Most employers understand and embrace the concept that an hourly non-exempt employee must be paid for all time worked. Where disputes arise around “off-the-clock” work the dispute is often based on a minor “closing” or “opening” task or set of tasks that occur before the employee has clocked in or after the employee has clocked out. Federal law recognizes a "de minimis" defense. The defense applies if the off-the-clock work is sufficiently minor or insignificant. The concept behind the de minimis defense is that the time is so “insubstantial or insignificant” that it need not be paid and is too difficult for an employer to track in any event.
In Troester v. Starbucks, the California Supreme Court rejected the application of the de minimis defense to work performed by Starbucks’ hourly employees who were required to close out the store after having clocked out. The employees alleged that the store close out process took 4-10 minutes with the variation in minutes caused by a variety of factors outside of the employees’ control. Starbucks did not pay for store close out time because the logistics of the process required the employees to clock out before beginning the store close out.
The California Supreme Court rejected the de minimis defense asserted by Starbucks. The Court acknowleged that the California Labor Commissioner has recognized the defense in certain circumstances, but concluded the defense is not supported by the language of the California Labor Code or the California Wage Orders. The Court emphasized that the Wage Orders define “hours worked” to include all time “the employee is suffered or permitted to work” and that this language has been interpreted by California courts to include time “the employer knew or should have known” an employee was performing work on the employer’s behalf.
The Court explicitly declined to hold that the de minimis defense could never be used by an employer in California, noting there might be circumstances where the defense might be appropriate. However, the Court refused to set any standards that would support the defense and stated that employers (not employees) are best suited to devise solutions to minor off-the-clock work scenarios.
The Starbucks case serves as an important reminder that employers must be vigilant in guarding against any off-the-clock work by non-exempt employees, particularly if it recurs on a regular basis as a result of an employer’s operations. Given the risks related to wage and hour litigation, employers should regularly audit their time-keeping practices for any potential pitfalls in recording of time by hourly employees. At least the following issues should be examined relating to potential off-the-clock work:
- Is there any work-related task that any category of non-exempt employee must regularly perform before clocking in or after clocking out?
- Where and when does the clock out process occur in relation to when the employee exits their work location?
- Are non-exempt employees contacted by supervisors or management and asked work-related questions while they are clocked out?
- Does the time-keeping system in some manner require employees to represent that they have recorded all time worked every day?
- Is there a written policy signed by each employee that states the employer does not permit “off-the-clock” work and that also provides a mechanism for reporting any such work if it occurs?
Off-the-clock cases rarely occur because an employer willingly directs employees to work off-the-clock. Most frequently, these cases result from an employer having flawed time-keeping practices and failing to have adequate policies or practices in place. Fortunately, these are issues that can be remedied with some diligence by employers. If you have questions about wage and hour law or any other issue relating to employment law, please contact one of our attorneys: