HR Management & Compliance, Recruiting

When Does a Job Interview Become Compensable?

There are a few situations in which an employer may have to pay individuals for time spent interviewing for a job. The factors to consider vary among jurisdictions but a federal appeals court recently made one thing clear in a lawsuit involving a 3-day interview: the length of the interview likely is irrelevant.

truck driver

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When an applicant must be paid, it’s because he or she is an “employee” under the Fair Labor Standards Act (FLSA). For example, this can happen—under certain circumstances—if the individual is a current employee and is interviewing for a transfer. It also may be the case when temp agencies send their employees on interviews: a federal district court judge ruled in 2010 that California law entitles workers to pay for that time and the employer in the case paid $2.75 million to settle the claims. Other courts, however, have since reached the opposite conclusion.

At issue in Nance v. May Trucking Co., No. 14-35640 (9th Cir., March 29, 2017), however, was a third possibility: that 3 days of training and skills tests amounted to actual work.

Facts of the Case

During May Trucking’s 3-day “orientation” program, the company showed applicants how to operate a truck and then gave them road and skills tests. It also evaluated whether they could be trusted to follow safety standards. It did not make offers to all of the applicants.

Two drivers sued, alleging they should have been paid for that time. But the FLSA only requires that businesses pay “employees,” which the law defines as individuals suffered or permitted to work, a federal district court judge said. And they did not meet that definition because they didn’t perform any work. In fact, they were the “primary beneficiaries” of the orientation.

May Trucking derived no immediate advantage from the tests, the applicants did not haul any loads, and no regular employees were displaced because of the testing. Additionally, there was no agreement, implied or otherwise, for compensation, the judge said, dismissing their claims.

The drivers appealed but the 9th U.S. Circuit Court of Appeals agreed with the lower court. Despite the employer calling those days “orientation,” the program was actually an extended interview and May Trucking didn’t need to pay job applicants for that time. “The orientation is May’s method for ascertaining its drivers’ training and abilities, and not all participants are hired upon the orientation’s completion,” the appeals court said; “attendees are therefore not ‘employees.’”

Employer Takeaway

While employers may not usually think of job applicants and interns as being in the same category, the necessary analysis under the FLSA can be similar.

The 9th Circuit looked to “trainee” tests for guidance in Nance, including one created by the U.S. Department of Labor (DOL) following a U.S. Supreme Court decision on trainees. The test says that no employment relationship exists if all of the following six factors are met:

  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 their close observation.
  4. The employer that provides the training derives no immediate advantage from the activities of the trainees; and on occasion 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.

The DOL has since applied that test to interns, instructing private employers in its Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act to use it to determine whether such workers are entitled to minimum wage and overtime pay.

At least one court, the 5th Circuit, has adopted the DOL’s test. Others, however, have held that that some factors are more important than others (like the Nance court and the 2nd, 4th, and 6th Circuits) or that courts must consider the totality of the circumstances (like the 10th Circuit).

None, however, has considered the length of the training a factor. In fact, the 10th Circuit in Reich v. Parker Fire Dist., 992 F.2d 1023 (1993), found that a 10-week firefighter academy program was not compensable work. So, despite the existence of different FLSA trainee tests around the country, one thing remains clear: duration has not been adopted as a factor in any of them.

Kate TornoneKate McGovern Tornone is an editor at BLR. She has almost 10 years’ experience covering a variety of employment law topics and currently writes for HR Daily Advisor and Before coming to BLR, she served as editor of Thompson Information Services’ ADA and FLSA publications, co-authored the Guide to the ADA Amendments Act, and published several special reports. She graduated from The Catholic University of America in Washington, D.C., with a B.A. in media studies.