Ninth Circuit rejects employer’s argument that off-the-clock bag checks were de minimis

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The federal de minimis doctrine and Troester v. Starbucks Corporation

Last year, we discussed the significance of the case Troester v. Starbucks Corporation, in which the California Supreme Court found that the federal de minimis doctrine did not apply to the plaintiff’s class action claims brought under California law. The federal de minimis doctrine provides that “insubstantial or insignificant periods of time…which cannot as a practical administrative matter be precisely recorded for payroll purposes, may be disregarded.” In cases applying federal law, courts have regularly held that daily periods of up to 10 minutes of work are de minimis.

Significantly, although the Troester Court held that the federal de minimis law has not been adopted by California wage and hour statutes, the Court “decline[d] to decide whether a de minimis principle may ever apply to wage and hour claims given the wide range of scenarios in which this issue arises,” and it left open “whether there are wage claims involving employee activities that are so irregular or brief in duration that it would not be reasonable to require employers to compensate employees for the time spent on them.”

In a concurring (i.e., not controlling) opinion, one of the Court justices noted that the majority opinion left “unresolved whether an employee’s work may ever be so fleeting or irregular that such time is no longer compensable.” In another concurring opinion, another justice noted that the claims brought by Troester involved “nontrivial, regularly occurring periods of work” but opined that it was easy to imagine other scenarios in which a de minimis rule might apply. The concurring justice then went on to list examples of what may be considered de minimis time, such as circumstances where: 1) an employer requires employees to turn on their computers and log into an application to start their shifts, which typically takes less than one minute but could take longer on rare occasions due to software glitches; 2) an employer occasionally emails or texts employees during their off hours to notify them of schedule changes; and 3) employees in retail stores, who often remain in the store for several minutes waiting for transportation, may occasionally be asked a question by a customer, not realizing the employee is off duty, and the employee spends a minute or two helping the customer. In sum, the concurring justice focused on irregular and short interruptions and delays as potential bases for allowing the de minimis doctrine to apply in cases brought under California law.

Rodriguez v. Nike Retail Services, Inc. and the application of Troester

The Troester case recently impacted another case in federal court applying California law. In Rodriguez v. Nike, an employee brought a class action lawsuit for time spent by employees undergoing off-the-clock exit inspections whenever they left the store. Nike filed a motion for summary judgment, asking the court to find that it defeated Rodriguez’s claims as a matter of law and that there was no triable issue of fact for a jury to decide. The lower district court’s ruling (which pre-dated the Supreme Court’s decision in Troester), found in favor of the employer on the basis of the federal de minimis doctrine. The employee appealed the decision to the Ninth Circuit, and, in the interim, the Supreme Court decided Troester.

Nike argued that, even after Troester, the amount of time at issue was still de minimis. In its argument before the Ninth Circuit, Nike noted that Troester left open “‘whether there are circumstances where compensable time is so minute or irregular that it is unreasonable to expect the time to be recorded,’” and it argued that Troester’s rejection of the de minimis doctrine applied only to a matter of minutes worked off-the-clock; not a matter of seconds. The Ninth Circuit rejected Nike’s interpretation: “To the extent Nike urges us to interpret Troester as replacing the federal de minimis doctrine’s 10-minute daily threshold with a state-law 60-second analogue, we hereby decline to do so.” The Ninth Circuit reversed the lower court’s decision and instructed the lower court to proceed consistent with Troester.

The Court also noted that employees frequently exited the store multiple times per day, and it pointed to evidence presented by Rodriguez that longer inspections were common, often at least a minute. In light of the evidence presented, the Court concluded that exit inspections did not qualify as “‘split-second absurdities’” that would potentially be permissible even under California law. The Court found that, even according to Nike’s expert’s study (which found that 92.2% of inspections took less than one minute, and the average inspection took between 16.9 and 20.2 seconds) “the vast majority of inspections took measurable amounts of time, and there is a genuine dispute between the parties as to whether these amounts were more than ‘minute,’ ‘brief’ or ‘trifling.’”

The Ninth Circuit also concluded that the district court erred in finding that Nike need only prove that “it would be administratively difficult to [record inspection time] given its timekeeping system.” It cited to Troester for its finding that employers are in a better position than employees to devise alternatives that would permit the tracking of small amounts of regularly occurring time. The Court also noted that “Troester expressly ‘decline[d] to adopt a rule that would require the employee to bear the entire burden of any difficulty in recording regularly occurring work time.’” The Court then acknowledged that Rodriguez had pointed to multiple viable alternatives for Nike to conduct on-the-clock bag checks and said the district court failed to explain why those proposals did not create a triable issue of fact.

Takeaway

Though the Troester and Rodriguez decisions still allow employers to argue that a de minimis principle applies in certain situations, it is clear that regularly occurring off-the-clock work will typically not fall within that principle, however short the period of work. As we previously mentioned, employers should exercise caution when communicating with employees during non-work hours. Additionally, employers should consider devising ways to record employees’ time that does not require the employees to perform work off-the-clock either immediately before or after clocking in or out. Lastly, employers may want to revise their written timekeeping policies to specify that employees should record all time spent on work-related duties, including very small amounts of time.