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To pay or not to pay? Court holds employer is not obligated to pay for attendance at mandatory treatment program

Employment Law Update

February 23, 2015

Although most employers are aware that an employee’s time spent working is generally compensable, the question of what actually constitutes compensable “working time” under the Fair Labor Standards Act (FLSA) is an area fraught with uncertainty and the subject of substantial litigation. Indeed, in December 2014, in the case of Integrity Staffing Solutions, Inc. v. Busk, the U.S. Supreme Court concluded that employees’ time spent waiting to undergo and undergoing security screenings was not compensable working time. If the amount of litigation surrounding this issue is any indication, determining whether employee activity connected to employment is compensable is an area where mistakes are easily and commonly made by employers.

A frequent question that arises in the context of compensability of employee activities concerns training. With some narrow exceptions, time that an employee spends attending employer-sponsored training is generally considered compensable under the FLSA. If particular training is designed to assist an employee in doing his or her current job more effectively, or is related to a current job requirement such as mandatory safety training, then an employee’s attendance is usually considered “working time.”

In January 2015, a U.S. District Judge in New York determined that mandatory alcohol counseling was not compensable “working time” under the FLSA. In Gibbs v. City of New York, the judge considered claims made by two New York Police Department (NYPD) employees that they should have been paid wages for attending mandatory alcohol treatment programs. The case provides a helpful illustration for employers who may be dealing with employees directed to attend mandatory drug or alcohol treatment programs.

Employees Demand Payment For Attending Mandatory Alcohol Counseling

In Gibbs, the two plaintiffs worked for the NYPD as administrative and office aides. One came to work several times with alcohol on her breath. The NYPD’s Counseling Services Unit investigated, and referred the employee to 28 days of inpatient counseling for which she was paid her regular hourly wage. Thereafter, she was assigned to attend a number of outpatient counseling sessions. This treatment was mandatory, and the employee was subject to discipline if she did not comply with the required treatment. Ultimately, the employee failed to adhere to her specified counseling schedule, and she was terminated.

The other plaintiff NYPD employee was required to attend outpatient alcohol treatment after returning from a three-month medical leave, when she complained that she was stressed and could not work with the public. She was paid for attending these sessions during the workday, but neither she nor the other plaintiff were paid overtime for attending after-hours treatment sessions.

Both plaintiffs sued the NYPD under the FLSA. They claimed that the NYPD should have paid them overtime for the time that they spent in after-hours alcohol counseling sessions. The NYPD and the other defendants claimed none of the time the plaintiffs spent in counseling sessions was required to be paid, and filed a motion to dismiss the lawsuit.

The Plaintiffs’ Claims Are Dismissed

Evaluating the plaintiffs’ claims for alleged unpaid wages, the judge applied several long-standing opinions issued by the U. S. Supreme Court in its interpretation of the FLSA. In a case dating back to 1944, the court noted that “work” included “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.” While this definition was clarified in later opinions and affected by the Portal-to-Portal Act of 1947, two fundamentally important aspects of the “work” definition remain: 1) whether the activity was “controlled or required by the employer”; and 2) whether the activity was “primarily for the benefit of the employer.”

Although the plaintiffs were indeed required to attend the counseling sessions or face disciplinary action, the judge still held that this was not “work” under the FLSA because it was not primarily for the NYPD’s benefit. In fact, the judge reasoned, the plaintiffs themselves were the primary beneficiaries of the counseling treatment sessions. Moreover, the judge observed that the NYPD was not primarily responsible for the costs of the mandated treatment regimen.

In addition to determining that the alcohol counseling program attendance did not constitute “work” by the two employees, the judge went one step further. Even if attendance at the counseling was “work” under the above definition, the judge reasoned that it would still not be compensable because it was not an indispensable part of the employees’ primary activities, and was therefore a non-compensable “postliminary” activity under the Portal-to-Portal Act. Accordingly, the judge dismissed the plaintiffs’ claims.

What Should Employers Do?

The NYPD ruling reinforces the importance of evaluating the potential compensability of employee activities on a case-by-case basis. Sometimes, whether an activity is compensable turns on a single fact, which may be different from situation to situation. Employers should therefore be cautious before applying compensability determinations in a blanket fashion and carefully evaluate any issues concerning compensability of employee attendance at training or counseling.

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