The California Supreme Court recently ruled against Starbucks regarding its practice of not paying employees for alleged “de minimis” work performed after clocking out. Starbucks had a practice of having their employees perform certain administrative and clean up duties after “clocking out” for the day. The effect was that the employees were not paid for this time. Allegedly, Starbucks thought it was okay because this was not a lot of money at issue (i.e. “de minimis“). Quoting from the opinion, “The de minimis doctrine is an application of the maxim de minimis non curat lex, which means ‘[t]he law does not concern itself with trifles.'” Here, though, the California Supreme Court did not view this as a trifle.

The California Supreme Court held that:

(1) California statutes and wage orders have not incorporated the Federal “de minimis doctrine” and
(2) California’s general background de minimis principle is not applicable here

Quoting Justice Liu:

“What Starbucks calls de minimis is not de minimis at all to many ordinary people who work for hourly wages.”

Applying the Starbucks Decision:

Our view is that in this context, “de minimis” is probably dead, so reliance on that concept for justifying post-closing, or pre-opening work “off-the-clock” is misplaced. Perhaps it was not previously, but things change. As Justice Liu wrote in his concluding paragraph of his opinion “The relevant statutes and wage order do not allow employers to require employees to routinely work for minutes off-the clock without compensation.”

How Do You Manage the Risk?:

Business and life is about risks, mitigating risks and managing risks. Litigation from arising from failing to fully pay employees is one of those risks, and it is significant. The first approach a company can take is to have employees perform all duties on the clock, and document that requirement in your policies and procedures. If you need an up to date California employer handbook, we can do that for you.

The second approach would be to test the boundaries of the word “routinely” and permit off the clock once in while, after running through the test with your legal counsel, and with full appreciation of the risks. We don’t advise this approach, but merely recognize that some could read the opinion that way.

About Adishian Law Group, P.C.

Adishian Law Group (http://www.AdishianLaw.com) is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services.   As of December 2016, the firm has represented corporate and individual clients located across 22 California counties, 13 States outside of California and 10 foreign countries in over 520 legal matters. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco.

For more information about this case, contact Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888
Email: askalg@adishianlaw.com
Social Media: @adishianlaw | LinkedIn | Facebook | YouTube

It’s as Easy as A-B-C, right?

Independent Contractors are always a point of tension.  Recently, the California Supreme Court adopted the “ABC” Test to determine distinguish between employees and independent contractors. The classification of an individual performing services for an operating company has long been an area of ambiguity and contention. Oftentimes, an employer may want to classify new hires as independent contractors. Oftentimes, employees may want to be classified as independent contractors. The critical hot buttons at issue with the classification are tax withholdings, tax deductions, eligibility for overtime, meal breaks, rest breaks and qualification for benefits.

The ABCs of the Dynamex Decision: 

The California Supreme Court adopted the ABC test to determine whether an employee is an independent contractor. As the Court wrote: “Under this test, a worker is properly considered an independent contractor to whom a wage order does not apply only if the hiring entity establishes:

(A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and
(C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring”

Applying the ABC Test:

The burden of proof is on the employer (i.e. the “hiring entity”). That means, if the classification is challenged, then the courts will start with the presumption that the individual at issue is an employee, and the employer will have to prove that the relationship passes the ABC test. Prongs “A” and “C” of the test can usually be satisfied with some planning and controls. However, we believe that “B” will prove to be very challenging for many companies or independent contractors.

How Do You Manage the Risk?:

Business and life is about risks, mitigating risks and managing risks. Litigation arising from misclassification is one of those risks. The first approach a company (or contractor) can take is to set up the work relationship as an employer-employee relationship. The second approach would be to set up the relationship as an independent contractor relationship after running through the test with your legal counsel, and with full appreciation of the risks of misclassification in financial terms. The third approach is to search for insurance to cover this risk. At the present time, we are not aware of any, but new products are being created all the time, so we recommend that employers revisit this issue with their insurance brokers periodically.

About Adishian Law Group, P.C.

Adishian Law Group (http://www.AdishianLaw.com) is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services.   As of December 2016, the firm has represented corporate and individual clients located across 22 California counties, 13 States outside of California and 10 foreign countries in over 520 legal matters. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco.

For more information about this case, contact Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888
Email: askalg@adishianlaw.com
Social Media: @adishianlaw | LinkedIn | Facebook | YouTube

Adishian Law Group, P.C. founder Chris Adishian answers why Adishian Law Group practices real estate law.

Transcript

Our firm practices real estate because I’ve always had an interest in real estate as a young adult and that interest just grew over time. Fortunately, along the way I had two great instructors, one was Marvin Starr, who was an attorney and actually the co-author of the main treatise on California law, governing real estate.
Another was Bill Coskran at Loyola Law School who was a fantastic real estate attorney, as well as a professor.

When I graduated from law school, I went to work at Arthur Andersen, and during my time there I worked on a number of large real estate companies tax matters. And then at Montgomery Securities, after Arthur Andersen, we did a lot of public market financing and M&A in the real estate space, mostly related to hotels and timeshare companies. After I started my law firm, I became a fully licensed California real estate broker. So through our affiliated company, Adishian Capital, our clients can get full brokerage services and full property management services. And taken together, they have a law firm and a property management firm, real estate brokerage, to have relationship continuity across all their real estate activities in California.