A Massachusetts federal district court recently issued an important ruling addressing whether driver trainees attending a carrier’s orientation program were in fact “employees” of a carrier and therefore subject to the requirements of the Fair Labor Standards Act (FLSA).
The carrier operates its own truck driver training school. The carrier requires most prospective driver-candidates to complete its four-phase driver-training program. In Phase 1, drivers obtain their commercial learner’s permits if needed (two or three day course), and then obtain their CDLs (two-and-a-half week course). In Phase 2, drivers attend approximately three days of orientation at the carrier’s facility. During this orientation, drivers learn the carrier’s policies and procedures and take road tests.
After Phase 2, the drivers go on the carrier’s payroll. In Phase 3, the drivers are paired with experienced drivers (“lead drivers”) for approximately 28 days of “team-driving.” Finally, in Phase 4, the drivers are paired with co-drivers and undertake approximately nine months of team-driving.
During the timeframe of November, 2013 to March, 2017, of the almost 26,000 drivers that started Phase 1 of the program, only roughly 21% completed Phase 4. Drivers who began Phase 3 of the training but did not complete Phase 3 and Phase 4 of the training can be required to pay $6,500 for the driver training school, plus additional costs the carrier put forward for the required Department of Transportation physical and drug screen, lodging costs, transportation costs, and accrued interest.
A group of drivers filed a lawsuit against the carrier alleging that the carrier underpaid its drivers, misled drivers regarding the costs of driver training, and levied excessive charges to recoup those unpaid costs in violation of the FLSA and state law. Each party moved for a judgment in its favor prior to any trial on the matter and the court issued a lengthy decision (the court called it a “long-haul opinion”!) in which it ruled in the carrier’s favor on some issues and in the drivers’ favor on other issues. This article will only focus on the court’s decision with regard to the wage claims brought under the FLSA related to driver orientation. Notably, the court also found that “[s]leeper berth time in excess of eight hours must be counted towards hours worked. This portion of the case will be discussed further in the next Legal Comment article.
With regard to the wage claims brought under the FLSA, the critical issue was whether the drivers were employees of the carrier during the training program and thus subject to the FLSA’s minimum wage requirements. While the parties agreed that the drivers where employees during Phases 3 and 4 of the training program, the parties hotly contested whether the drivers were employees of the carrier during Phases 1 and 2 of the training program.
Under the FLSA, to “employ” is “to suffer or permit to work.” The United States Supreme Court has recognized that “[w]ithout a doubt [the FLSA] covers trainees,” but not all trainees are “employees” under the FLSA. In considering whether the trainees were in fact employees, the court first looked to the six criteria utilized by the United States Department of Labor (DOL) for determining whether a trainee is an “employee” under the FLSA.
The six criteria are: (1) the training 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 close observation; (4) the employer providing the training receives no advantage from the activities of the trainees; (5) the trainees are not necessarily entitled to a job at the end of the training; and (6) the employer and trainees both understand that the trainees are not entitled to wages for the time spent in training. The court noted, however, that it was not bound to follow the DOL’s criteria and pointed out that many courts have deemed the criteria “relevant but not conclusive.”
The court then looked to the “primary benefits test.” This test, used by several other courts, asks whether “the trainee or putative employer is the ‘primary beneficiary’ of the training program.” More specifically, courts consider “(1) the benefits of [the] relationship to the individual, (2) the benefits derived from that relationship by the putative employer, and (3) the expectations of the parties,” in order to “assess the relative dominance in the relationship between host institution and the individual claiming employee status.” The court decided that it would rely on both the six criteria from the DOL and the primary benefits test in determining whether the drivers were employees of the carrier during Phases 1 and 2 of the training program.
In analyzing Phase 1 of the training program under the DOL criteria, the court found all but one criteria (the expectation of employment at conclusion of the training) to be in favor of finding that the drivers were not employees of the carrier during Phase 1. The court stated, however, that under the primary benefits test, the question is “closer.” The court concluded that both the carrier and the driver obtained “significant benefits from the training.” The court ultimately found that the training provided during Phase 1 was “valuable and transferable” and thus that the drivers were not employees during Phase 1 of the training program.
Turning to Phase 2 of the training program, the court found that the DOL criteria weighed in favor of a determination that the drivers are employees. Specifically, the court noted that in Phase 2, the drivers “do not gain an additional certification or diploma that would be easily transferable.” The court also found that the carrier was the primary beneficiary of Phase 2 pursuant to the primary benefits test. Accordingly, the court concluded that the drivers were employees under the FLSA during Phase 2 of the training program and thus must be paid minimum wage under the FLSA.
Carriers should be mindful of this decision when organizing or reviewing their orientation programs and/or driver training programs. While this decision is not controlling nationwide, it provides guidance on how a court could approach this issue. When in doubt, carriers should associate with experienced counsel to audit their orientation and/or driver training programs or their plans for these programs. While compensating individuals during such programs can be very costly, litigating a collective action under the FLSA (in addition to possibly ultimately paying such compensation, and opposing counsel’s fees and costs) is even more costly.
R. Eddie Wayland is a partner with the law firm of King & Ballow. You may reach Mr. Wayland at (615) 726-5430 or at firstname.lastname@example.org. The foregoing materials, discussion and comments have been abridged from laws, court decisions, and administrative rulings and should not be construed as legal advice on specific situations or subjects.