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Supreme Court case review could have major implications for businesses

posted Dec 12, 2016, 10:49 AM by Resty Manapat

It is a lawsuit that has largely made its way through the court system under the radar, but it is one with potentially major implications for businesses, both large and small. 

The class-action suit against Starbucks centers on whether a worker should be paid for the time it takes to arm an alarm, walk out of the store and lock the door. The California Supreme Court has agreed to review a plaintiff’s arguments in the case after it was thrown out by the U.S. 9th Circuit Court of Appeals. A ruling is expected next year. 

The Supreme Court will decide whether a long-standing federal rule - the de minimis doctrine that employees do not have to be paid for the small amount of time spent on premises after clocking out - applies to California labor law. 

“The case has huge implications for California employers,” Anthony Zaller, a Los Angeles-based employment lawyer, told the Northern California Record. “Will the court recognize that employers have a de minimis defense? If not, it will change the landscape and you will see a lot more of these types of wage and hour class actions against every size of businesses. What might happen is just the threat of a lawsuit, and potentially spending thousands on defending it, may lead employers to settling cases.” 

Douglas Troester filed a lawsuit alleging that Starbucks violated the California Labor Code by failing to pay him for short periods of time he spent closing the store.  

He alleged Starbucks failed to pay him for time spent walking out of the store after activating the security alarm, for the time he spent turning the lock on the store’s front door, and for the time he spent occasionally reopening the door so that a co-worker could retrieve a coat. 

The plaintiff, represented by attorney David Spivak, of the Spivak Law Firm, filed a class-action suit under the California Labor Code for failure to pay minimum and overtime wages, failure to provide accurate written wage statements and failure to timely pay all final wages. Spivak did not return calls asking for comment. 

Starbucks filed a motion for summary judgment asking the court to dismiss the plaintiff’s case based upon the de minimis doctrine. The trial court agreed. 

“People are really looking for something for nothing,” Betty Toccoli, president of the California Small Business Association told the Northern California Record. “We are trying to keep jobs, and this sort of thing makes some business owners not want to hire people. This potentially sets a precedent. If it does go through, there are serious ramifications, and this in California where we just got hit with $15 an hour minimum wage. This case is against business, and its one more thing to harm job creation.” 

Zaller said it is hard to say why the Supreme Court takes on certain cases but he speculated that the main reason the court granted review of this one is because de minimis is a federal rule and the plaintiff has argued that it does not apply to California. 

This clarification is needed despite other courts noting that California’s Division of Labor Standards Enforcement—“the agency empowered to enforce California’s labor laws”—has adopted the federal regulation in its manual. Under de minimis, which has been in place for five decades, it is thought that 10 minutes in any day does not have to be counted when calculating wages. 

While the California Supreme Court has not adjudicated on this matter, the Court of Appeal Fourth Appellate District applied a federal standard when permitting employers to round employee time entries to the nearest five minutes, one-tenth, or a quarter of an hour. The case was Candy Shops Inc. v. Superior Court, Zaller said, and the rounding was expected to be in favor of both parties. 

Given the uncertainty, the Supreme Court agreed to take it up. The Supreme Court’s decision in the Starbucks case could potentially have a wider impact regarding whether other federal wage and hour doctrines have any place in interpreting California law, Zaller said. 

"It seems realistic to expect the court to rule in favor of Starbucks because without some standard the argument could come down to seconds and that is when it gets ridiculous,” Zaller said. “It really should not give rise to a lawsuit just as long as employers are not trying to take advantage of employees." 

If the Supreme Court does rule in favor of the plaintiff, Zaller said he does not expect the legislature to step in and pass a pro-employer law. 

“The California legislature is very pro-plaintiff and will not disagree,” he said.

Source: Northern California Record