Firing hourly worker? Starbucks’ big win shows how to handle wage statements and pay

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Terminating an employee is never easy. But thanks to a recent California Court of Appeal decision, at least you don’t have to worry about wage statement violations—if you follow the common sense guidelines the court announced.

For example, the court clarified when wage statements are due, when employers can be penalized for not providing wage statements and how to account for reporting time owed to an employee called in to work for a termination meeting on a day he was not scheduled to work.

Recent case: When David Price went to work for Starbucks, it didn’t take long for the company to find out he was an unreliable employee. The main problem: He couldn’t seem to get to work on time. After less than a month on the job, Starbucks decided to terminate Price.

Starbucks told Price to report to work to attend a meeting on a day he was not scheduled to work. In a session lasting all of 45 seconds, Starbucks informed Price he was being fired and gave him his final pay, which included two hours of “reporting time” pay for the exit meeting.

Price then sued, alleging Starbucks violated California Labor Code Section 226 by failing to provide a wage statement that set forth the total hours worked, net wages earned and all applicable overtime rates. He also said Starbucks failed to pay all reporting time pay for the day he was fired.

He asked the court to make it a class-action lawsuit representing other similarly situated former Starbucks employees.

In an enormously helpful ruling for employers, the court dismissed Price’s wage statement claim. It said he had failed show that he suffered injury under Labor Code Section 226(e). In reaching this result, the court held that:

  • Section 226(e) requires proving actual injury.
  • The fact that an employee might have to do simple mathematics to calculate his or her overtime rate of pay doesn’t constitute an injury.
  • Courts should not presume an injury occurred simply because required information is missing from the pay statement.

Also noteworthy was the court’s ruling on the reporting time issue. The court held that Starbucks complied with Wage Order 5, which requires employers to pay an employee who reports to work for “half the usual or scheduled day’s work, but in no event for less than two (2) hours nor more than four (4) hours” at the regular rate of pay.

Because Price was not scheduled to work that day, the court found he was only entitled to two hours of reporting time pay, not half the eight hours’ worth of pay he would have received on a work day. (Price v. Starbucks Corporation, No. B219501, Court of Appeal of California, 2nd Appellate District, 2011)

Note: In this regard, the opinion is at odds with the Policies and Interpretations Manual of the Division of Labor Standards Enforcement (DLSE). Be aware of this case if you have to deal with the DLSE on a termination issue.

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