California's top court rules workers must be paid for off-the-clock tasks

See Starbucks' straw-free lid
See Starbucks' straw-free lid

California's Supreme Court ruled that employers must pay workers for the time they spend completing off-the-clock tasks, such as locking up after work.

The decision, issued this week, marks a win for labor advocates who say requiring hourly workers to spend minutes doing unpaid tasks amounts to wage theft. Business groups say the ruling will embolden frivolous lawsuits and cost companies money.

A federal law, called the Fair Labor Standards Act, generally allows companies to avoid compensating employees for time spent on duties the law describes as trivial or too difficult to track.

In its majority opinion, the California Supreme Court said the federal rule does not apply in the state when it comes to certain off-the-clock tasks performed by employees.

It's the result of a six-year legal battle between Starbucks (SBUX) and Douglas Troester, a California worker who sued the company for not paying him for closing tasks that he said took four to 10 additional minutes after he clocked out each day.

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Over the 17 months of Troester's employment at Starbucks, the unpaid time added up to more than $100, according to court documents.

Shaun Setareh, one of the attorneys who represented Troester, said it amounted to "wage theft."

"It's basically skimming off of people's paychecks for the benefit of fattening the wallets of CEOs and stockholders of major corporations," he said.

Setareh called the decision a "game changer" that "has implications for every single employer in the state."

Starbucks said in a statement that it was "disappointed" with the decision, which sends the case back to the 9th Circuit US Court of Appeals.

"We will await further disposition of the case before the 9th Circuit as the appeal process continues," the statement reads.

The US Chamber of Commerce, the largest business lobbying group in the country, stood with Starbucks in fighting the case. The organization said in a brief filed with California's Supreme Court that employers in California are "are already vulnerable to litigation costs from insubstantial wage and hour" lawsuits.

"The Court should not increase this exposure by approving of the Appellant Douglas Troester's rigid and unworkable position," the brief reads. The Chamber of Commerce did not respond to a request for comment on the decision.

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The majority opinion from California's top court suggests the federal law is antiquated, and smartphones or other modern devices can be used to easily track a employee's time down to the minute.

"As the facts here demonstrate, a few extra minutes of work each day can add up," the California Supreme Court opinion states.

The decision does leave room for interpretation.

"We leave open whether there are wage claims involving employee activities that are so irregular or brief in duration that it would not be reasonable to require employers to compensate employees for the time spent on them," the majority opinion states.

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