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A Reminder of California’s Evolving Wage-and-Hour Landscape for Employers
Tuesday, September 26, 2023

California stands out for its employee-friendly labor laws aimed at safeguarding employee rights. One critical aspect of these laws is prohibiting off-the-clock work, which even for a couple of minutes can result in (1) claims of failure to pay regular and overtime wages and (2) accompanying statutory and civil penalties. Avoiding employee claims of off-the-clock work is one crucial step California employers can take to avoid costly wage-and-hour lawsuits similar to a recent case that cost one company a $72.5 million settlement.

In response to a question from the U.S. Court of Appeals for the Ninth Circuit and following the court’s 2018 decision in Troester v. Starbucks (2018) 5 Cal. 5th 829, the California Supreme Court found that the California Labor Code and wage order provisions provide that employees must be paid for all time worked. Specifically, the Court stated that “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. A few extra minutes of work each day can add up.” 

Several Practices May Result in Off-the-Clock Work Claims 
For example, an employer may delay employee departures after they clock out for the day to conduct a security check, or require or allow employees to get their workstations prepared before they clock in, or respond to calls and emails or in-person customers before or after being on the clock. An employer may require employees to make short trips to the bank or elsewhere for work purposes while off the clock.

There are various examples other than employers blatantly ordering employees to work while off the clock.

Off-the-clock work also may arise as a result of the use of timekeeping systems that round employee work time. While rounding the time when one punches in and out has not yet been deemed per se illegal in California, there are instances where the legal and practical implications of rounding can result in what’s commonly referred to as “time-shaving,” resulting in employees not getting paid for all hours worked. Put another way, employees claim they worked “off the clock” during the periods in which their time may have been rounded down. Such claims can result in costly legal consequences for employers.

Employers must establish that their rounding of time is neutral on its face and in practice so it does not result in loss of pay to employees. Often, employers do not conduct an analysis of their rounding practices until after the practice is challenged, which is sometimes too late. Additionally, in Donohue v. AMN Services, LLC (2021) 11 Cal. 5th 58, 69, the California Supreme Court held that rounding is never appropriate in the meal-period context, which may result not only in meal-period violations but also in unpaid wages for the time worked that was rounded.

Implementing Clear Policies
Working with counsel, employers should develop and communicate clear and comprehensive policies regarding working time, overtime, meal periods and timekeeping. The policies should emphasize that accurately recording time worked is the responsibility of every nonexempt employee and that federal and state laws require the employer to keep an accurate record of time worked. 

The policy also should: 

  • Provide information regarding the method employees should use to accurately record their time, including start and end times and meal periods each day. 
  • Emphasize that working off the clock is strictly prohibited and that if any nonexempt employee is ever asked to do any work without recording their work time, it must immediately be reported to the human resources department. It should make clear that unless specifically asked by a supervisor or manager, nonexempt employees are not to perform any work outside of regularly scheduled hours. 
  • Explain that if a nonexempt employee is asked to perform work by a supervisor or manager before the employee’s scheduled start time, the employee must record that time. Similarly, unless a nonexempt employee is asked to perform work after the employee’s scheduled end time, the employee must stop all work-related activities once the employee’s shift ends. 
  • Specifically address the use of work-related emails and text messages while off the clock. The policy should make clear that nonexempt employees should not perform any work, including but not limited to work-related email, text messages or voicemail while off the clock. 
  • State that once a nonexempt employee’s shift is over, the employee must stop all work-related activities. 

Provide Proper Training
Employers should train managers, supervisors and all employees on wage-and-hour laws, including the importance of accurate timekeeping, taking required breaks and seeking approval for overtime work, if applicable. Employees should be provided with copies of the policies and requested to review, ask questions and sign the policies to acknowledge their understanding and commitment to adhere to the policies.

Regular Review and Updating of Policies
Employers should revisit wage-and-hour policies and procedures on a regular basis to ensure current policies remain lawful and in conformance with all applicable laws.

Monitoring Actual Practices 
Periodic audits of practices regarding compliance with the above-described policies should be conducted with the assistance of counsel. Getting the right policies in place is only one part of the battle, actually ensuring the policies are being followed is the other extremely important part. Unfortunately, employers often fail to notice such inconsistencies until after litigation has commenced.

Compliance can be difficult under ever-changing laws, but staying on top of current wage-and-hour trends is a key step toward compliance and avoiding off-the-clock claims. It is always important for employers to regularly revisit their policies and practices to make sure they are lawful and in conformance with all applicable federal, state and local laws. This should be done with counsel in addition to regular examinations of practices. 

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