Eric Dean, who is a partner at FitzGerald Yap Kreditor LLP, recently wrote an article on the Dynamex case, in which the California Supreme Court further defined the strict limitations on employers designating workers as independent contractors. This article concerns two more recent cases in California for “off the clock” time spent by workers in providing services to their employer. In Troester v. Starbuck, the California Supreme Court unanimously ruled that Starbucks and other employers in California must pay workers for minutes they routinely spend off the clock (whether before clocking in or after clocking out) on tasks such as a shift change, locking up, maintain records, tidying up, answering customer questions, assisting fellow workers, setting alarms etc.

In the Troester suit, the employee claimed that he spent 4 to 10 minutes off the clock each work day, activating the store alarm, locking the front door and walking co-workers to their cars. The employee’s claim was that he had put in 12 hours and 50 minutes of off clockwork over a 17-month period for a total claim of $102.60.

A U.S. District Court rejected Troester’s lawsuit under Federal Law on the grounds that the time he spent on off the clock tasks was minimal and too difficult for the employer to calculate considering the circumstances. However, the Federal District Court then requested the California courts to determine whether there would be a different result under California law. The California Supreme Court essentially ruled that the Federal Law was archaic and ruled that under California Law Troester was entitled to payment of his of the clock time.

Quotes from the ruling in Troester include: “That [the $102.60 claimed] is enough to pay a utility bill, buy a week of groceries, or cover a month of bus fares,” Associate Justice Goodwin Liu wrote. “What Starbucks calls de minimis is not de minimis at all to many ordinary people who work for hourly wages.”

In its ruling, the California Supreme Court noted that it was not closing the door on all claims by employers that the amount of additional work was “so brief, irregular of occurrence, or difficult to accurately measure or estimate,” as to be trivial and not warrant recovery.

The California Supreme Court also rejected Starbuck’s claim that it would be extremely difficult if not impossible to track the off clock time taking the position that employers could use technology for that or restructure employees’ work so they don’t have any tasks after they clock out.

In another lawsuit against Papa Johns filed in a Federal District Court in California, hourly employees have asked the Judge to conditionally certify a nationwide class action claiming the workers were stiffed on minimum wages because the pizza chain forced them to complete mandatory off-the-clock training on its corporate website.

The motivation for these and other labor cases is often the attorney’s fees award available to the worker’s counsel if the claim is successfully prosecuted or the threat of a class action certification. This has impacted both large and small companies in the Hospitality Industry as well as many other industries. In many instances, the attorney’s fees awards can substantially exceed the award to the worker.

Often the threat of a class action certification and/or a substantial adverse award of attorney’s fees compels an Employer to compromise claims that might otherwise be viewed as speculative or de minimus. Considering the very active Employee Labor Bar in California, it can be anticipated that these off the clock claims will substantially grow in number in California.

The uncertainty created by the Troester ruling appears to require employers to consider whether past business practices create additional risks of claims and, if so to consider (1) making some limited offer of payment to employees who might have claims under Troester in exchange for a release and perhaps a class action waiver and (2) eliminating off clock hours or (3) creating some compensation structure for employees who provide off the clock services and carefully documenting that understanding with the employee.

About the Author: Eric Dean has 30+ years of experience in all aspects of the representation of hospitality, commercial real estate, and secured lenders clients as both a general counsel and a department head of both national and regional law firms. Eric understands that effective, understandable and consistent communications with clients are an essential part of the client-lawyer relationship. Eric also understands that working as a team with clients to define objectives and then developing effective strategies in order to timely and cost-effectively achieve those client objectives is an essential part of being a quality attorney. You may contact Eric Dean at (949) 788-8900 or edean@fyklaw.com

Note: This article is a brief and incomplete summary and solely for purposes of creating awareness of the subject matter. It is not intended as advice or to be relied on.  If concerns exist, counsel or an HR Professional should be consulted concerning the subject matter of this Article.