Calif. High Court's Starbucks Decision: Bombshell Or Blip?

Law360—Braden Campbell

Businesses in the Golden State are bracing for an uptick in wage-and-hour suits following the California Supreme Court's recent ruling that a federal doctrine blocking workers from suing over brief periods of unpaid time didn't doom a proposed class action against Starbucks Corp., but a key question still lingering after the ballyhooed decision means a flood of successful class actions is far from inevitable.

Attorneys for workers have praised the court's partial rejection of the de minimis doctrine, saying it paves the way for suits bringing wage-skimmers to justice. Meanwhile, some advisers for employers say the ruling opens their clients up to costly class suits for the sin of being bound by the practical realities of business.

But whether the ruling in Troester v. Starbucks is a bombshell or a blip may hinge on a question the California Supreme Court didn't answer: Can de minimis claims generally serve as the basis for class actions, or do the specifics of why and when workers perform mere minutes of unpaid off-the-clock work preclude group litigation?

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The de minimis doctrine comes from a U.S. Department of Labor regulation interpreting the federal Fair Labor Standards Act to excuse businesses from paying out "insubstantial or insignificant periods of time beyond the scheduled working hours," with the rationale that these periods are too hard for businesses to track. In Troester, the Ninth Circuit asked the California Supreme Court to say whether the doctrine applies to claims for unpaid wages under the California Labor Code.

Douglas Troester, who alleged Starbucks regularly made a class of nonmanagerial California employees perform a few minutes of work closing their stores after they had clocked out for the day, had asked the Ninth Circuit to revive his suit after a trial court said his claims for unpaid wages were de minimis.

The California Supreme Court said in its July 26 ruling that the doctrine conflicts with state law and regulation explicitly requiring businesses to pay workers for all work they perform. But the court stopped short of ruling it can never apply to claims brought under California law, saying only that it doesn't block Troester's suit.

"The relevant wage order and statutes do not permit application of the de minimis rule on the facts given to us by the Ninth Circuit, where the employer required the employee to work 'off the clock' several minutes per shift," Judge Goodwin Liu wrote for the unanimous court. "We do not decide whether there are circumstances where compensable time is so minute or irregular that it is unreasonable to expect the time to be recorded."

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... concerns about class certification haven't tarnished this shiny new toy in worker-side attorneys' eyes.

Jahan Sagafi, a class action and wage-and-hour specialist in plaintiff-side firm Outten & Golden LLP's San Francisco office, told Law360 that the "superiority" component of class certification means workers stand a good chance of being able to sue in groups. Courts make workers show class action is a better method for pressing their claims than individual suits, which Sagafi said will be an easy bar to clear since claims like Troester's are so small they'd be hard to bring alone.

And though procedural hurdles may block some workers from banding together to sue over spurts of unpaid time, the Troester ruling gives them a means of challenging regular wage theft they didn't have two weeks ago.

"As a practical matter, small work periods may pose individualized questions, and plaintiffs lawyers typically don't sue companies for merely being imperfect in timekeeping," Sagafi wrote in an email. "This decision reminds companies that they're going to be sued for systematically cheating workers, even if it's 'only' skimming a little bit each day."