Monday, November 22, 2010
Court: City Can Force Officers to Repay Training Costs
By STEVEN M. ELLIS, Staff Writer
The Ninth U.S. Circuit Court of Appeals ruled Friday that the City of Oakland can force new police officers who quit to repay training costs.
The court threw out a former officer’s class action alleging that city policy requiring reimbursement by officers who leave before completing five years of service violated the minimum wage provisions of the federal Fair Labor Standards Act.
A three-judge panel held that Courtney Gordon, who left after less than two years on the job, failed to state a claim because she received all of her wages at a rate exceeding the minimum wage before the city demanded partial reimbursement of the $8,000 it spent to train her.
Writing for the court, Senior Judge Procter Hug Jr. said the costs of training were basically a loan, not a “kick-back” payment to Gordon’s employer. He also rejected her argument that there was no legal difference between deducting a sum from an employee’s check and directly demanding the employee surrender a sum after being paid.
Gordon joined the city’s over-650-officer police force in 2006 after attending its police academy. Upon her successful application to become a trainee, the city had required her to sign a conditional hiring agreement providing that officers who voluntarily leave within five years must repay a pro rata share of training costs.
The contract was the result of collective bargaining agreements between the city and the police officers’ union dating back to the late 1990s, and it decreased the amount of reimbursement by 20 percent for each full year of service a new officer completed.
When Gordon resigned in January 2008, she received nearly $2,400 in pay for her final two weeks wages, but the city notified her that she owed $6,400 for training costs.
The notification indicated that the city had offset that amount by withholding nearly $2,000 in accrued unused vacation and compensatory time off. The city increased the remainder owed to $5,268.03 two months later with a “collection fee” after Gordon didn’t pay.
Gordon sued under the FLSA, but U.S. District Judge William H. Alsup of the Northern District of California dismissed her complaint for failure to state a cognizable claim. Gordon then paid and moved to file an amended complaint, but Alsup denied the request, reasoning that she still couldn’t demonstrate that she was paid less than the federal minimum wage at any time.
On appeal, Gordon maintained that her proposed amended complaint set forth a viable claim under the FLSA’s minimum wage provisions, but Hug disagreed.
Noting that neither the conditional employment offer nor the city’s collective bargaining agreement limited Gordon’s right to receive at least minimum wage, and that she never alleged she was paid below the minimum wage, the judge said the only way Gordon could state a claim was if a portion of her training costs was a kick-back payment to the city under 29 C.F.R. § 535.31. That regulation provides that wages are not considered paid unless they are made “free and clear” of any requirement to kick part back to the employer.
Looking to the Seventh Circuit’s reasoning in Heder v. City of Two Rivers, Wisconsin (2002) 295 F.3d 777 involving a similar agreement affecting firefighters, Hug wrote that Gordon’s payment to the city was not a kick-back, but the equivalent of a repayment of a voluntarily-accepted loan that would otherwise have been entitled to forgiveness at the end of the five-year term.
“Gordon.chose not to serve the five years necessary to secure complete forgiveness,” he said. “Despite the debt Gordon owed following her resignation, the City satisfied the FLSA’s requirements by paying Gordon at least minimum wage for her final week of work. The City was therefore free to seek repayment of Gordon’s training debt as an ordinary creditor.”
Judges Pamela Ann Rymer and N. Randy Smith joined Hug in his opinion.
The case is Gordon v. City of Oakland, 09-16167.
Copyright 2010, Metropolitan News Company