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Training Cost Repayment Policy Approved

January 21, 2011

Courtney Gordon resigned from her police officer position with the city of Oakland, California, within two years of being hired. Oakland’s policy states that police officers who resign less than five years after joining the department must repay some of the city’s costs incurred in training them. Oakland’s policy, as agreed upon in a series of collective bargaining agreements, tied repayment of training expenses to the employee’s length of service.

After Gordon resigned, Oakland told her that she was liable for 80 percent of her training costs, totaling $6,400, and withheld part of the debt against her unused vacation and compensatory time off. In March 2008, Gordon filed a federal lawsuit alleging violations of the Fair Labor Standards Act, among other claims, and argued that Oakland could not withhold payments against amounts owed to her.

The district court dismissed her FLSA claims, and Gordon appealed to the U.S. Court of Appeals for the 9th District in San Francisco, which upheld the district court’s ruling.

The 9th Circuit agreed that the city did not violate the FLSA when it withheld Gordon’s accrued vacation pay and compensatory time-off payments because it had not reduced the pay for her final work for the police department. It noted that the only way for Gordon to establish a viable FLSA claim was to allege that the city had demanded an illegal kickback under 29 C.F.R. §535.31. The 9th Circuit agreed that the training expenses were not a kickback, but more akin to a loan to employees, with repayment forgiven over a period of years. The 9th Circuit held that the city’s training reimbursement policy did not violate the FLSA because Gordon was paid at least the FLSA federal minimum wage for her final work week. (Gordon v. City of Oakland, 9th Cir., No. 09-16167, Nov. 19, 2010).

IMPACT: Training repayment policies may be permissible under the FLSA as long as employees are paid at least the minimum wage for all hours worked in their final workweek.

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The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.