FLSA ruling: When you don't have to pay workers for training time

training, FLSA, compensation

training, FLSA, compensation
A U.S. District Court just gave employers a helpful example of when it’s okay to NOT pay workers for the time they spend in training. 
The court acknowledged the Department of Labor (DOL) has six criteria for deciding whether a worker crosses the line from being a non-compensable “trainee” to a compensable “employee” under the Fair Labor Standards Act (FLSA).
The criteria, as outlined by the court, are:

  1. 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.
  2. The training is for the benefit of the trainees.
  3. The trainees do not displace regular employees, but work under close observation.
  4. The employer that provides the training derives no immediate advantage from the activities of the trainees; and on occasion his operations may actually be impeded.
  5. The trainees are not necessarily entitled to a job at the conclusion of the training period.
  6. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

For each of these criteria that are met, it would be a big check in the non-compensable trainee box for the employer. But, as this court pointed out, “the six criteria are relevant but not conclusive” on whether trainees are employees.
Basically, the court’s ruling came down to this: Who primarily benefited from the training — the worker or the employer?

Trainee wanted to be paid

The issue was brought before the court by Kathryn Otico, who was training to be a Hawaiian Airlines customer service representative at Oakland International Airport in California. She spent 10 days in a training program, and she wasn’t compensated for any of that time. So she sued to collect payment.
Hawaiian Airlines fought to get her lawsuit thrown out — and it succeeded.
The court looked closely at what Otico was asked to do during the training program to see if Hawaiian was taking financial advantage of Otico by using her to perform work that an employee would otherwise be performing.
The training program consisted mostly of classroom work, tours of facilities, and training on FAA regulations and Hawaiian’s computer system.
Otico provided no service to customers during the training program — nor did she replace a Hawaiian employee.
As a result, the court ruled Otico was the “primary beneficiary” of the training since the airline derived no “immediate advantage” from it. The instruction she received was only a precursor to performing the work of an actual employee, the court said.
It also said no reasonable juror could conclude Otico was acting as an employee during her training.
So Otico didn’t have to be compensated under California wage law or the FLSA, the court ruled.
Case dismissed.
Cite: Otico v. Hawaiian Airlines Inc.