Court rules employee training is unpaid when trainee is not performing work of employee

Jeremy Byellin, JD

The case, Otico v. Hawaiian Airlines, Inc., ruled that an airline worker who quit her job was not acting as an “employee” during her 10-day training period, and thus was not entitled to be paid.

The case involved Kathryn Otico, who was accepted into a customer service representative training program for Hawaiian Airlines. Before interviewing for the position, Otico was informed that she would not be paid for the training.

According to the opinion, except for “a fleeting moment,” Otico did not provide any service to any Hawaiian Airlines customer during the instruction period.

At the end of the training period, Otico was required to take an exam, upon the successful completion of which (in addition to a few other prerequisites) she would presumably begin her employment with Hawaiian Airlines. Otico indeed passed the test and was hired, but only worked for a short time before quitting.

She later sued her former employer for unpaid wages, claiming that she should have been paid for the 10 days that she spent in training.

The Otico ruling noted six criteria for determining whether a worker qualifies as “trainee” or “employee” under federal Fair Labor Standards Act (according to a 2001 Department of Labor opinion letter.

As cited by the court, the criteria are:

1. The training, even though it includes actual operation of the facilities of the employer, 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 that provides the training derives no immediate advantage from the activities of the trainees; and on occasion his operations may actually be impeded.
5. The trainees are not necessarily entitled to a job at the conclusion of the training period.
6. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

Otico argued – as the DOL often had – that courts should rigidly apply these criteria, and that a trainee is an “employee” unless the employer satisfies all six requirements.

The court, however, noted that “[j]ust about every court” that has heard this argument has rejected it. Although there is no easy way to verify this assertion, it is true that the prevailing jurisprudence across the various circuits holds that the six criteria are “relevant but not conclusive,” and that courts should look at the totality of the circumstances instead.

The Otico court distilled the six criteria down to one specific question: Whether the employer is using the trainee to perform work that would ordinarily be performed by an employee.

If so, then the trainee must be paid as an employee would.

In the present case, the court concluded that Otico was the primary beneficiary of the training, since Hawaiian Airlines was using its paid employees to train Otico, who was not performing any tasks that were normally performed by paid employees.

Thus, the court sided with Hawaiian Airlines.

The court went further in its opinion in explaining that this case was a good illustration of why courts have typically rejected the DOL’s arguments on the six criteria. Specifically, the court noted that the six criteria were designed for true “on-the-job” training wherein a trainee is performing the same work as an employee as part of her training – which wasn’t the case here.

Finally, the court concluded by finding that even if the six criteria were applied as Otico wanted, the result would be the same.

Regardless, even though the court didn’t find the criteria to be determinative in the strictest sense, courts are aware of the importance of these factors, so they should certainly be considered when implementing employee training programs.

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