Don’t Gamble on FLSA—Pay Trainees for Their Time

Yesterday’s Advisor described a court case where a casino paid trainees for only 2 days of a 12-week training course—and the trainees filed a class action suit alleging violations of the federal Fair Labor Standards Act (FLSA) as a result. While the case was dismissed by a district court, the trainees appealed. Today, we see what the appeals court had to say on the matter.

The appeals court reversed and sent the case back to district court but did not express an opinion about whether attending the dealer school was “work” or whether the trainees were “employees” for the purposes of the FLSA.
Under the FLSA, employers must pay employees “for all hours worked.” In the 1940s, the Supreme Court made the assumption that “work” means “physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business” and, separately, that a trainee may be an “employee” under the FLSA.
The Supreme Court has not addressed the latter issue since the 1940s, and the 4th Circuit has addressed it only once—in 1989 when it concluded that trainees were “employees” for FLSA purposes when they participated in a training program. In that case, the court reasoned that the employer “received more advantage” from the training program than the trainees did; that is, the employer was the “primary beneficiary” of the training program.
In the current case, the company argued that “it is literally impossible for the Trainees to show that they provided the Casino with any work or that the Casino received any benefit during the time they attended table game dealer’s school because … the Casino did not operate table games at that time.”
However, the appeals court said that just because the company “could not operate table games during the ‘dealer school’ does not necessarily mean that the Trainees were not working for FLSA purposes in attending the required ‘school.’”
Meanwhile, the trainees said the company primarily benefited from the training, ensuring them a workforce of more than 800 dealers trained to operate table games within days of table games becoming legal. The trainees also contended that the training was so unique to the company’s specifications that it was not transferrable to work in other casinos.
Harbourt et al. v. PPE Casino Resorts, Maryland, LLC (No. 15-1546) (U.S. Court of Appeals, 4th Cir., 4/25/16)
If you require applicants to complete training that primarily benefits your company, they might be considered “employees” for purposes of the FLSA, and as a result, you might have to pay them at least the minimum wage for the time spent in training.