Written by Ransom Boynton, Senior Associate
Your timekeeping system is probably creating legal exposure — no matter which one you choose.
Imagine you’re a California employer trying to do everything right. You’ve read the court decisions. You’ve updated your policies. You’ve invested in technology to make sure your employees are paid for every minute they work. You WANT to treat your employees fairly for the work they provide for your business. And yet, somehow, you’re still staring down a wage-and-hour lawsuit — because of the very compliance tools you put in place. Welcome to California employment law in 2026!
The One-Two Punch: Donohue and Troester
Two California Supreme Court decisions have put employers in an almost impossible position.
In Donohue v. AMN Services, LLC (2021), the California Supreme Court ruled that employers cannot round meal period punches — not even slightly. Worse, if your time records show a meal period violation, you’re now presumed to have violated the law. The burden shifts to you to prove otherwise. Then came Troester v. Starbucks Corp. (2018), which rejected a common federal doctrine that lets employers ignore trivially small amounts of off-the-clock time. In California, there’s no such safe harbor. If employees regularly work even a few uncompensated minutes — say, waiting in line to clock in — that’s a compensable violation.
The message from the courts is clear: track time precisely, down to the minute, every time.
The “Solution” Creates a New Problem
So, you do what any reasonable employer would do: you move away from a centralized time clock (where employees wait in line before clocking in — hello, Troester) and adopt a mobile timekeeping app or biometric punch tied to employees’ smartphones. Problem solved, right? Not quite.
California Labor Code § 2802 requires employers to reimburse employees for “necessary expenditures” incurred while doing their jobs. Under Cochran v. Schwan’s Home Service, Inc. (2014), that includes a portion of personal cell phone costs when employees are required to use their phones for work — even if they already have an unlimited plan.
The scoreboard now looks like this:
• Centralized time clock → Troester liability for waiting-in-line time
• Mobile/biometric app → § 2802 liability for cell phone reimbursement
• Either approach → PAGA exposure when plaintiffs’ attorneys roll these theories into representative actions.
What Can You Actually Do?
The good news: there are practical steps you can take to reduce your exposure on both fronts. None of them eliminate risk entirely — this is California, after all — but they significantly strengthen your position. Audit your timekeeping system now.
1. Take a hard look at how employees clock in and out. Are there situations where they’re consistently working a few unpaid minutes before or after punching? Is your system capable of tracking breaks with the precision Donohue requires? Identify the gaps before plaintiffs’ counsel does.
2. If you require a mobile app, handle the phone reimbursement question proactively. You have three defensible options:
• Provide a company-owned device for timekeeping use.
• Offer a reasonable monthly stipend to cover partial phone costs.
• Confirm and document in writing that the employee truly incurs no actual cost (e.g., employer-paid unlimited plan).
Don’t assume that an unlimited personal cell phone plan means zero reimbursement owed. Courts have rejected that argument.
3. Put your reimbursement policy in writing — and actually follow it. A verbal assurance or informal practice won’t cut it. Your policy should spell out what’s covered, how employees submit for reimbursement, and what the approval process looks like. Then apply it consistently across all employees.
The Bottom Line
California law demands that you pay employees precisely. It also demands that you reimburse them for the technology required to do so. Those two obligations can pull in opposite directions — and plaintiffs’ attorneys know it.
Defending against wage-and-hour claims in this environment isn’t just about paying accurately anymore. It’s about paying for the infrastructure that makes accuracy possible — and documenting that you did. If you’re not sure whether your current setup creates exposure, now is the time to find out. Contact Koegle Law Group today for assistance in auditing your timekeeping practices and wage and hour compliance.
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DISCLAIMER: This client alert is provided for informational purposes only and does not constitute legal advice. The information contained herein may not reflect the most current legal developments. You should consult with qualified legal counsel before taking any action based on the information in this alert. Receipt of this alert does not create an attorney-client relationship.