Pre-employment training was noncompensable

On-the-job training for new employees can be time-consuming and disruptive of regular work operations. What’s more, if the newbie actually performs work (even ineptly or inefficiently), the employer will generally have to pay the worker for the training time.

In a new case, however, an employer took a different approach to worker training. The company required prospective employees to undergo training before being offered a job. What’s more, a U.S. district court held that the employer was not required to pay for the training time.

Facts

Kathryn Otico was accepted into a training program to become a customer service representative for Hawaiian Airlines. The program, which took place at an airport, lasted 10 days. It consisted almost exclusively of classroom work and tours of the facilities. Hawaiian Airlines employees taught Otico about FAA regulations, the computer system, and the way that the company operated. Except for one occasion when she was observing the customer check-in process and actually checked information for one or two passengers, Otico provided no services to any Hawaiian Airlines customers during the 10-day instruction period. Before interviewing for the position, Otico was told that she would not be paid for the training.

At the end of the training period, Otico was required to take a test. Otico passed the test, was hired, but quit a short time later. Following her resignation, Otico filed a lawsuit claiming that she was an employee of Hawaiian Airlines during the 10-day training program and should have been paid for the training time.

Trainee or employee

The key question before the court was whether Otico was a trainee or an employee under the Fair Labor Standards Act (FLSA).

The U.S. Department of Labor (DOL) has identified six criteria for deciding whether a worker crosses the line from unpaid trainee to paid employee under the FLSA.

• The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school.

• The training is for the benefit of the trainee.

• The trainee does not displace regular employees but works under close observation.

• The employer derives no immediate advantage from the activities of the trainee; and on occasion the employer’s operations may actually be impeded.

• The trainee is not necessarily entitled to a job at the conclusion of the training period.
time spent in training.

The DOL takes the position that all six criteria must be met for a worker to be classified as an unpaid trainee. However, the court rejected such a rigid approach. Instead, the court said that the key question is whether the employer is taking financial advantage of the trainee and using him or her to perform work that an employee would otherwise be performing. “If so,” the court said, “the trainee should be paid for the work as an employee.”

According to the court, the DOL’s criteria seem designed for true “on-the-job” training—that is, where a trainee is actually performing the work of an employee as part of his or her training. In those situations, the concern is that the employer is exploiting trainees by using them to save money on payroll. However, Otico did not engage in the type of “on-the-job” training that the criteria are concerned with. She did not actually perform the work of an employee. Her training comprised almost exclusively of classroom instruction and touring of the facilities, which were precursors to performing the work of an employee. Therefore, the court concluded that Otico was not acting as an employee when she took the Hawaiian Airlines training course—and Hawaiian Airlines was not required to pay her for the training time.

One the other hand, the court was not entirely sympathetic to the airline’s unpaid training program. “Although one wonders why Hawaiian is unwilling to pay something to these people, since they no doubt must sacrifice to participate in the program,” the court said, “the law does not require it to do so.” (Otico v. Hawaiian Airlines, Inc., No. 16-cv-02557-VC (N.D. Cal., January 9, 2017).)

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