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California Supreme Court Distinguishes State and Federal Wage Laws

State and federal wage laws require employers to pay a minimum wage and overtime to non-exempt employees. The U.S. Supreme Court has identified an exception when the alleged amount of unpaid wages is particularly small, known as the “de minimis doctrine.” It applies to wage claims under federal law, but not necessarily to state wage claims. The California Supreme Court recently ruled on a certified question from the Ninth Circuit Court of Appeals, asking whether the federal de minimis doctrine applies to California wage laws. The state high court ruled that it does not apply in Troester v. Starbucks Corp., No. S234969, slip op. (Cal., Jul. 26, 2018).

The federal Fair Labor Standards Act (FLSA) currently sets the national minimum wage at $7.25 per hour. 29 U.S.C. § 206(a)(1)(C). It allows states to enact their own statutes with a higher, but not lower, minimum wage. Id. at § 218(a). California law sets a minimum wage of $10.50 per hour for employers with up to twenty-five employees, and $11 per hour for employers with at least twenty-six employees. Cal. Lab. Code §§ 1182.12(b)(1)(B), (2)(A). Both state and federal law establish an overtime wage rate of one-and-a-half times a non-exempt employee’s usual wage for work in excess of forty hours in a week. 29 U.S.C. § 207(a)(1), Cal. Lab. Code § 510.

The FLSA’s de minimis doctrine holds that employers are not liable for wage law violations when the amounts in question are sufficiently small, based on three factors:
1. When the amount of time in question “is so miniscule that it cannot, as an administrative matter, be recorded for payroll purposes”;
2. When “the size of the aggregate claim” is “insubstantial”; and
3. When “the claimants [did not] perform[] the work on a regular basis.”
Lindow v. United States, 738 F. 2d 1057, 1063 (9th Cir. 1984). See also Anderson v. Mt. Clemens Pottery Co., 328 US 680, 692 (1946); 29 C.F.R. § 785.47.

The Troester case began as a putative class action in Los Angeles County Superior Court, asserting causes of action under the FLSA and California law. The lead plaintiff worked for the defendant as a shift supervisor, and alleged that he was required to perform multiple tasks related to closing the store after he had clocked out. After removing the case to federal court, the defendant moved for summary judgment based on the de minimis doctrine. The district court granted the motion, and the plaintiff appealed.

The California Supreme Court, in response to the Ninth Circuit’s certified questions, ruled that the de minimis doctrine does not apply to state law claims. The court also allowed, however, that employers may be able to challenge claims “involving employee activities that are so irregular or brief in duration that” employers could not reasonably be expected to compensate them. Troester, slip op. at 21. A concurring justice noted that the court did not identify a clear threshold for determining when a claim might be “so fleeting or irregular that such time is no longer compensable.” Id. at 22 (Cuéllar, J., concurring).

Employment attorney James G. Schwartz has advocated for the rights and interests of Bay Area businesses and business owners for more than forty years, representing clients in both litigation and transactional matters. To schedule a free and confidential consultation with a member of our experienced and knowledgeable team, please contact us today online or at (925) 463-1073.

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California Legislator Reviews Employment Laws Dealing with Workplace Harassment, Pleasanton Business & Commercial Law Blog, January 29, 2018