the rule under the facts presented, it did not address a much larger question."

And that question, they argued in a post, is whether "highly individualized" arguments over small amounts of time could justify certification.

"And while Troester certainly suggests that employers in California will face an increased number of class actions alleging that certain insignificant amounts of time should have been compensated, plaintiffs’ difficulty in actually getting classes certified on such claims appears relatively unchanged," they wrote.

Paula Brantner, a senior adviser to Workplace Fairness, an advocacy group, said she welcomed the decision, describing it is as important because it defines the differences between California's labor laws and federal.

Brantner told the Northern California Record: "Most of the these cases have to be brought as class actions, when, such as in this case, the amount is a little over $100. It is the only way workers can band together."

But she added, "I do not think (Troester) will allow for any more than already exist." 

Nevertheless, defense lawyers across the state are advising clients to take immediate measures, including a review of the company's practices, updating written standards, studying whether technology might fill any gaps, and to train managers to investigate all claims of "off the clock work."

Starbucks has not indicated it intends to take the case further if its application for a rehearing is denied.

But the Supreme Court ruling was a watershed moment in a case where the plaintiff's claim was first dismissed by a federal judge in 2014. Troester appealed to the 9th Circuit, which then asked the California to decide whether "de minimis" did apply to California law.

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Organizations in this Story

California Southern Small Business Development Corp. Epstein Becker & Green, P.C. Starbucks Corporation

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