Nonexempt employees must be paid for all time worked under California’s Labor Code, even very brief periods of work, according to a recent opinion from the Ninth Circuit Court of Appeals. In general, nonexempt employees (often called hourly employees) must be paid for all time spent performing work, but federal law recognizes an exception if the time can be considered “de minimis.” The de minimis exception allows employers not to pay for periods of work that are too small, irregular, or administratively difficult to track. As we previously reported, the California Supreme Court decided last year that the de minimis exception does not apply to the California Labor Code (Troester v. Starbucks Corp., Cal, July 2018). The Ninth Circuit’s current ruling removes any doubt that may have existed about whether California employers can apply the de minimis exception to avoid paying for small increments of time (Rodriguez v. Nike Retail Services, Inc., 9th Cir, June 2019).
The employer in the current case required nonexempt retail employees to submit to an off-the-clock exit inspection every time they left the store. The inspections took an average of 4.7 seconds at the end of each shift, but occasionally could take up to two minutes. The employer argued that these small increments of time should still be considered de minimis, despite the Troester decision, because the increments of time were generally less than a full minute. But the Ninth Circuit was unconvinced and determined that the employer could not apply the de minimis exception, regardless of how small the increment of time it took to perform the inspections.
Tips For Employers: Although relying on the federal de minimis exception has always been risky, it’s clear that California employers can no longer rely on this defense for failing to pay nonexempt employees. This means it’s critically important to review your organization’s practices to ensure nonexempt employees are being paid for all hours worked, even periods of time that are small, irregular, or administratively difficult to track.