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Is Training Time Compensable Under the FLSA? Perhaps...


Harbourt v. PPE Casino Resorts Maryland, LLC - Fourth Circuit Court of Appeals


Facts:  PPE Casino Resorts Maryland, LLC ("PPE") owned and operated a casino in Maryland.  After the state legalized gambling starting April 11, 2013, PPE decided to offer a free twelve week training course (called a "dealer school") to approximately 830 dealers who would operate gambling tables at the casino.  Claudia Harbourt, Michael Lukoski, and Ursula Pocknett (the "Trainees") applied for a dealer position with PPE.  

After interviews, PPE offered the Trainees (among others) an opportunity to attend the dealer school.  The dealer school consisted of four hours of daily instruction (Monday through Friday) in four hour time periods.  Although the school was to run for twenty hours/week for twelve weeks, it consumed more time as a result of "numerous delays" caused by PPE staff.  The dealer school, completely run by PPE, had attendees complete employment forms, submit to a drug test, provide fingerprints and social security numbers, and engage in a PPE run training course.  

The Trainees attended the school between eight to twelve weeks each.  Although Harbourt and Pocknett were not paid, Lukoski and others were paid &7.25/hour for the final two days of the dealer school.  The Trainees filed a class action against PPE on the grounds of violations of the Fair Labor Standards Act ("FLSA") and Maryland state law.  The District Court dismissed the case on the grounds that no valid claim had been alleged upon which relief could be granted.  The District Court's ruling was subsequently appealed.

Holding:  The Fourth Circuit Court of Appeals pointed out that to proceed on a cause of action, a plaintiff must allege sufficient facts to establish the elements of the claim.  In this instance, the FLSA requires employers to pay employees the minimum hourly rate "for all hours worked".  (Of course, the FLSA does not define "work").  However, the Supreme Court has provided guidance that "work" can be interpreted as "physical or mental exertion controlled or required by the employer and pursued necessarily and primarly for the benefit of the employer and his business."  As well, it has previously been held that a trainee may be an "employee" for purposes of the FLSA, although the analysis often turns on whether the employer received an "immediate advantage" from the trainees' efforts during training.

PPE argued that the Trainees could not show that PPE received any benefit during the time the Trainees attended dealer school.  The Court acknowledged that the fact that table gambling games were not yet in operation during the training could prove to be an insurmountable obstacle to the Trainees recovering under the FLSA and therefore bar them from recovery.  However, as the Court pointed out, the Trainees were in the same position as all other persons training for positions in which they are not yet performing their work related duties.  Inexperienced persons required to train to be waiters in an about to be licensed, but not yet open, restaurant  would be in the same position as the Trainees in this case.  

Whether a cause of action under the FLSA was found to exist would depend primarily upon whether the training constituted a benefit to the employer or the trainee.  In this case, the Court found sufficient facts had been alleged to support the claim that PPE benefited from the training, rather than the Trainees.  As well, the fact that PPE paid all dealers in the dealer school the hourly minimum wage for the final two days of the school lent credence to the argument that PPE regarded the dealer school participants to be employees doing "work".

Judgment:  The Fourth Circuit Court of Appeals reversed and remanded the ruling from the District Court and held that the Trainees had alleged sufficient facts in their complaint to proceed on a claim that they were in fact doing "work" for PPE's benefit at the training school, and were therefore entitled to compensation under the FLSA and Maryland state law.

The Takeaway:  Ever heard the phrase "live to fight another day"?  I think that is appropriate here for the Trainees.  While the Fourth Circuit did not directly decide the matter of whether the Trainees were entitled to compensation for attending the dealer school, the Court did hold that sufficient facts had been alleged to allow the claim to proceed.  I think employers should review this case and consider how compensation (or lack thereof) of trainees are handled at their workplace.  The Court pointed to a couple of Supreme Court cases that could cut both ways in regard to whether trainees are entitled to compensation for time spent in training.  Review this one carefully...this certainly is not the last we have heard of this issue.

Majority Opinion Judge:  Judge Motz

Date:  April 25, 2016

Opinion:  https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&uact=8&ved=0ahUKEwiu1YLnnYfNAhWE7iYKHTS6BEMQFggqMAI&url=http%3A%2F%2Fhr.cch.com%2FELD%2FHarbourtPPE.pdf&usg=AFQjCNHbpHRAmZ8NGSJJebcVWkpAnFeCrQ&sig2=YsnJiE4F2JorWo-5ukR3hA&bvm=bv.123325700,d.eWE

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