Harbourt v. PPE Casino Resorts Maryland | Tim Coffield by Tim Coffield Attorney

Maryland: Fourth Circuit Recognizes Training Can Be Compensable Work Under FLSA

by TimCo몭eldAttorney | Oct 19, 2022 | Uncategorized |

In Harbourt v. PPE Casino Resorts Maryland, LLC, 820 F.3d 655 (4th Cir. 2016) the Fourth Circuit held that under the Fair Labor Standards Act, compensable “work,” for which the FLSA requires employers to pay at least minimum wage, broadly encompasses physical or mental exertion, whether burdensome or not, controlled or required by the employer primarily for its bene몭t, and therefore training can constitute “work” under the FLSA.

Statutory Background Compensable “Work” under the FLSA

Congress enacted the FLSA “to protect all covered workers from substandard wages and oppressive working hours ” Trejo v Ryman Hosp Props , Inc , 795 F 3d 442, 446 (4th Cir. 2015) (quotes omitted.) To accomplish these goals, the FLSA requires employers to pay their employees both a minimum wage and overtime pay. Hall v. DIRECTV, LLC, 846 F 3d 757, 761 (4th Cir 2017)

Speci몭cally, the FLSA requires employers to pay their employees at least the federal minimum wage 29 U S C § 206(a)(1) And it requires employers to pay not less than time and a half for each hour worked over forty hours during a workweek. Id. § 207(a)

(1) The FLSA’s overtime requirement “was intended ‘to spread employment by placing 몭nancial pressure on the employer’ and ‘to compensate employees for the burden of a workweek in excess of the hours 몭xed in the Act.’ ” Calderon v. GEICO Gen. Ins. Co., 809 F 3d 111, 121 (4th Cir 2015)

Relevant to the situation in Harbourt, the FLSA requires that employers pay employees the minimum hourly wage “for all hours worked.” Perez v. Mountaire Farms, Inc., 650 F.3d 350, 363 (4th Cir. 2011) (internal quotation marks omitted). As Harbourt pointed out, the FLSA Act does not de몭ne “work ” See 29 U S C §§ 201 219 But the Supreme Court instructs that “in the absence of a contrary legislative expression” courts should assume that Congress was referring to work or employment “as those words are commonly used as meaning physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the bene몭t of the employer and his business ” Tennessee Coal, Iron & R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 598, 64 S.Ct. 698 (1944), superseded by statute on other grounds, Portal to Portal Act of 1947, Pub. L. No. 104 188, 110 Stat 1928 Harbourt, 820 F 3d at 658

In Harbourt, the court addressed the question of whether a casino’s training program for prospective dealers constituted compensable “work” under the FLSA, even though the casino was not yet even open or operating at the time of the training. As explained below, the Harbourt held that such training could be compensable work for which the employer must pay minimum wages.

Facts

The defendant, PPE Casino, operated a casino in Maryland. The Casino selected approximately 830 of the applicants to attend a “dealer school ” The “dealer school” consisted of four hours of daily instruction Monday through Friday, for about twenty hours per week, for twelve weeks. The school was scheduled to conclude about ten days before the start of legalized table gambling in Maryland 820 F 3d 655, 657 58 Plainti몭s, who attended the dealer school, were not paid to attend it until the 몭nal two days. They alleged the training at the dealer school was speci몭c to the manner in which the Casino’s employees were to perform the table games at the casino once it opened The plainti몭s further alleged that although the Casino advertised the “school” as being held in conjunction with a community college, it was really just run by the Casino The Casino authored all course materials, Casino employees provided all instruction, and attendees never interacted with anyone from a community college. During the “school,” the attendees completed employment forms, including an income tax withholding form and direct deposit authorization form To help the attendees receive a gambling license by the end of the course, the Casino required them to submit to a drug test, provide their 몭ngerprints and social security numbers, and authorize the Casino to obtain their driving records and perform criminal and 몭nancial background checks on them. 820 F.3d at 657 58.

The Casino did not pay the attendees to attend the dealer school until the 몭nal two days of the twelve week course. For the 몭nal two days they were paid minimum wage. The plainti몭s 몭led a putative class action asserting violations of the minimum wage provisions of the FLSA and various state laws. The district court granted the Casino’s motion to dismiss, holding that the plainti몭s “fail[ed] to show that the primary bene몭ciary of their attendance at the training was the Casino rather than themselves.” 820 F.3d at 657 58.

The Court’s Decision

The Fourth Circuit reversed, holding the plainti몭s did su몭ciently allege violations of the FLSA’s minimum wage provisions.

In reaching this conclusion, the Fourth Circuit observed that “work” for FLSA purposes broadly encompasses “physical or mental exertion (whether burdensome or not) controlled or required by the employer” primarily for its bene몭t. 820 F.3d at 660 (quoting Tennessee Coal, 321 U S at 598 And the Supreme Court has held “training” can constitute “work” under the statute. Id. (citing Walling v. Portland Terminal Co., 330 U S 148, 151, 67 S Ct 639 (1947) (noting that “[w]ithout doubt the Act covers trainees”); McLaughlin v. Ensley, 877 F.2d 1207, 1208 10 (4th Cir. 1989) (holding trainee routemen of a food distribution company were “employees” for FLSA purposes when they participated in a 몭ve day, 50 to 60 hour training program in which they learned how to load trucks and maintain food vending machines and helped experienced routemen perform their duties); and 29 C.F.R. §§ 785.27 .31 (2015) (establishing the requirements that mid employment training must meet for the training not to count toward work hours).

The Fourth Circuit rejected the Casino’s argument that because the trainees could not interact with paying customers in the Casino during the “school,” they failed to qualify as FLSA employees performing work for the Casino “That the Casino could not operate table games during the dealer school does not necessarily mean that the Trainees were not working for FLSA purposes in attending the required ‘school ’” 820 F.3d at 660. Rather, the Fourth Circuit observed, “whether the required training would constitute work for FLSA purposes would depend on whether it primarily constituted a bene몭t to the employer or the trainee ” Id

The Fourth Circuit then found that plainti몭s su몭ciently alleged facts to support a conclusion that the Casino, rather than the trainees, primarily bene몭ted from the dealer school training. For example, the plainti몭s alleged that the Casino received a large bene몭t a workforce of hundreds of dealers trained to operate table games to the Casino’s speci몭cations when the table games became legal in Maryland. And the plainti몭s also alleged that they received very little from the twelve weeks of training that did not primarily bene몭t the Casino, since the training was unique to the Casino’s speci몭cations and not transferable to work in other casinos.

The Fourth Circuit also pointed out that the plainti몭 alleged the dealer school training was “either conceived or carried out in such a way as to violate … the spirit of the minimum wage law ” 820 F 3d at 660 (quoting Portland Terminal, 330 U S at 153 Speci몭cally, the plainti몭s alleged that the “sole purpose” of the Casino’s “temporary makeshift ‘school’ was to hire the exact number of dealers needed to 몭ll the vacant table games positions[,]” and that the Casino “disguised its employee training course as a school for the purpose of not paying” the trainees. 820 F.3d at 660 61.

The Fourth Circuit found that if these allegations were correct, “a fact 몭nder could conclude that requiring applicants to attend a training ‘school’ for twenty hours each week for a full twelve weeks, training advertised to be associated with a community college course but that allegedly had nothing to do with any college, demonstrates that the Casino ‘conceived or carried out’ its ‘school’ to avoid paying the minimum wage. Id. The Fourth Circuit observed that “a fact 몭nder could further conclude that an employer would only take such actions to avoid paying the minimum wage to persons who were labelled ‘trainees’ but who actually worked for the Casino and were FLSA employees.” Id.

Accordingly, the Fourth Circuit held that the plainti몭s alleged su몭cient facts to state a claim that the Casino violated the FLSA and the Maryland wage laws by failing to pay them for the dealer school training 820 F 3d at 660 61

Analysis

In sum, in Harbourt the Fourth Circuit held that training can be compensable “work” requiring at least minimum wages under the FLSA. For purposes of the FLSA, “work” broadly encompasses physical or mental exertion, whether burdensome or not, controlled or required by the employer primarily for its bene몭t. Therefore, an employee attending an employer’s training program can be performing “work” under the FLSA

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