Federal Judge Finds That New York City Does Not Have to Pay Officers FLSA Wages When They Benefit More Than City From Mandatory Drug And Alcohol Classes

By Jim Cline and Geoff Kiernan

A federal judge in Gibbs v. City of New York ruled that mandatory drug and alcohol classes and AA meetings that NYPD required for officers that they felt had a substance abuse problem did not count as compensable “work” under FLSA, even though the officers’ jobs were contingent on them attending these classes. The judge found that since the mandatory drug and alcohol counseling sessions primarily benefited the employee rather than the NYPD it would be improper to require the employer to compensate them.

This case was filed in response to the NYPD’s referral of employees to its Counseling Services Unit (CSU) and AA meetings. The plaintiffs were two female officers, Gibbs and Drew, who were identified by the NYPD as having problems with alcohol use, although both officers continue to dispute this characterization. Each plaintiff was required to attend mandatory alcohol sessions or else face disciplinary action, including termination.  The counseling fell into three categories:  inpatient treatment, outpatient counseling during regular work hours provided by CSU, and outpatient provided by third parties after regular working hours.  Gibbs was required to attend all three types of counseling and Drew attended only the two outpatient options. Drew completed the required counseling and remains employed at the NYPD, while Gibbs was terminated when she refused to continue to go to counseling.

The claim related to what compensation to plaintiffs was required from NYPD. The NYPD held that they were not required to compensate plaintiffs for any of these meetings, but did so to help the employees at its own discretion. It was undisputed that Gibbs was compensated for both her inpatient and outpatient counseling, while Drew was compensated for her workday sessions, but not for her after work sessions. Neither was paid overtime for the counseling sessions, so the root of the lawsuit was whether the officers were entitled to overtime for the after-hours sessions.

Under FLSA, employees are required to receive compensation for “work,” but exactly what “work” has been hotly disputed throughout the years.  The definition ultimately settled on was that “work” “includes all time during which an employee is necessarily required to be on the employer’s premises, on duty or at a prescribed workplace.” There are two notable exceptions that Congress created to this expansive definition where the employer is not required to pay for travelling to and from the job, and for activities which are “preliminary to or postliminary to” the job.

The judge found that counseling sessions were not “work” as defined by the courts for FLSA. The judge explained that this was because the counseling was not done primarily to benefit the NYPD. He wrote:

Thus the remaining issue … is whether the counseling sessions were pursued ‘necessarily and primarily for the benefit of the employer.’ This is not an either-or proposition. Rather, the question is whether the time ‘is spent predominantly for the employer’s benefit or for the employee’s,’ and that inquiry depends ‘upon all the circumstances of the case.’

The judge explained that there was no evidence to suggest that the NYPD benefited from this counseling in any special way. The judge did not find that these employees were particularly valuable to the NYPD, nor was there any evidence that there were any staffing concerns which required the NYPD to retain all of its officers.  This distinguished the case from another lawsuit out of Aurora Colorado [Sehie v. City of Aurora], where the Seventh Circuit Court of Appeals found that mandated counseling sessions of a 911 dispatcher were compensable. In that situation, the Court found that the counseling sessions helped ensure that the employee “stayed on the job in a position that was short-staffed”, thus the employer was the primary beneficiary. However, the judge found that for the NYPD there was no shortage of qualified officers and the department didn’t “need” the officers in the same way as the police department in Aurora.

As a matter of policy, the Court also found that it would be improper to mandate employers pay for counseling sessions as that would be a disincentive for employers to send their employees to counseling.   The judge was convinced by the NYPD’s argument that these counseling sessions provide an alternative to other discipline and even termination. He explained:

To hold that the FLSA requires an employer to compensate in the circumstances of this case would risk creating a material disincentive to the growing use of employee assistance programs and so-called ‘last-chance agreements’ in this and similar circumstances.

The Court felt that despite the fact that the counseling sessions were not paid for, they are clearly more beneficial to the employees than the alternative, which is discipline or in some cases termination. The judge went on to explain that there is nothing to stop employees from bargaining for compensation for mandatory counseling sessions. However, in the absence of such a provision, the Court ruled that FLSA would not cover mandatory counseling sessions.

Whether the FLSA requires payment for mandated counseling and medical sessions remains a surprisingly unresolved issue. The “predominant benefits” test invoked by this Court is often used as a measure of whether work is deemed compensable “work.”  The Court’s citation to the lack of any shortage of replacement officers is peculiar, and, in any event, may not hold up in the current labor market environment where many agencies do have documented shortages.  The Court here acknowledged that the City benefits from having “sober” officers but apparently not enough to have to pay them.

This issue also arises where a City compels fitness examinations, sick leave verification, or FMLA certification. The DOL has opined that such examinations are not compensable unless they fall within the employee’s normal work hours. The Seventh Circuit found these opinions unpersuasive and declined to follow them. It also noted that DOL had released opinions finding that such time was compensable.

We anticipate further conflicting court decisions on this issue before it is resolved. In the meantime, we recommend that you take the position that such time is compensable. Our best guess is that is more likely where the court decisions will eventually land.  Where the employer is ordering the examination, it should be deemed a benefit to them and they should be required to pay the employees for that time.

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