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  • Beware of Liability When Not Paying Trainees for Orientation Time

    Employers Group | 11/19/2019 | News

    By Jodi R. Bohr, Gallagher & Kennedy, P.A.

    Federal law provides that once an individual becomes an employee, he is entitled to be paid under the Fair Labor Standards Act (FLSA). The law can be a bit unclear, however, about compensation to trainees who are undergoing orientation activities and studying to pass tests necessary for employment.

    Although mere applicants don’t have to be paid during orientation, hired employees must be compensated for their orientation time. Furthermore, at-home studying for employer-specific tests should be compensated.

    Take care of how you communicate with applicants during orientation to avoid treating them as employees. Care also must be exercised in structuring testing and study programs to avoid liability.

    Setting the Scene

    Swift Transportation Co. takes applications for its drivers online. After the company approves an application, the trainee attends a 3-day orientation, during which Swift pays for travel and accommodations. Trainees are told they may receive up to 6 weeks of training with a mentor after orientation, or they may be “terminated” and sent home immediately if there is any noncompliance with company policies during orientation.

    Not all trainees are treated equally. Swift promised some trainees they would be paid for all 3 days of orientation but promised others that they would be paid only for the last 2 days of orientation. Orientation activities also varied depending on the training site. Swift’s model orientation schedule involves both basic qualification tests (such as a drug test, physical exam, and driving test) and Swift-specific training involving videos about the company and its policies. Some sites completed only the basic qualification tests and other basic paperwork to ensure trainees were legally qualified to work but didn’t require the Swift-specific material.

    After the 3-day orientation, trainees then began behind-the-wheel training with a mentor, after which they had to pass three Swift-specific tests. During that time, they were expected to study Swift-specific materials and couldn’t continue working without passing the tests. The company instructed trainees to study any time they were on-duty but not driving.

    Some of that time, however, trainees were supposed to be logged as “sleeper berth” and off-duty. Many trainees continued to study during this time, although they weren’t required to do so. The company and their mentors stressed the importance of studying and passing the tests, and they knew trainees studied while on “sleeper berth.”

    The inconsistencies in communication, training, and study time have Swift hovering over hot water. The company is currently in litigation involving its training program and whether the time is compensable. Trainees claim they should be paid for attending all 3 days of a 3-day orientation program (not just the last 2) and for off-duty studying for tests Swift requires drivers to pass before continuing employment.

    The company maintains the trainees aren’t yet employees during the first day of orientation and therefore shouldn’t be paid. It also argues that off-duty study time shouldn’t be compensated when employees are given on-duty study time and not told to study while off-duty.

    Orientation Activities

    Under the FLSA, whether the trainees are compensated for their first day of orientation depends on whether they are considered applicants or employees. Choosing among different multifactor tests, an Arizona federal court decided the analysis should be based on the trainees’ expectation of pay and job prospects upon completion of that day of orientation.

    Trainees asserted that the threatened “termination” due to noncompliance with company policies made them think they were already hired. After all, how could they be fired if they weren’t employees? Other trainees had undergone a “Swift Academy” training before orientation to get their commercial driver’s license and were told the tuition for that program would be taken out of future paychecks—so those trainees thought orientation was the start of their employment with Swift. Plus, many trainees who underwent Swift-specific training on the first day argued they should be paid for the company-specific time.

    Swift argued trainees weren’t yet employees because they referred to them as “applicants” in one communication. The company also doesn’t hire 25% to 30% of the trainees, who are disqualified after the first day of orientation. As such, it hired the trainees as employees on the second day of orientation and argued it never explicitly promised trainees employment before completion of the first day.

    The court didn’t have enough information to determine whether trainees were employees or applicants on the first day of orientation and allowed the litigation to proceed to further develop the facts. It credited Swift’s argument that not hiring the trainees until after the first day of orientation makes it seem like that day is a continuation of the application process.

    It didn’t have a clear factual record, however, about how many and which trainees were promised to be paid for all 3 days versus only the last 2 days. It also didn’t have enough information from across the various training sites regarding how much of the first orientation day was specific to Swift and its policies, rather than for assessing the applicants’ qualifications more generally.

    Study Time

    Depending on its purpose, off-duty study time can be compensable. The FLSA provides that certain training doesn’t have to be counted as working time if attendance is voluntary and outside the employee’s regular working hours, it isn’t directly related to her job, and she doesn’t perform any productive work during the training.

    However, further guidance from the U.S. Department of Labor (DOL) interpreting the FLSA’s rules clarifies that studying for employer-required training outside of normal working hours is compensable unless the studying isn’t explicitly required.

    So, if an employee were to study at home to “bolster their own ability,” an employer wouldn’t have to pay for the study time. If extra work at home is a requirement of a compensable training class, however, the employer must compensate for the work so it doesn’t gain the benefits of off-the-clock studying without compensating employees. In fact, the DOL cautions employers that simply making a rule against off-the-clock studying isn’t enough to avoid liability, and instead, management should “make every effort” to enforce such a rule.

    In Swift’s case, the court found the employees should be compensated for their off-duty study time, even though the company didn’t instruct them to study during their allocated “sleeper berth” time. The court acknowledged that Swift gave its trainees on-duty time to study and never told them to study while off-duty, but that wasn’t sufficient to avoid liability because it had an obligation to prohibit uncompensated work. Swift and its appointed mentors knew its trainees were studying during that time and did nothing to deter it—and thus must pay its trainees for the study time.

    A Word to the Wise

    Take care in structuring your applicant training and orientation programs to avoid liability issues down the road. Be consistent in your promises to pay for orientation activities—promise all or none of your applicants they will be paid. If you intend for your orientation to be more of a continuation of the application process, clearly indicate in communications that there isn’t yet any promise of employment. Avoid using language that explicitly or implicitly could lead applicants (or a jury) to infer promises, such as referring to them as employees instead of applicants.

    In structuring your orientation activities, be aware of what type of relationship you are creating: a noncompensable employer-applicant relationship in which they are still undergoing eligibility checks such as basic tax paperwork, drug tests, physical exams, and basic driving skills tests or a compensable employer-employee relationship in which they are receiving employer-specific training on company-related policies.

    Be mindful of what types of testing and certifications you require. The court distinguished the Swift-specific tests from the general certifications that may be applicable to other professions (e.g., EMT certifications). Try not to require training and tests that are employer-specific unless you are willing to compensate trainees for at-home studying.

    If you offer employer-specific tests that require studying, you should have policies against extra studying at home and make every effort to enforce those rules through your management teams (e.g., require study materials to remain at the worksite).

    Jodi R. Bohr, an attorney with Gallagher & Kennedy, P.A., who practices employment and labor law with an emphasis on litigation, class actions, and HR matters, is a frequent speaker on a wide range of employment law topics. Bohr is also an editor of Arizona Employment Law Letter.