We’ve all been there: You pull up to a parking spot, hop out to check whether the meter requires payment on Sunday and then grumble as you fish around in the coin tray. With any luck, you find a quarter or two. More often than not, however, you’re stuck with nickels and the nigh-useless penny. (Of course, the ensuing profanity of finding only 23 cents in your car will soon be a lost art, as most new parking meters accept credit cards or mobile payments.)

Many of us fill that coin tray with the loose change resulting from a purchase at Starbucks, and now a recent California Supreme Court ruling has ensured that California-based employees receive a little more of that earned loose change going forward. In Troester v. Starbucks Corp., 2018 WL 3582702 (Cal. Sup. Ct. July 26, 2018), plaintiff Douglas Troester was a shift supervisor at Starbucks. He filed the initial action in August 2012 on behalf of himself and others in a putative class of all nonmanagerial California employees who performed store closing tasks from mid-2009 through October 2010. Specifically, Troester claimed that on every closing shift, Starbucks’ computer software required him to clock out before initiating the software’s “close store procedure” on a separate computer terminal in the back office. After he completed that task, he activated the alarm, exited the store, locked the front door and walked his co-workers to their cars, in compliance with Starbucks’ policy. All of this, he alleged, happened off the clock.

Starbucks removed the action to federal district court and moved for summary judgment on the grounds that Troester’s uncompensated time was so minimal that Starbucks was not required to compensate him. The district court agreed, and held that over the 17-month period at issue, Troester’s unpaid time totaled approximately 12 hours and 50 minutes. That equated to $102.67, exclusive of penalties or other remedies.

The Ninth Circuit upheld the district court opinion, but also recognized that while the de minimis doctrine has long been a part of the Fair Labor Standards Act (FLSA) (since the Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946)), California courts had never addressed whether it applied to wage claims brought under California law. As a result, the Ninth Circuit certified the question and sent it to the California Supreme Court.

The California Supreme Court disagreed with both the district court and the Ninth Circuit and held that the de minimis rule did not apply to California wage claims. Specifically, the court explained, “We hold that the relevant California statutes and wage order have not incorporated the de minimis doctrine found in the FLSA. We further conclude that although California has a de minimis rule that is a background principle of state law, the rule is not applicable here.” With respect to the dollar amount at issue, the court stated that $8 an hour is “enough to pay a utility bill, buy a week of groceries, or cover a month of bus fares.”

The ramifications of the ruling are still unknown, but some things are certain. The effects of this decision extend far beyond a few dollars for a shift supervisor. What may start as pennies will quickly escalate into significant dollars once a plaintiff’s attorney tacks on other California-specific wage claims, such as waiting time penalties and damages multipliers. Employers in California that have been operating under the expectation that the FLSA’s de minimis rule will apply no longer have that luxury.

California has traditionally been a state that offers more employee protections than does the FLSA or other comparable states’ acts. With the widespread use of more accurate time-recording software and timekeeping systems, however, there is a possibility that plaintiffs’ attorneys across the country may seek similar rulings in their home jurisdictions.

The Bottom Line: 

Employers in California can no longer rely on the de minimis rule as a defense against potential liability, and are now subject to significant penalties for pennies on the dollar.