Gordon v. City of Oakland: City May Require Police Officer to Repay Training Costs Under FLSA

In Gordon v. City of Oakland, --- F.3d ----, 2010 WL 4673695 (9th Cir. November 19, 2010), the Ninth Circuit Court of Appeals held that a city did not violate the minimum wage provisions of the Fair Labor Standards Act (FLSA) by requiring the plaintiff, a former police officer subject to a collective bargaining agreement, to repay a portion of her training costs when she voluntarily left the City's employment before completing five years of service. The Court quoted 29 C.F.R. § 535.31, which provides in pertinent part:

Whether in cash or other facilities, ‘wages' cannot be considered to have been paid by the employer and received by the employee unless they are paid finally and unconditionally or ‘free and clear.’ The wage requirements of the Act will not be met where the employee ‘kicks-back’ directly or indirectly to the employer or to another person for the employer's benefit the whole or part of the wage delivered to the employee. This is true whether the “kick-back” is made in cash or in other than cash.

It then held:

Because Gordon did not allege she was paid below the federal minimum wage for any given week, the only way Gordon has stated a cognizable claim is if her payment to the City for a portion of her training costs is a “kick-back” payment as described in section 535.31.

Slip op. at 3.

Finally, the Court held that the costs of training were similar to a loan to the plaintiff, not a kickback to the employer, and the City paid the plaintiff at least minimum wage for her final work week before deducting the training costs. Slip op. at 4.

The opinion is here.