United States: New York Federal Court Finds That The Fair Labor Standards Act Does Not Require An Employer To Compensate An Employee For Time Spent At Mandatory Alcohol Counseling And Treatment Sessions

Employers do not have to pay their employees to attend mandatory alcohol counseling and treatment sessions, according to a New York Federal court.  In reaching its decision, the court concluded that employee attendance at these sessions does not constitute “work”, and even if it did, then the employer still would not have to pay for this time because it would be considered a non-compensable postliminary activity.  The decision is encouraging, especially because it will continue to incentivize employers to help employees successfully seek treatment before they opt to discipline or fire them.

Background

In Gibbs v. City of New York, the New York Police Department ordered two clerical workers to attend alcohol counseling and treatment sessions or face discipline, including possibly termination.  The sessions included (i) inpatient counseling at a residential treatment facility, (ii) outpatient counseling during regularly-scheduled work hours, and (iii) outpatient counseling after regularly-scheduled work hours.  The NYPD compensated both employees for the time they spent attending the inpatient treatment sessions (excluding overtime) and also for the outpatient sessions during regular working hours.

The employees later sued claiming that the NYPD should have paid them overtime for time spent at inpatient treatment or for attending the outpatient sessions after working hours.  In entering summary judgment for the NYPD, the court spent considerable time addressing the Fair Labor Standards Act’s definition of work and its exceptions under the Portal-to-Portal Act.

Attendance at the Counseling Sessions did Not Constitute “Work” Under the FLSA

First, the court pointed out that the FLSA requires employers to compensate employees for time spent engaging in an activity that is “both controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business” (emphasis ours).  While it was clear that the NYPD required their attendance (it even threatened discharge for failing to attend), the NYPD did not, the court held, “predominantly benefit” from their attendance.

In making this determination, the Court relied primarily on the fact that the employees’ attendance did not benefit the NYPD “in any relevant way” (emphasis again ours).  It noted that their attendance did in fact benefit the NYPD, because if the sessions were successful, it would potentially stop a premature termination and therefore save the NYPD the costs related to hiring and training a replacement.  But this wasn’t necessarily a relevant benefit, or stated in another way: “[s]omething more is required” the court said.  The problem however, is that the court did not expand on what that “something more” was.  Instead, it would only commit to the conclusion that an employee’s continued employment does not in and of itself predominately benefit the employer, except, potentially, where it is short-staffed and/or where the employee is crucial to its operations (neither of which was the case here).

To bolster its “predominately benefits” conclusion, the court also noted that the two workers were (i) actually the beneficiaries of the mandatory counseling sessions – “they served as proactive assistance to the employees whose continued employment could have been in jeopardy”; and (ii) primarily responsible for the cost of the counseling.

The court also took into consideration the “practical consequences” of a ruling adverse to the NYPD.  The court noted, sensibly, that if this time was compensable that it would create a “material disincentive” for employers to utilize and promote employee assistance programs and last-chance agreements as the NYPD had done in this case.  And such a payment requirement would even go beyond that required under the Americans with Disabilities Act, which only requires unpaid leave to participate in a treatment program.

Attendance at the Counseling Session Is a Non-Compensable Postliminary Activity

Even though it could have ended its opinion there, the court decided to turn its attention next to the Portal-to-Portal Act.  That Act resulted from widespread criticism of a 1946 Supreme Court decision that interpreted the definition of “work” broadly, and it relieves employers from the requirement to pay employees in part where the employee engages in an activity that is preliminary or postliminary to the employee’s principal activity.

Many of our readers will remember that the Supreme Court recently addressed the Portal-to-Portal Act in Integrity Staffingand found that to be compensable, the preliminary or postliminary activity must be either the principal activity the employer hired the employee to perform or integral or indispensable to the principal activity the employer hired the employee to perform.

In applying the Integrity Staffing standard, the court here found that even if attendance at the counseling sessions constituted “work” under the FLSA, such attendance was not compensable because it was neither indispensable nor integral to the employees’ jobs with the NYPD.

Conclusion

Employers need not shy away from compelling their employees to seek alcohol counseling and treatment (or other drug dependency treatment) as an alternative to job discipline or termination of employment where appropriate.  However, employers should still exercise prudence when doing so and make sure that the mandatory referral to counseling is well-founded and appropriately documented.  Additionally, if employers do pay for all or part of the treatment, they should set this forth clearly in a policy that is applied equally to all employees.