California Supreme Court Rejects the FLSA’s De Minimis Rule

On July 26, 2018, the Supreme Court of California ruled that the state’s wage and hour rules and regulations have not adopted the Fair Labor Standards Act’s de minimis doctrine and that the de minimis rule does not apply to a wage and hour claim brought under a state wage order. The de minimis rule permits employers to disregard “insubstantial or insignificant periods of time beyond the scheduled working hours” when recording an employee’s hours worked for purposes of compensation.

Does the FLSA’s De Minimis Doctrine Apply in California?

The court examined the California Labor Code and its 18 Industrial Welfare Commission (IWC) wage orders to see if the de minimis doctrine applied. The specific wage order in this case—IWC Wage Order No. 5-2001—defines “hours worked” as “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.” The state labor code specifies that employees must be paid for all work performed. According to the court, “[n]othing in the language of the wage orders or Labor Code shows an intent to incorporate the federal de minimis rule” and “neither the Labor Code statutes nor any wage order has been amended to recognize a de minimis exception.”

Is the De Minimis Doctrine a Principle of California Law?

The court next considered whether the de minimis rule applied to wage and hour claims as one of the legal principles under which California’s wage orders and labor code were adopted. The state’s highest 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.” However, in deciding whether the de minimis rule applied to the specific facts of the case and the wage order at issue, the court observed that “the regulatory scheme of which the relevant statutes and wage order provisions are a part is indeed concerned with ‘small things’”—namely, 10-minute rest breaks and preliminary and postliminary activities that are defined as “hours worked.”

Additional Considerations

The court reinforced its position by rejecting the contention that “‘[s]plit-second absurdities’ can be readily equated with ‘minutes of work beyond the scheduled working hours.’” “Nor is it clear why,” the court noted, “when it is difficult to keep track of time worked, the employee alone should bear the burden of that difficulty.”

The court also stated that “the modern availability of class action lawsuits undermines to some extent the rationale behind a de minimis rule with respect to wage and hour actions” by permitting the aggregation of small individual recoveries. Finally, the court noted that “many of the problems in recording employee work time . . . 70 years ago, when time was often kept by punching a clock, may be cured or ameliorated by technological advances that enable employees to track and register their work time via smartphones, tablets, or other devices.”

Thus, the court held that California’s wage and hour laws have not incorporated the FLSA’s de minimis doctrine and that “although California has a de minimis rule that is a background principle of state law,” the rule was not applicable to the case at issue.

Key Takeaways

While the decision deals a blow to California employers by requiring them to record and compensate employees for de minimis work under some circumstances, employers should keep in mind that the court’s analysis was specific to the facts of the case at hand.

California employers will also want to note that this decision will likely not affect any lawful rounding policies that employers have implemented. The opinion appears to approve of reasonable, fair rounding policies, provided they do not result in a failure to pay employees for time spent working.