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Starbucks Decision Shocks Employers

Published Monday, July 30, 2018
by CEA's HR Advisors

 

Until now, it was thought that California employers were not obligated to pay employees for small increments of “off-the-clock time” spent preparing for or ending a shift, provided such time amounted to approximately 10 minutes or less of work. On August 17, 2016, the California Supreme Court agreed to review Troester v. Starbucks, a case to decide whether de minimis work time must be compensated under California law. We’ve been waiting for two years and the verdict is in – not in the favor of the employer.

HISTORY

Mr. Troester was a former employee of Starbucks who sued in federal court in California claiming that Starbucks violated the California Labor Code, because he was not paid for certain off-the clock activities related to closing the store (turning on the alarm, locking the doors, etc). The employee alleged that his off-the-clock work hours over a 17 month period equaled approximately 12 hours and 50 minutes of time, for which he was never paid. That’s only $102.67 but turns into much more when you add final paycheck penalties and it turns into a gargantuan amount when you think about the number of employees who might perform these duties in Starbucks locations throughout California and the rest of the U.S.

THE VERDICT

On July 26, 2018, the court answered the question in the negative, stating that there is no convincing evidence that California wage and hour laws incorporate the de minimis standard. That should be a surprise to the Division of Labor Standards Enforcement, whose Enforcement Policies and Interpretations Manual and opinion letters expressly adopted the standard. But the court explained that those aren’t binding. To keep things confusing for employers, the court left open the possibility that there may be employee activities that are so brief or irregular that they don’t require compensation, but the four to ten minutes at issue in this case didn’t fit into that category.

 

WHAT SHOULD EMPLOYERS DO?

1. Ensure that employees don’t clock out until they’ve completed all work-related tasks. This includes security checks, closing shop, and exiting the work premises.

2. If you use fixed time clocks, ensure that they are as close as possible to the exits or utilize time clock systems that employees can operate remotely.

3. If you use a rounding rule, ensure that your policy is just as likely to round up as to round down.

4. Require non-exempt employees to report any time they work after hours. Trivial tasks like checking e-mail or an online schedule could now be compensable under this ruling.

5. Train managers on how and when to communicate with non-exempt staff after hours.

6. If employees do after-hours work without authorization, discipline them, but pay for the time.


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