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Fourth Circuit Says Employer-Sponsored Training Through Community College May Be Compensable Working Time

    Client Alerts
  • May 09, 2016

The Fair Labor Standards Act contains regulations explaining when time spent by new employees training for their jobs is compensable working time. In most circumstances, the employer must pay trainees for time spent learning that is directly related to their eventual job tasks. However, employers are not required to pay employees for non-mandatory training that results in an upgrade of job skills that could be applied to other positions.

Last month, the Fourth Circuit Court of Appeals (which includes North Carolina and South Carolina), concluded that a training course for casino dealers sponsored through a local community college had enough alleged applicability to the jobs offered by the employer to be potentially compensable under the FLSA. In Harbourt v. PPE Casino Resorts Maryland, LLC, the casino needed to hire a large number of dealers for its new facility. After screening applicants for the jobs, the defendant offered about 830 persons the opportunity to take a course at a local community college that would teach them casino table game skills. Although hosted by the college, the casino developed all course materials and ran the training. At the end of the training, about 150 persons were hired for the dealer jobs. The defendant did not compensate the trainees for the time spent in the dealer course, except for several days at the end for the group of persons actually hired.

The trainees filed a collective action claim under the FLSA and Maryland law, seeking wage compensation for time spent in the training. The district court dismissed the complaint, concluding that the course was not compensable working time under the FLSA.

On appeal, the Fourth Circuit reversed this decision and remanded the matter for further proceedings. The court concluded that the plaintiffs could demonstrate that the training course was primarily offered for the employer’s benefit. The defendant conceivably received an immediate advantage from the training in that it resulted in a pool of qualified applicants for its vacant positions. The fact that the casino was not open at the time of the training does not affect this analysis.

The employer could have avoided this determination if it required as a prerequisite to hiring, that applicants demonstrate some level of education or training available from an unaffiliated third party. Training not specifically linked to the casino’s specifications might be seen as transferrable to other jobs. If the training is considered compensable working time, employers have the option of setting a special, lower training wage for new employees. This would not avoid the payment obligation, but would at least reduce the cost to the employer.