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  • 9th Circuit Revives Wage Claims for Brief ‘Off-the-Clock’ Inspections

    Employers Group | 10/17/2019 | News

    The de minimis doctrine under the Fair Labor Standards Act (FLSA), the federal minimum wage and overtime law, says that employers do not need to pay employees for otherwise compensable amounts of time that are small, irregular, or administratively difficult to record.

    When deciding whether certain amounts of time are de minimis, federal courts governed by the U.S. 9th Circuit Court of Appeals—which covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington—consider:

    1. The practical administrative difficulty of recording the time;
    2. The aggregate amount of time involved; and
    3. The regularity of the work in question.

    Some courts use a rough rule of thumb that daily periods of up to 10 minutes of unpaid time are de minimis, meaning employers are not required to pay employees for that time.

    In a recent case, however, the 9th Circuit relied on a California Supreme Court decision to find that Nike must pay its nonexempt retail employees for the time they spend undergoing “exit inspections” before they leave the store on breaks or at the end of their shifts.

    Facts of the Case

    Nike has 34 retail stores in California. The nonexempt employees who work in those stores are required to clock in at the start of their shifts and clock out when they leave the store on breaks and at the end of their shifts.

    After clocking out but before leaving, they must undergo exit inspections by a manager. The time spent in those inspections varies from a few seconds to several minutes depending on things like whether the employee is carrying a package that must be inspected and how long the employee must wait for a manager to be available.

    In early 2014, Isaac Rodriguez, a former Nike employee, filed a class action on behalf of all nonexempt retail employees at all 34 Nike stores in California, claiming the company violated the state’s wage and hour laws by not paying employees for the time they spent undergoing exit inspections. The trial court agreed with Rodriguez that he could pursue a claim on behalf of all nonexempt retail employees who worked for Nike in California from early 2010 to the present.

    However, Nike challenged the merits of Rodriguez’s claims, arguing the de minimis doctrine applies to California’s wage and hour laws in the same way it applies to claims under the FLSA. The trial court agreed with Nike, concluding that California should recognize the de minimis doctrine under state law. Because the exit inspections were covered by the de minimis doctrine, the court dismissed Rodriguez’s claims, and he appealed to the 9th Circuit.

    Does California Recognize the De Minimis Doctrine?

    At the time of the trial court’s decision in Rodriguez’s case, the applicability of the de minimis doctrine under state law was pending before the California Supreme Court in another case, but a decision hadn’t been issued.

    By the time Rodriguez’s appeal reached the 9th Circuit, the supreme court had decided the question and rejected the doctrine under state law because California’s wage and hour laws are more protective of employees than federal law, and state law makes it clear that all work time must be compensated.

    Although it didn’t completely rule out the possibility that there might be situations in which the time in question is so short or irregular that it would be unreasonable to expect an employer to record and pay it, the supreme court found that the much more forgiving federal de minimis doctrine doesn’t apply to claims based on California’s laws.

    The court concluded, “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.”

    Because the trial court had explicitly relied on the de minimis doctrine to dismiss Rodriguez’s claims and because the exit inspections are a regular part of employees’ workday and there was evidence that they can take several minutes, the 9th Circuit panel reversed the trial court’s ruling and sent the case back for further proceedings in accord with the decision of the California Supreme Court. Rodriguez v. Nike Retail Services, Inc., Case No. 17-16866 (June 28, 2019).

    Takeaway for Employers

    The takeaway for employers in California is clear: Nonexempt employees are entitled to be paid for all of their work time unless, perhaps, the time in question is so trifling or happens so irregularly that it would be unreasonable to expect it to be recorded. Although the 9th Circuit’s decision is limited to California law, employers in other states would do well to take note of the case, too.

    Like California, many states have wage and hour laws that are more protective of employees than the FLSA. Even under federal law, off-the-clock work is frequently challenged, particularly when it’s a regular part of the workday. And in light of modern electronic timekeeping systems, it’s increasingly difficult for an employer to argue that recording de minimis time is administratively difficult.