This article was written by Kate Visosky and Christina Nordsten and originally posted on Kelley Drye’s Labor Days Blog.

In July, the California Supreme Court issued its opinion in Troester v. Starbucks Corp., holding that the federal wage laws that excuse companies from paying workers for de minimis work, i.e. small amounts of time that are difficult to record, do not apply under the California wage and hour standards.

The de minimis rule has been applied by the federal courts for more than 70 years. The doctrine excuses the payment of wages for small amounts of otherwise compensable time upon a showing that the time is administratively difficult to record. For example, courts have held that time spent by employees booting up their computers and shutting down and clocking out are de minimis and not compensable. See e.g. Chambers v. Sears Roebuck and Co., 428 Fed. Appx. 400 (5th Cir. 2011).

In Troester, the California Supreme Court stepped away from the de minimis approach holding that an “employer that requires its employees to work minutes off the clock on a regular basis or as a regular feature of the job may not evade the obligation to compensate the employee for that time by invoking the de minimis doctrine.” Troester, (2018) 5 Cal. 5th 829, 847. The plaintiff in Troester “had various duties related to closing the store after he clocked out” and that “on a daily basis, these closing tasks generally took [plaintiff] about 4-10 minutes.” Id. at *21. The Court said this time must be compensated.

Notably, while the Court declined to apply the de minimis standard under the facts of the case, it did not reject the doctrine completely. Indeed, it noted there could be instances involving tasks “so irregular or brief in duration that it would not be reasonable to require employers to compensate employees for the time spent on them.”  Troester, 5 Cal. 5th at 848. Thus, the key notion to take away from this case is that off-the-clock work considered significant and regular must be compensated, while insignificant and irregular time could still be considered de minimis. As to the application of the rule, Justice Leondra Kruger wrote a separate concurring opinion offering some concrete examples for when the de minimis rule could apply:

  • Time spent turning on a computer and logging in to an application in order to start a shift and the process takes longer because of a rare and unpredictable software glitch.
  • Time spent reviewing schedule changes notified by e-mail or text message during off hours.
  • Time spent waiting at work for transportation at the end of the day during which time a customer may ask the employee a question not realizing the employee is off duty.

Justice Kruger noted that requiring an employer to accurately record this type of time would be impractical and unreasonable.

What does this ruling mean for California employers?

Although the Troester decision limits the de minimis standard in California, it does not fully reject it. Realistically there will be situations where some work will be impossible to record. The Court made note of this. Therefore, while entities doing business in California can be confident that highly unusual and irregular time spent off-the-clock may not be found compensable, the Troester decision may still have an impact on their business. This is especially true for companies in the service industry such as retailers and restaurants who employ a large number of the hourly workers in our state. These companies may want to conduct a review of their policies, practices, and procedures that impact their employees’ timekeeping. Below are a few examples of what employers in California can do in light of Troester.

  • Review pre-shift and post-shift practices to ensure that there is no regularly occurring off-the-clock work. For example, “post-shift” practices that include locking up the business should be done on the clock.
  • Keep in mind that technological advances can streamline timekeeping practices. For example, many companies employ smartphone applications that can measure time worked to the split of a second.
  • Update handbooks and written policies to ensure compliance. For example, policies should strictly prohibit off-the-clock work and provide employees with a process for submitting claims of off-the-clock work.
  • Train employees, including supervisors, and managers, in their updated policies and procedures.

Although the Troester decision has limited the application of the de minimis doctrine in California, it remains to be seen how it will be applied to other cases moving forward. In the meantime, employers can limit their exposure by proactively reviewing and revising their policies and procedures in light of the decision.

This article was originally published in Lawyer Monthly on August 31, 2018.

This post was written by Michael Gallion and David Van Pelt and originally posted on Kelley Drye’s Labor Days Blog.

In a noteworthy decision last week, the Ninth Circuit ruled that fast food workers in California can voluntarily bargain away some of their meal period rights in exchange for discounted meals. The unanswered questions are how much employees can trade away, and in exchange for what.

The case (Rodriguez v. Taco Bell) challenged Taco Bell’s policy of offering discounted food to employees to be eaten during their meal breaks, as long as the employees agreed to remain in the store. Taco Bell’s reason for adopting the policy was apparently to prevent employees from leaving the premises and giving the food to friends or family. California law requires that during employees’ required meal breaks, employees must be relieved of all duty and be free to leave the premises.

The Court rejected the employee’s argument that by being required to remain in the store, the employee was “under the control” of Taco Bell and the meal period was invalid. The Court noted that purchasing the discounted food was “entirely voluntary,” and Taco Bell did not interfere in how the employee spent the meal break.

The obvious question is how far the reasoning in this case can be extended. The California Supreme Court held years ago that an employer is not liable if employees voluntarily choose not to take their meal break. Does this mean that employees can trade away their right to take meal periods or rest breaks in exchange for a company gift card, for example? What about a monthly bonus? Employees in California can waive their meal periods under certain circumstances. Can they also trade them away, and be required to work an eight-hour shift with no meal period, in exchange for a benefit?

In our view, a significant expansion of this case is unlikely. California courts are simply too protective of employee rights (or perhaps paternalistic, depending on your viewpoint) to permit employees themselves to trade away significant rights. The Court in this case suggested that if the employee had been “under the control” of Taco Bell during the meal period, even voluntarily as part of receiving discounted meals, the practice would have been struck down. Indeed, California law provides that even if an employee prefers to work (and be paid) during his/her meal period, an employer can only do so if the nature of the job makes it necessary.

Still, this case does provide an opportunity that California employers may use to their advantage. Companies might consider ways to lessen the inconvenience that comes with certain legally-protected employee rights (such as the right to leave the premises during a meal period) in exchange for a benefit. Employers should just be aware that any limitation on employee rights will be viewed with suspicion by California courts.

This post was written by  Michael D. Yim and originally posted on Kelley Drye’s Labor Days Blog.

Employers, even with the most robust and well-intentioned human resources departments, can still face the dreaded misclassification lawsuit for their salaried employers. In many cases, exempt employees are properly classified as executive or administrative employees. A misclassification lawsuit, however, is difficult to dismiss early because plaintiffs are afforded great latitude in crafting factual disputes that can only be resolved at trial. On top of that, plaintiffs generally bring such claims as class or collective actions – making litigation costly as well. Further compounding the problem, settlement of wage and hour misclassification cases is the preferred mode of resolution – but only after a range of damages can be made with some degree of certainty.

What if I told you that if you included one simple sentence in your employment contracts, handbooks and policies for salaried employees, it would likely reduce your exposure by approximately two-thirds in FLSA cases? For starters, it would make it easier to settle at the right amount by avoiding unnecessarily inflated ceiling for damage calculations by plaintiffs. So what are the “magic words” in this simple sentence?

For exempt employees, your salary is intended to pay for all hours worked during each pay period, regardless of your scheduled or tracked hours.

An employer’s first response is: well, isn’t that assumed for salaried employees since common sense dictates that a salaried employee means that an employee is not paid on a time basis and would be paid for all hours worked? No. This isn’t the case as more courts have presumed that, absent an express understanding, an employee’s salary only applies to the first 40 hours of a workweek as a default. This is because U.S. Department of Labor regulations are vague on how to calculate damages for misclassification cases, and courts have growingly interpreted guidance on what is called the Fluctuating Workweek (“FWW”) method of calculation for non-exempt employees – that is, counting a weekly salary to count as pay for all hours worked at a regular rate, even “overtime.”

Wait, what? In short, many courts would treat any overtime hours as unpaid as a default for calculations. Damages, therefore, would be 1.5 times the regular rate based on 40 hours (salary divided by 40 hours) for the overtime hours. See Ramos v. Telgian Corp., 176 F. Supp. 3d 181, 193, 2016 U.S. Dist. LEXIS 44321 (E.D.N.Y. 2016) (explaining that “[i]n the case of salaried, rather than hourly, employees, … the FLSA … ‘presum[es] that [] a weekly salary covers only the first forty hours, unless the parties intend and understand the weekly salary to include overtime hours at the premium rate’”).

Continue Reading Add One Line in Your Employment Contracts and Policies to Reduce Exposure to Misclassification Liability

This post was written by Barbara E. Hoey, Mark A. Konkel, Steven R. Nevolis and Diana R. Hamar and originally posted on Kelley Drye’s Labor Days Blog.

As January draws to a close, New York employers are confronting the reality of many new laws and regulations that govern the employment relationship – from the new Paid Family Leave law, to the new federal tax law. We are also tracking several newly-signed and proposed pieces of legislation, which could further complicate the employment relationship in New York.

Here is what there is so far:

New York Paid Family Leave

As we previously reported, effective January 1, most employers in New York State will be covered by the new Paid Family Leave law (“PFL”). Under the PFL, employers will need to provide eligible employees with 8 weeks of family leave with salary reimbursement capped at 50% of the state’s average weekly wage. This will increase on an annual sliding schedule until 2021 when employees will be entitled to 12 weeks of family leave with salary reimbursement capped at 67% of the state’s average weekly wage.

Eligible employees will be permitted to take leave to care for a qualified family member’s serious medical condition, to care for the birth or placement of a child, or for a qualified military exigency. Leave under the PFL will overlap with an employee’s leave under the Family and Medical Leave Act under certain circumstances.

For a more extensive analysis of the PFL, its requirements (including employer notice requirements), and suggested steps for compliance, we encourage you to read our previous blog post on this law: “A New Headache – New York’s Paid Family LeaveContinue Reading The New Year Brings New Rules to New York