California Supreme Court Rejects De Minimis Doctrine
Why it matters
Answering a certified question from the U.S. Court of Appeals, Ninth Circuit, the California Supreme Court declared that the Fair Labor Standards Act (FLSA) de minimis doctrine does not apply to the state’s wage and hour rules and regulations. The dispute involved former Starbucks employee Douglas Troester, who sued the coffee chain for failing to pay workers for tasks that lasted only a few minutes but were performed after they clocked out. A district court granted Starbucks’ motion for summary judgment, and Troester appealed. While the FLSA prohibits claims over small chunks of time, the Ninth Circuit found no definitive policy in state law and punted the case to the state’s highest court for guidance. Considering both the Labor Code as well as the Industrial Welfare Commission (IWC) wage orders, the unanimous court found that “[n]othing in the language of the wage orders or Labor Code shows an intent to incorporate the federal de minimis rule,” and that neither “has been amended to recognize a de minimis exception.” Instead, California law mandates that employees be paid for “all hours worked,” the court explained, noting that it was not deciding “whether there are circumstances where compensable time is so minute or irregular that it is unreasonable to expect the time to be recorded.”
A former shift supervisor at a California Starbucks, Douglas Troester filed suit in August 2012. He claimed that during his year of employment with the company, Starbucks’ computer software required him to clock out on every closing shift before initiating the software’s “close store procedure” on a separate computer terminal in the back office.
In addition, Troester was required by company policy to walk coworkers to their cars and, on occasion, wait with employees for their rides to arrive, bring in store patio furniture that had been left outside or reopen the store to allow employees to retrieve items they left behind. These tasks generally took between four and ten minutes, which in aggregate over Troester’s employment would have netted him $102.67 had he been paid for the time.
Ruling on Starbucks’ motion for summary judgment, a federal district court found the time to be de minimis. While acknowledging that the closing activities occurred on a regular basis, the court said the FLSA’s de minimis doctrine foreclosed recovery in the suit.
Troester appealed, but the Ninth Circuit found itself unable to rule, turning to the California Supreme Court for assistance. The federal panel certified the question: “Does the federal [FLSA’s] de minimis doctrine … apply to claims for unpaid wages?”
The state’s highest court answered in the negative. The court began with the provisions of the Labor Code and the 18 wage orders adopted by the IWC, both of which contemplate “that employees will be paid for all work performed,” the court noted.
“The federal rule permitting employers under some circumstances to require employees to work as much as 10 minutes a day without compensation is less protective than a rule that an employee must be paid for ‘all hours worked,’ or ‘[a]ny work’ beyond eight hours a day,” the court wrote. “And there is no ‘convincing evidence of the IWC’s intent to adopt the federal standard.”
“Nothing in the language of the wage orders or Labor Code shows an intent to incorporate the federal de minimis rule … or the federal regulation. … [N]either the Labor Code statutes nor any wage order has been amended to recognize a de minimis exception. Starbucks cites no statutory or regulatory history, and we have found none, that indicates an intent by the IWC or the Legislature to impliedly adopt such a rule.”
Having concluded that California’s wage and hour statutes and wage orders have not adopted the de minimis doctrine, the court then considered whether some version of the doctrine nonetheless applies to wage and hour claims as a matter of state law. Again, the court answered in the negative, rejecting Starbucks’ argument that in light of the “ancient roots” of the de minimis doctrine, it should be recognized as an inherent part of wage and hour law.
“We decline 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,” the court said. “In FLSA litigation, the brief employee activity in question has sometimes been incidental to noncompensable time, such as commute time. In other cases, the activity in question was irregular or rarely occurring. In still others, the activity in question was paperwork involving a minute or less of an employee’s time.”
In lieu of prejudging various factual permutations, the court limited its holding to the facts of the case, finding the de minimis rule inapplicable to Troester’s experience.
“We have said that application of a de minimis rule is inappropriate when ‘the law under which this action is prosecuted does care for small things,’” the court explained. “In deciding whether application of the de minimis rule in this case would be consistent with the governing wage order and Labor Code statutes, we observe that the regulatory scheme of which the relevant statutes and wage order provisions are a part is indeed concerned with ‘small things.’”
For example, California law ensures that most nonexempt employees receive two daily ten-minute breaks and the court has “scrupulously guarded” against encroachments on these periods, while the wage orders emphasize a remedial purpose requiring a liberal construction and a directive to compensate employees for all time worked, the court said.
“[W]e conclude that the de minimis doctrine has no application under the circumstances presented here,” the court wrote. “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. As the facts here demonstrate, a few extra minutes of work each day can add up. According to the Ninth Circuit, Troester is seeking payment for 12 hours and 50 minutes of compensable work over a 17-month period, which amounts to $102.67 at a wage of $8 per hour. That is enough to pay a utility bill, buy a week of groceries, or cover a month of bus fares. What Starbucks calls ‘de minimis’ is not de minimis at all to many ordinary people who work for hourly wages.”
The court also noted that technological advances may help employers devise ways to track small amounts of regularly occurring work time and that it may be possible to reasonably estimate work time through surveys, time studies or a fair rounding policy.
To read the opinion in Troester v. Starbucks Corp., click here.
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New Law Clarifies California’s Ban on Salary Inquiries
Why it matters
Providing additional clarity on last year’s law prohibiting inquiries into salary history, California Governor Jerry Brown recently signed Assembly Bill 2282 into law. The Fair Pay Act’s ban on asking job applicants for “salary history information” that took effect on Jan. 1, 2018, left several questions unanswered. A.B. 2282 attempted to provide some solutions, making clear that an “applicant” is an individual who seeks employment with the employer and not a current employee; the new law also defined “pay scale” as a salary or hourly wage range that does not include bonuses or equity ranges and clarified that employers may ask about an applicant’s salary expectations without running afoul of the Fair Pay Act. In related news, Hawaii jumped on the salary history inquiry prohibition bandwagon with the enactment of Senate Bill 2351, a new law effective on Jan. 1, 2019, that bans employers in the state from asking about an applicant’s wage history.
Joining the growing number of jurisdictions—including Delaware, Massachusetts, New York, Oregon and several cities—the California Legislature enacted Assembly Bill 168 in 2017, prohibiting employers from asking job applicants for “salary history information,” a term defined to include both compensation and benefits.
The Fair Pay Act, which took effect on Jan. 1, does permit employers to rely on information that is shared by the applicant “voluntarily and without prompting,” although employers are banned from relying solely on prior salary to justify any disparity in compensation. The law also requires employers to provide applicants with the pay scale for a position upon “reasonable request.”
However, the law left several issues unclear. In response, the legislature enacted A.B. 2282, hoping to provide some clarity. The amendments defined three terms found in the Fair Pay Act. First, the term “applicant” was defined as “an individual who is seeking employment with the employer and is not currently employed with that employer in any capacity or position.” A “reasonable request” for pay scale information means “a request made after an applicant has completed an initial interview with the employer,” while A.B. 2282 defined a “pay scale” as “a salary or hourly wage range.”
In a positive clarification for employers, the amendment stated that employers may ask about an applicant’s salary expectations for a position.
Pursuant to Senate Bill 2351, employers, employment agencies and their agents are banned from inquiring about an applicant’s “current or prior wage, benefits, or other compensation.” Employers are also prohibited from researching this information or from relying on salary history in creating an applicant’s salary or compensation package, even if the applicant voluntarily discloses prior salary information.
Current employees are specifically excluded from the law, and employers are permitted to discuss an “applicant’s productivity, such as revenue, sales, or other production reports.”
To read A.B. 2282, click here.
To read S.B. 2351, click here.
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Court Tosses Claims Where EEOC Lacked Details
Why it matters
A new decision from a California federal court in a pattern or practice discrimination case filed by the Equal Employment Opportunity Commission (EEOC) provides a valuable lesson for employers. The agency filed suit against Prestige Care, Inc., an employer that manages and provides senior nursing care facilities in several states, alleging the company promulgated or implemented policies that violated the Americans with Disabilities Act (ADA), such as a “100% healed/100% fit for duty” return-to-work policy. The employer also ignored its obligation to engage in an interactive process and did not offer light duty as a reasonable accommodation, the EEOC alleged, citing violations with regard to at least 13 individuals affected by the policies. Prestige responded with a motion to dismiss. The court granted the motion for the majority of the individuals, ruling that when the EEOC pursues a class claim under Section 706 and chooses to identify “additional class members” who have suffered some form of disability discrimination, the allegations must plausibly show that those additional individuals are protected by the ADA. As the agency failed to allege an impairment that affected a major life activity or identify essential job functions for eight of the individuals referenced in the complaint, claims based on those individuals were dismissed.
The EEOC filed suit against California-based Prestige Care, Inc., asserting violations of the ADA at the senior nursing care facilities or senior assisted living facilities operated by the defendant in Alaska, Arizona, California, Idaho, Montana, Nevada, Oregon and Washington.
Prestige promulgated or implemented and followed a “100% healed/100% fit for duty” return to work policy, failed to offer light duty as a reasonable accommodation and ignored its obligation to engage in an interactive process, the agency alleged, listing “at least” 13 individuals who had been adversely affected by Prestige.
The employer moved to dismiss the suit, arguing that the complaint was deficient with respect to ten claimants because the EEOC failed to allege an impairment that affects a major life activity or failed to identify essential job functions. Without such allegations, no plausible ADA claim existed for these individuals, the defendant told the court.
U.S. District Judge Anthony W. Ishii agreed. “[B]y identifying additional class members and describing their circumstances and experiences, the EEOC is making significant representations about those members,” the court said. “In essence, the EEOC is averring that the additional members suffered discrimination, the members are protected by the ADA, a recovery is being sought for those members, and the members’ experiences are similar to other unidentified class members. Because a recovery is being sought for those members, the circumstances and eligibility to recover under the ADA of any identified class member is put directly to issue. If an individual is not ‘disabled’ or a ‘qualified individual’ under the ADA, then the ADA offers no protection. This is true even if an individual is subject to a policy that is alleged to be a per se violation of the ADA, such as a 100% healed return to work policy.”
By the time the EEOC files a complaint, “at a minimum” the agency should know or reasonably believe that each individual identified is “disabled” or “qualified,” the court added. “In sum, the Court holds that when the EEOC pursues a class claim under Section 706 and chooses to identify ‘additional class members’ who have suffered some form of disability discrimination, the allegations must plausibly show that those ‘additional individuals’ are protected by the ADA.”
The court then examined the allegations for each of the ten individuals whose claims were challenged by the employer. While the claims of two passed muster—with sufficient evidence that they were a “qualified individual with a disability”—the claims of the other eight failed the court’s review.
In total, the court dismissed the claims of eight class members, albeit without prejudice, while letting claims for five move forward (three of which went unchallenged by the employer).
To read the order in EEOC v. Prestige Care, Inc., click here.
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Accommodating Telecommuting: Physical Presence in Office Presents Factual Question
Why it matters
A factual question remained as to whether the employee’s physical presence in the office was required full time, the U.S. Court of Appeals, Sixth Circuit ruled, reversing summary judgment in favor of an employer in an Americans with Disabilities Act (ADA) case. A human resources (HR) employee was four months pregnant when she was hired by the College of Wooster. She took 12 weeks of unpaid leave under the Family and Medical Leave Act (FMLA) but suffered from postpartum depression and separation anxiety, returning to work on a part-time basis. She claimed that she was able to accomplish everything required of her job on her modified scheduled, but the school terminated her when she was unable to return to full-time work. She sued under Title VII, the FMLA and the ADA, and the district court sided with her employer. On appeal, the Sixth Circuit reversed. The plaintiff was clearly an individual with a disability and was otherwise qualified for the position, the court found, having received a “very positive” review of her part-time work. Just because the employer said a full-time presence was an essential function of the job did not make it so, the federal appellate panel ruled, finding that fact disputes as to the issue precluded summary judgment.
Late in the summer of 2013, Heidi Hostettler was hired as an HR generalist by the College of Wooster. She was four months pregnant at the time. Before her maternity leave, Hostettler worked full time, from 8 a.m. to 5 p.m., and her employment went well. She took 12 weeks of unpaid leave pursuant to the FMLA.
But when she experienced severe postpartum depression and separation anxiety, Hostettler’s doctor suggested she return to work on a part-time basis for the “foreseeable future.” In May, Hostettler returned to work five days a week for half-days, an arrangement the school agreed to until June 30.
The parties disagreed about what happened over the next two months. Hostettler—who continued to suffer from depression and anxiety—would have panic attacks if she had to work later than noon. She claimed that with an accommodated schedule, however, she was able to do everything required of her position. One of her colleagues agreed with this perspective in a declaration.
Her supervisor agreed there had been no complaints about Hostettler’s work or conduct and that Hostettler never failed to perform any responsibility or finish any assigned task, and provided a purely positive review of her work during this time period. However, her supervisor also stated that the modified schedule put a strain on the rest of the department.
When July rolled around, Hostettler’s supervisor pushed her to extend her schedule. Hostettler submitted an updated medical certification that explained she should continue working part time and might be able to return to full-time work in September. The next day, Hostettler was fired. She sued, alleging violations of the ADA, the FMLA, Title VII and corresponding Ohio state laws. Wooster moved for summary judgment, and a district court judge granted the motion on all claims.
Hostettler appealed. She argued that the district court improperly accepted the employer’s contention that full-time work was an essential function of the position of HR generalist. The Sixth Circuit agreed, reversing the summary judgment in favor of Wooster because questions of fact remained.
The plaintiff was clearly an individual with a disability pursuant to the ADA, the court noted, further finding that she was also otherwise qualified for her position. “Hostettler presented evidence that she satisfied all the core tasks of her position,” the panel wrote. “She testified that she completed all her work on time, including training, employee relations, and recruiting. She also submitted the affidavit of her former colleague … who confirmed Hostettler’s evaluation of her effectiveness on a half-schedule. [The colleague] even went so far to say that it was not just Hostettler’s work that was being done in a timely manner—she was ‘unaware of any human resources issue, program, or assignment of any kind that the Department failed to complete professional and timely during the same period.’”
The statements of Hostettler’s supervisor supported these conclusions, as she agreed that the plaintiff never failed to complete a task or meet a responsibility, and the supervisor gave Hostettler a positive review that did not mention the plaintiff was needed on a full-time basis.
“In many circumstances, that much evidence might be sufficient to grant summary judgment in an employee’s favor,” the court said. “But here the record does contain some evidence that Hostettler was not completing all of her work during her part-time schedule. [The supervisor] stated that she was overwhelmed as the only one in the office to handle employees who showed up unexpectedly to talk about an issue. And because there was no one in the office to help with the issues [the supervisor] faced, some event-planning responsibilities ‘dropped through the cracks.’ [The supervisor] further explained that Hostettler’s absence was putting a strain on the department.”
Given this competing evidence, summary judgment was improper, the Sixth Circuit said. “On its own … full-time presence at work is not an essential function,” the panel wrote. “An employer must tie time-and-presence requirements to some other job requirement.”
“Wooster must explain why Hostettler could not complete the essential functions of her job unless she was present 40 hours a week,” the court said. “But Wooster cannot make that required showing: as explained above, there remain disputes of material fact over whether Hostettler was able to achieve all of her job’s essential functions on a modified schedule.”
Full-time presence at work is not an essential function of a job simply because an employer says that it is, the Sixth Circuit made clear. “If it were otherwise, employers could refuse any accommodation that left an employee at work for fewer than 40 hours per week. That could mean denying leave for doctor’s appointments, dialysis, therapy, or anything else that requires time away from work. Aside from being antithetical to the purpose of the ADA, it also would allow employers to negate the regulation that reasonable accommodations include leave or telework.
“Wooster may have preferred that Hostettler be in the office 40 hours a week. And it may have been more efficient and easier on the department if she were. But those are not the concerns of the ADA: Congress decided that the benefits of gainful employment for individuals with disabilities—dignity, financial independence, and self-sufficiency, among others—outweigh simple calculations of ease or efficiency. To that end, the ADA requires that employers reasonably accommodate employees with disabilities, including allowing modified work schedules. An employer cannot deny a modified work schedule as unreasonable unless the employer can show why the employee is needed on a full-time schedule; merely stating that anything less than full-time employment is per se unreasonable will not relieve an employer of its ADA responsibilities.”
The panel also concluded that summary judgment of Hostettler’s Title VII, FMLA and state law claims was improper, reversing the district court and remanding the case for further proceedings.
To read the opinion in Hostettler v. College of Wooster, click here.
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Ninth Circuit: Meal Discount Didn’t Violate California Labor Code
Why it matters
An employer’s policy offering discounted meals to workers if they ate the food on the premises during their meal breaks did not violate the California Labor Code, the U.S. Court of Appeals, Ninth Circuit determined. As a benefit to employees, Taco Bell provided a “deep discount” to buy one meal per shift, provided that it was eaten on the premises (a policy intended to prevent theft or sharing of the food with friends). Bernardina Rodriguez filed a putative class action, alleging that the policy ran afoul of state law because employees were not relieved of all duties during their meal break, as they were obligated to remain on the premises if they wanted to eat the discounted meals. A district court sided with the employer, and the federal appellate panel affirmed. Taco Bell’s meal breaks fully complied with state law, the court said, and the undisputed evidence showed that the employer did not require or otherwise pressure employees to purchase a discounted meal.
For seven years, Bernardina Rodriguez worked for Taco Bell in a Suisun City, CA, store. The national fast-food chain had a policy offering workers a discounted meal and complementary drinks, subject to certain rules. The meal must be eaten in the restaurant and away from the cash register service area as well as the food production area.
The discounted meal policy was optional, and there was no requirement that employees ever purchase Taco Bell products. The requirement to eat the meal on the premises was to ensure that the benefit was utilized only by employees and that the food was not given to friends and family. The policy was popular with employees, and Rodriguez availed herself of a discounted meal almost every shift.
In 2013, Rodriguez filed suit against Taco Bell, asserting that the on-premises discount policy subjected the employees to sufficient control to render the time spent eating the meals as working under California law. A district court judge granted Taco Bell’s motion for summary judgment.
On appeal, the Ninth Circuit affirmed.
California Wage Order 5-2001 requires employees be relieved of “all duty” during the meal period, and in Brinker Restaurant Corp. v. Superior Court, 273 P.3d 513 (2012), the California Supreme Court elaborated on this requirement, holding that employers fulfill their obligations when they relieve “employees of all duty, relinquish control over their activities and permit them a reasonable opportunity to take an uninterrupted 30-minute break, and do not impede or discourage them from doing so.”
Taco Bell’s on-premises discount policy satisfied all of these obligations, the court said.
“[T]he company relieves employees of all duty and relinquishes control over their activities,” the panel wrote. “Taco Bell does not require the employee to purchase a discounted meal. The purchase of the meal is entirely voluntary. Plaintiff has not alleged nor introduced any evidence to show that Taco Bell pressured its employees to purchase the discounted meals. Employees are free to leave the premises or spend their break time in any way that they choose that does not interfere with Taco Bell conducting its business.
“For that matter, employees are free to purchase meals at full price and eat them wherever the employees wish. The company does not otherwise interfere with the employees’ use of the break time or require the employees to serve the interests of Taco Bell. Nor has Plaintiff alleged or introduced any evidence to show that her employer required or pressured her to conduct work activities while on premises during the meal period. Taco Bell’s policy indeed appeared to prohibit this, as employees were required to take rest breaks and meal periods away from ‘[t]he food production area’ and ‘[t]he cash register service area.’”
The court readily acknowledged that some employer policies may so burden the use of employees’ break time that the workers must be considered “on duty,” citing the decision in Augustus v. ABM Security Services, Inc., 385 P.3d 823 (2016) as an example. In that case, security guards were required to be “on call” during their breaks and carry a device so that the employer could reach the employee during the break if services were needed.
“This case is not remotely similar,” the Ninth Circuit said. “The employees are not on call and are free to use the time in any way they wish. … The district court properly granted summary judgment in favor of Taco Bell.”
To read the opinion in Rodriguez v. Taco Bell Corp., click here.
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Ohio Court Declines to Extend USERRA to Spouses
Why it matters
Do Uniformed Services Employment and Reemployment Rights Act (USERRA) protections extend to military spouses? No, a federal court in Ohio has ruled, rejecting a lawsuit filed by a woman who claimed she was forced to resign her position after she moved with her husband for a two-year deployment. Stacy Norris worked from home for her position with Glassdoor, Inc., from 2007 until 2011, when she informed her employer that the U.S. Navy had deployed her husband to Virginia for two years. She planned to continue to work remotely but was told she would lose her job unless she remained in Ohio. Although the employer said she could be rehired upon her return, she received no response when she moved back to Ohio and reached out to Glassdoor. Norris filed suit under USERRA, alleging discrimination based on her association with her husband. Noting that the U.S. Court of Appeals, Sixth Circuit has yet to weigh in on whether the statute allows claims based on spousal activity, the court found the text of the statute was clear that USERRA’s protections extend only to members of the uniformed services on the basis of their own service.
In 2007, Stacy Norris was hired by Glassdoor, Inc., working remotely from her home in Ohio. In 2011, the U.S. Navy deployed her husband to Virginia Beach, VA, for two years. Norris planned to go with her husband and informed Glassdoor about her move, suggesting that she continue working remotely for the company while in Virginia.
Glassdoor objected, responding that she would lose her job unless she maintained her Ohio residency and that if she moved to Virginia, she would need to resign. In exchange for her resignation, Glassdoor agreed to rehire Norris upon her return to Ohio.
After she returned to Ohio in 2013, Norris contacted Glassdoor and expressed her interest in working there again. When she received no response, she filed suit alleging violations of USERRA based on her association with her husband. Norris claimed that her husband’s military activity was a substantial or motivating factor in Glassdoor’s adverse employment action. In response, the employer moved for summary judgment, arguing that USERRA does not permit associational claims.
Noting that no courts in the Sixth Circuit have decided the issue, U.S. District Judge Algenon L. Marbley began with the text of the statute. Norris pointed to Section (b) of the statute, which she said indicated USERRA’s protections are broad enough to cover her due to the use of the phrase “any person.” Section (b) reads: “An employer may not discriminate in employment against or take any adverse employment against any person because such person (1) has taken an action to enforce a protection afforded any person under this chapter, (2) has testified or otherwise made a statement in or in connection with any proceeding under this chapter, (3) has assisted or otherwise participated in an investigation under this chapter, or (4) has exercised a right provided for in this chapter. The prohibition in this subsection shall apply with respect to a person regardless of whether that person has performed service in the uniformed services.”
The court was not persuaded. “This portion of USERRA provides no remedy for Mrs. Norris,” the court wrote. “The phrase ‘any person’ does not stand alone, and the language of this section is not as flexible as she suggests. Section (b) contains a list of prerequisites that qualify a plaintiff for relief. The prerequisites show that subsection (b) is meant to protect employees against adverse employment actions due to their pursuit of other legal protections available to them under USERRA or their assistance to another individual who is bringing a USERRA claim. Mrs. Norris satisfies none of these prerequisites. If Congress had wished to provide the same protection for the spouses of uniformed service members, such a clause logically would have fit into section (b), but no such clause is present.”
Nor did Norris’ reliance on the remedial nature of the statute sway the court. “It is true that USERRA is remedial in nature,” the court acknowledged. “But here, the Court need not rely on interpretive canons to ascertain the statute’s reach. Congress explicitly outlined the scope of USERRA’s remedial purpose in 38 U.S.C.A. section 4301(a).”
As an alternative argument, Norris pointed to her own military service to support her USERRA claims. A veteran of the U.S. Navy, Norris was on active duty from September 1997 until 2001, when she was honorably discharged. She continued to serve on inactive duty until September 2005.
But Norris’ veteran status, on its own, did not entitle her to relief, the court determined, as the statute provides that a claimant’s military status must be “the actual substantial or motivating factor for an adverse employment action.” Glassdoor’s knowledge of her veteran status did not render every action the employer took against her actionable, the court made clear. “The Court cannot ascertain any basis upon which to conclude that Mrs. Norris was the victim of discrimination based on her veteran status,” the court wrote. “Not only had her employer known of her veteran status when they hired her in the first place, but also six years had elapsed between Mrs. Norris’s military activity and her resignation from Glassdoor.”
Further, by “Norris’s own allegation, her husband’s military service and her decision to follow him to Virginia are what motivated Glassdoor to demand her resignation,” the court said. “Where a veteran ‘argues that something other than his [or her] military status was the actual substantial or motivating factor for an adverse employment action,’ a USERRA claim does not lie.”
The court granted the employer’s motion to dismiss.
To read the opinion and order in Norris v. Glassdoor, Inc., click here.
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