New hires need not be paid for time related to drug screening, 9th Cir. says

Dive Brief:

California law doesn’t require employers to reimburse new hires for their travel expenses or for their time related to a pre-employment drug test, the 9th U.S. Circuit Court of Appeals held (Johnson v. WinCo Foods, LLC, No. 21-55501 (June 13, 2022)).
WinCo Foods operates a chain of supermarkets in Western states, including California. After the company extends a contingent job offer to new hires, it requires them to undergo a mandatory drug test, according to the court. If a new hire consents to the offer, WinCo instructs them to report to a drug testing location at a specific time and date. The company pays the facility’s fees but doesn’t compensate new hires for the travel expenses or for their time undergoing the drug test.
An employee in California filed a class-action suit against WinCo under state law to get reimbursed for travel expenses and time spent taking the drug test. The 9th Circuit upheld judgment for WinCo. The class members weren’t entitled to payment because they weren’t “employees” at the time they took the tests, the panel said. Under California law, an employment relationship exists if a company controls how a person performs the job. The class members were applying for a job when they took the drug tests, not performing one, the 9th Circuit explained. Although WinCo exercised control over the drug testing procedure, it was merely doing so with regard to the job application process and not over the performance of a job.

Dive Insight:

Pre-employment drug tests are used to screen prospective employees for illegal drug use or abuse of prescription medication. Employers typically extend conditional job offers to new hires contingent on them passing the drug test. Employers might also require current employees to be tested for drug or alcohol use following a work-related accident or pursuant to federal regulations governing their industry.

Under the Fair Labor Standards Act, employers must pay employees for all hours worked. The FLSA doesn’t expressly mention whether this includes drug and alcohol testing, but the U.S. Department of Labor regulations offer some guidance. The regulations state that attendance at lectures, meetings, training programs and similar activities need not be counted as working time if four criteria are met: attendance is outside the employee’s regular working hours; attendance is voluntary; the activity isn’t directly related to the employee’s job; and the employee doesn’t perform any productive work while attending the activity.

So if a drug test is mandated by an employer (i.e., it’s not voluntary), the FLSA requires the employer to compensate current employees for their time spent taking the test, Cullan E. Jones, an employment attorney with Ford Harrison in Washington, D.C., and Tampa, Florida, told HR Dive in an email. “When an employer imposes drug testing requirements on employees, the employees must be compensated for the time spent traveling to and from the tests, waiting for and undergoing these tests, or meeting the requirements of the test,” Jones said.

The FLSA only applies to “employees,” Jones added. It doesn’t apply to applicants, volunteers and independent contractors, and the “control test” the 9th Circuit used in the WinCo case isn’t relevant to FLSA pre-employment activities, he explained.

The WinCo plaintiffs argued that they became employees and an employment contract was formed when they accepted WinCo’s job offer before they took the drug test. The 9th Circuit disagreed. WinCo went to great lengths to make sure they understood the offer was conditional, and the plaintiffs had to have known the employment offer they were accepting was contingent on a successful drug test, it emphasized.

This is good practice. “Clearly communicating that offers of employment are conditioned on passing a pre-employment drug test or pre-employment background check can shield employers from liability under the FLSA and state analogs to the FLSA, as well as potential claims that the employer violated the Fair Credit Reporting Act, for failing to provide sufficient pre-adverse action notice,” Jones said.

In an earlier case from California, a federal district court weighed in on whether a trainee was an employee entitled to compensation for attending a training program. The plaintiff had been accepted into a 10-day program to become a customer service representative for Hawaiian Airlines. Before interviewing for the position, the airline told her she wouldn’t be paid for the training. It hired her after she passed a test at the end of the program, but she quit a short time later and sued to get paid for the time she spent in the program. The court said she wasn’t an “employee” and ruled against her.

Under the FLSA, the key question is whether the employer is taking advantage of a trainee by using the trainee to perform work an employee would otherwise be performing, the court explained. If so, the trainee should be paid for their time.

Except for a “fleeting moment” when the plaintiff was supposed to be observing the customer check-in process and asked one or two customers for ID, she didn’t provide any customer service or perform work of an employee. Rather, she spent almost the entire time in a classroom and touring the facilities, which were “precursors” to performing employee work, the court concluded.