Hiring a new employee takes time—for example, time completing paperwork before the start date, as well as time reviewing policies and procedures and completing training. But how much of that time is considered compensable under the Fair Labor Standards Act (FLSA)?
Orientation and Onboarding
The FLSA generally counts a new hire’s time spent in orientation and on completing onboarding paperwork and job training as hours worked that must be compensated, even if the orientation, onboarding, or training occurs outside regularly scheduled hours or away from the employer’s place of business.
For new employees, compensable time includes all time they spend on:
- Completing tax, payroll, benefits, and insurance paperwork;
- Reviewing policies and procedures that are required reading or that the employer requires them to review and sign; and
- Training directly related to their job, such as watching instructional videos, shadowing experienced employees, and other similar training activities to learn the job.
Hours Worked and Compensable Time
Two provisions of federal labor law answer this question. The first provision states that nonexempt employees must be compensated for any time they must “suffer” or are “permit[ted] to work.” The second provision excludes certain activities that must meet four factors, all of which must be true for an onboarding or a training activity to be noncompensable:
- The activity occurred outside of the employee’s regular working hours.
- The activity was, in fact, voluntary.
- The activity isn’t directly related to the employee’s job.
- The activity produced no productive work.
The Department of Labor (DOL) provides additional guidance on these four factors in 29 Code of Federal Regulations (C.F.R.) §§ 785.28 through 785.32. For example, the regulations explain that an activity is “not voluntary in fact if the employee is given to understand or led to believe that his present working conditions or the continuance of his employment would be adversely affected” by not completing the activity.
Illustrative Scenarios
The following five scenarios illustrate how the FLSA applies in practice to common new hire onboarding and training activities:
Scenario 1: A new hire is asked to arrive an hour earlier than employees’ regular working hours to complete onboarding paperwork (I-9, W-4, election of benefits, etc.) and a required review of the company’s policies and procedures the new hire must sign.
This time is compensable. While occurring outside the employee’s normal working hours, these activities aren’t voluntary and help the employer maintain payroll, benefits, and the company’s tax accounting, making them productive.
Scenario 2: A new hire is asked to come in the day before the employee’s first regularly scheduled shift to complete onboarding paperwork and shadow a more experienced employee working the same position for the rest of the workday.
This time is compensable. The onboarding paperwork isn’t voluntary and is productive for the employer for the same reasons provided under Scenario 1. Job shadowing constitutes training time the new hire must “suffer” and is directly related to the employee’s job, even though the shadowing may not produce any productive work.
Scenario 3: A new hire is emailed all necessary tax, payroll, and benefit forms, as well as the company’s policies, procedures, and safety materials, and a link to an online training video several days before the new hire’s first scheduled shift. The email tells the new hire to complete the forms, read and sign the materials, and watch the training video before arriving to the worker’s first shift.
This time is compensable. The FLSA contains no exception for “at home” assigned reading or paperwork, and an employer can’t get around compensating new hires for time spent on these onboarding activities by having them complete it away from its place of business. The FLSA factors don’t care where the activities are completed. If the onboarding paperwork, reading, and training are required, directly job-related, or productive for your HR or accounting recordkeeping, then a new hire’s time spent on them must be compensated.
Scenario 4: At orientation, an employer encourages its new hire to review the company website and provides the new employee additional company literature to better acquaint the new employee with the company’s philosophy and culture. The employer doesn’t require the new employee to sign the literature and never indicates that the materials are required reading before the employee could start working. During a 30-minute bona fide meal break after orientation and later at home after the first day, the new employee reads the website and literature.
Time spent reviewing the website and literature is generally not compensable. This review occurs outside of the employee’s scheduled work hours. It is, in fact, voluntary—even if strongly encouraged—so long as the employer doesn’t do or say anything that would cause the new employee to believe continued employment depends on reading the material. Learning about company philosophy and culture doesn’t directly relate to learning how to complete actual job tasks, and the review isn’t productive for the employer.
Scenario 5: A new hire travels 30 minutes from home to the employer’s place of business for required onboarding and training. The new hire is punctual and arrives 15 minutes before the scheduled start, during which time the worker waits in a conference room or waiting room until an employee arrives with paperwork at the scheduled start time.
The 30 minutes of travel time and 15 minutes of preliminary wait time are generally not compensable. Separate provisions of the FLSA expressly state that in most common circumstances, travel time and “preliminary” and “postliminary” time aren’t compensable hours worked.
‘At Home’ Onboarding, Avoiding Overtime, and Paying Ghosts
Several notable implications follow from the above FLSA provisions. First, the “at home” approach to onboarding discussed in Scenario 3 introduces the added difficulty of monitoring and recording a new hire’s time spent on completing the “at home” portion of the onboarding process.
If you use an “at home” approach to onboarding and training before the first scheduled shift, consider providing the new hire specific instruction to record the time it takes to complete the necessary paperwork, review any required readings, and watch any training videos. Alternatively, onboarding and training that occur on-site or at the employer’s place of business give the employer greater ability to monitor and control the total time spent on onboarding and training activities.
Second, a new hire’s time spent at orientation, completing onboarding paperwork, and training constitutes compensable time worked that counts toward the worker’s 40-hour workweek. If paying overtime during that first week is a concern, any onboarding and training hours the new employee spends at home or outside regularly scheduled work hours must be factored into the new employee’s schedule for that week.
And third, employers must still pay “ghosts,” or new hires who complete some or all the onboarding and training process but don’t show up for their first regularly scheduled shift or any shift after that. The FLSA requires you to issue paychecks to the vanished employees for the time spent on whichever onboarding or training activities they actually performed, even if they never engaged in any productive work for the company.
Zachariah J. Sibley is an attorney with Axley Brynelson, LLP, in Madison, Wisconsin. He can be reached at zsibley@axley.com.