When Exactly Does an Employee Start Being an “Employee”?

When Exactly Does an Employee Start Being an “Employee”?

Are California employers required to compensate job applicants for the time and expense of taking a mandatory drug test?

The Ninth Circuit Court of Appeals recently held that a district court properly entered judgment for the company and found that class members weren’t employees at the time of the pre-employment drug test. And as such, they didn’t need to be compensated.

The federal appellate court held that the members of the class weren’t performing work for an employer when they took the drug test. Rather, they were applying for the job and weren’t yet employees. The class asserted that they were and should be compensated employees for the time and expense of taking a drug test as a successful applicant for employment.

Background

The grocery store WinCo Foods requires a drug test of successful applicants for employment before they can begin the duties of the job. The plaintiff, Alfred Johnson, represented a class of employees seeking reimbursement for the time and travel expenses required to take their drug test for WinCo. The district court entered judgment in favor of the grocery store on the ground that under California law, the plaintiffs weren’t yet employees when they took the drug test. The plaintiffs appealed, arguing that they were employees.

WinCo operates a supermarket chain with about 100 locations across the western U.S., including California. When the grocery store hires new employees, a hiring manager calls successful applicants to extend what WinCo terms a contingent offer of employment. The offer includes the following:

  • The job title;
  • The pay; and
  • The job location.

Using the company’s instructions, the hiring manager discusses the offer with the applicant. This includes telling the applicant about the mandatory drug test, and stating, “as part of your contingent job offer with WinCo Foods, we will be conducting a pre-employment background check and drug test on you.”

When an applicant agrees, the hiring manager tells the applicant to report to a testing location. WinCo pays the drug testing facility's fee but doesn’t compensate them for the travel expenses and time required to undergo the testing.

In August 2017, the plaintiff, Alfred Johnson, on behalf of himself and other WinCo employees in California, filed a class claiming compensation was due to him as an employee for the time and expenses of taking the drug test. He alleged violations of the California Labor Code relating to the payment of wages and business-related expenses and the California Business & Professions Code, for unfair business practices. The district court held that Johnson and class members weren’t employees of WinCo Foods when they underwent drug testing and the court granted WinCo's motion to dismiss the case.

The Control Test Doesn’t Apply

Johnson argued that he and his fellow class members were employees when they took the drug tests because WinCo exerted sufficient control over the drug testing process to render them employees. Johnson relied on California caselaw that looks at the level of control the putative employer exerts over the putative employee's performance of the job to evaluate whether there was an employment relationship between the parties.

The parties didn’t dispute that WinCo exercises control over the mandatory drug testing by prescribing the time and date of the tests, the facility where the tests take place, and the scope of those tests. The problem with Johnson's argument, the Ninth Circuit found, is that control over a drug test as part of the job application process isn’t “control” over the performance of the job.

Circuit Judge Mary M. Schroeder explained that for purposes of the California Labor Code, the Industrial Welfare Commission ("IWC") defines an employer as "any person . . . who . . . employs or exercises control over wages, hours, or working conditions of any person.” Relying on this definition, the Supreme Court of California established the control test, looking to whether a person controls the manner and means of accomplishing a desired service as the principal test of an employment relationship.

Here, the class members weren’t performing work for an employer when they took the pre-employment drug test— they were applying for the job. As such, they weren’t yet employees.

The Supreme Court of California recognized that there is a "general societal understanding that…all job applicants submit to a medical examination prior to hiring" and that "[p]re-employment physical examination, including urinalysis, is simply too familiar a feature of the job market on all levels." The Supreme Court held that pre-employment tests constituted a lesser invasion of privacy than requiring testing of those already employed.

Drug testing, like an interview or pre-employment physical examination, Judge Schroeder opined, is an activity to secure a position, not a requirement for those already employed. The district court below observed that:

There are many ways in which employers exercise some degree of control over job applicants. They may require that applicants appear at a certain time and place for an interview; that they undergo a writing or skills test; that they interview in a certain fashion—such as on a panel with other applicants; that they pass a background check; and so on. The fact that employers control the "manner" in which these activities take place does not magically convert applicants into employees.

The fact that WinCo controlled the manner in which they took the drug test didn’t make them employees before they were qualified to report for work.

The judgment of the U.S. District Court for the Central District of California, holding that the class members weren’t employees at the time of the drug test and did not need to be compensated, was affirmed. Johnson v. WinCo Foods, LLC (Ninth Circuit Court of Appeals, 6/13/22).

Bottom Line

The Ninth Circuit makes it clear in the WinCo case that employers need not compensate job applicants for the time and expenses they incur in drug testing during the application process— except for the cost of the drug test, which employers should pay. Moreover, the Court said that the employment relationship doesn’t begin until the condition (a successful drug test) is satisfied.

California employers should be cautious in the way that they state that an offer of employment is contingent on passing the drug test. In addition, they should explain what must be accomplished to satisfy the contingency.

Danielle G. Eanet can be reached at Eanet, PC in Los Angeles, CA at danielle@eanetpc.com.

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