Capturing Wages for Off-the-Clock Work in California Retail Stores
During the past several years, we have represented employees of several clothing retailers, including sales associates working for Polo Ralph Lauren, Gap and Banana Republic, and Chico’s in California-wide class action cases. All of these cases were prosecuted under California labor law. Our most recent employment class action against Polo Ralph Lauren challenged its failure to pay employees for the time they spent waiting for and undergoing “bag checks” or internal theft prevention inspections at the end of their shifts. Our clients alleged they sometimes had to wait for up to a half an hour for managers to perform bag checks and let them leave the stores. They alleged that under California law this off-the-clock time was “work” and that they were entitled to wages for the time they spent in their stores between “clock out and walk out.”
Bag Checks Are Common In the Retail Setting
In the retail store environment, many companies require employees to undergo bag check inspections before they can leave their stores for breaks or at the end of their shifts. According to industry experts, bag checks are a loss prevention tool used by retailers to discourage internal theft. These bag checks are permitted under California law and are generally a mandatory condition of employment for certain types of retail workers. The problem arises when employees are required to wait for their managers or other authorized personnel to perform bag checks on them after they have clocked out and are no longer being paid for their time. Is this waiting time compensable under California, however?
Under California Law, an Employer’s Control Over the Worker Is Key
With certain limited exceptions, hourly employees in California are entitled to be paid for all the time they are “subject to the control of an employer.” Bono Enterprises, Inc. v. Bradshaw (1995) 32 Cal. App. 4th 968. This “includes all the time the employee is suffered or permitted to work, whether or not required to do so.” Industrial Welfare Commission Order 7-2001. In the Polo case, our clients alleged they had been locked inside their stores after they had clocked out at the end of their shifts. From our clients’ perspective, physical confinement plainly satisfied the “control” requirement under California law.
The Federal De Minimis Defense
Polo defended the claims by relying on a federal legal doctrine called the de minimis defense. The de minimis defense arose out of the Portal-to-Portal Act (a 1947 amendment to the federal Fair Labor Standards Act). 29 U.S.C. § 254(a), a provision of the Fair Labor Standards Act, provides that certain activities performed before (preliminary) or after (postliminary) the worker’s principal activities are not compensable.
Under the Fair Labor Standards Act, principle activities include any work of consequence performed for an employer, no matter when the work is performed. If the activity is necessary to the business and is performed by the employees for the primary benefit of the employer, it is generally compensable time, unless it is deemed to be de minimis. It is de minimis when the unpaid time is short, occurs infrequently and is difficult for the employer to track. Lindow v. United States, 738 F. 2d 1057 (9th Cir. 1984)
As the United States Supreme Court explained more than 60 years ago,
When the matter in issue concerns only a few seconds or minutes of work beyond the scheduled working hours, such trifles may be disregarded. Split-second absurdities are not justified by the actualities of working conditions or by the policy of the Fair Labor Standards Act. It is only when an employee is required to give up a substantial measure of his time and effort that compensable working time is involved.
Federal Courts, including the Ninth Circuit, have developed a three-part test to evaluate when unpaid work time can be described as de minimis. In Lindow v. United States, (9th Cir. 1984), the Ninth Circuit Court of Appeals explained that to excuse an employer from its wage obligations under the de minimis defense, the courts must evaluate: “(1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work.”
Thus, if the work time is short, occurs only on rare occasion and is very hard to track, under federal law the employer can essentially ignore it.
But, Does the De Minimis Defense Apply Under California Law?
One of the central legal issues in the Polo case was whether the federal de minimis exception applied to wage and hour claims under California law. We argued that applying the de minimis defense to our clients’ off-the-clock claims would undermine California’s “subject to the control” test. In other words, if employees under California law are entitled to be paid for all time they are under the employer’s control, it does not matter whether the time is preliminary, postliminary or de minimis. The only thing that matters is whether the worker is under the employer’s control. If control is present, then the worker is entitled to be paid for the time they are under that control.
While the de minimis defense has not been tested by any California appellate court, one thing is clear: “The federal authorities are of little if any assistance in construing state regulations which provide greater protection to workers.” Bono Enterprises, Inc. v. Bradshaw, 32 Cal. App. 4th 968 (1995). This distinction is of great benefit to California workers and is one reason most wage and hour cases in California are prosecuted under California, and not federal, law.
So, does the de minimis defense apply to wage and hour claims under more employee-friendly California law? We still do not know. Just days before the trial court in the Polo class action was scheduled to decide whether to apply the federal de minimis defense to our clients’ claims, the case settled for $4 million.
Eventually, of course, a California appellate court will be asked to decide whether the de minimis defense applies to California off-the-clock claims. For now, California law remains unclear. What if the de minimis defense is deemed to apply to California claims? If workers can establish that the off-the-clock work occurred regularly, amounted to substantial time during the course of employment and that it would have been feasible for the employer to track the time, the de minimis defense should not have a substantial impact on their right to be paid wages for all the time they are subject to their employer’s control.