In Woods v. Vector Marketing Corp., the plaintiffs filed five state law class actions and an FLSA collective action for unpaid wages claiming they should have been compensated for time spent in Vector’s sales training program. Notably, the trainees were not hired at the time of the training and were only eligible to sign agreements to act as Sales Representatives once the training was completed.
Vector argued that the members of the putative class were not yet employees of the company when they participated in the training and therefore, were not entitled to wages under the FLSA or any state law. Instead, the putative class members were only hired after they qualified for employment by completing the training.
Generally, employees need not be compensated for training where the training is similar to that which is given in a vocational school, it is for the benefit of the trainee, the employer derives no immediate advantage from the activities of the trainees, and the trainees are not necessarily entitled to a job at the completion of the training period. Here, the putative class argued that the training was for Vector’s benefit because, among other things, they were required to provide a list of prospective clients to Vector during the training.
While not reaching the merits of the case, the court found that Vector’s uniform decision not to pay for the training constituted a common policy capable of class wide resolution. And, even though Vector argued that some recruits did not provide names to Vector during the training (i.e. such that the training would not benefit Vector with respect to those individuals), the court found that this individualized fact, itself, did not predominate over the other common questions. Importantly, the court found that “any variance with respect to recruit lists can be easily managed (and adjudicated) at either trial or summary judgment because any variance as to this issue is simple and binary. Either a collective action member provided a recruit list or not. There is no grey area, and within each group (i.e., those who provided lists and those who did not), it is clear that all trainees are ‘similarly situated.’”
In a competitive hiring environment, it may be tempting to have recruits undergo a training program before they can qualify for employment. However, plaintiffs’ lawyers and the courts are paying close attention to this practice, and employers should review their training practices carefully before deciding not to pay for training time.