When can an employer require an employee to pay for training?

Some employers require employees to have certain training before hiring the employee, advancing the employee to a higher position or even to maintain employment.  In some instances, the training is required by law (e.g., state-mandated continuing education).  In other instances, the training is required by the employer, but not required by any statute or regulation.

Can an employer require an employee to pay for training?

In a recent decision by the Fourth Appellate District, In Re Acknowledgment Cases, the court held that the City of Los Angeles could not require police officers to reimburse the employer for training unless the training was legally required.

The City, requires that all newly hired police officers attend and graduate from the Los Angeles Police Academy.  Tired of providing the training only to have the officers leave to work for another police department, the City enacted LA Administrative Code section 4.1700, which provides that any police officer hired by the LAPD that does not remain employed with the LAPD for 60 months and goes to work for another law enforcement agency is required to reimburse the City a prorated portion of the cost of training at the academy.  The training consisted of state-mandated training as well as unique training for the LAPD.

Each applicant signed an agreement stating that he or she would reimburse the city for the direct and indirect costs of training if he or she leaves the LAPD within five years after graduation and becomes employed by another law enforcement agency within one year after leaving the LAPD.

43 former officers of the LAPD sued the LAPD claiming the agreement violated Labor Code sections 2802 and 2804. Labor Code section 2802 requires employers to indemnify employees for all necessary expenditures or losses incurred by the employee in direct consequence of discharging his or her duties, or at the direction of the employer.  Labor Code section 2804 says that an employee’s rights under Labor Code section 2802 may not be waived.  The officers contended that since the city required the employees to take training above and beyond state-mandated training, the city was required to bear the expense of that training, and requiring the employees to reimburse the employer for the cost of the additional training violates the Labor Code.

The City argued that because the officers did not pay for the training themselves, the officers did not incur any out-of-pocket expense, and therefore Labor Code section 2802 did not apply.  The court pointed out that the City’s argument contradicted the fact that the City sued the officers to recover the training costs.

The City also argued that Labor Code section 2802 did not apply because state law required training under the Peace Officer Standards and Training (POST) legislation.  The City ran into problems, however, because the LAPD required training above and beyond the state-mandated training.

In analyzing the issue, the court relied, in part, on a 1994 opinion letter from the Department of Labor Standards Enforcement, which says:

There is generally no requirement that an employer pay for training leading to licensure or the cost of licensure for an employee. While the license may be a requirement of the employment, it is not the type of cost encompassed by Labor Code [section] 2802. The most important aspect of licensure is that it is required by the state or locality as a result of public policy. It is the employee who must be licensed and unless there is a specific statute which requires the employer to assume part of the cost, the cost of licensing must be borne by the employee.

There may be situations, however, where licensure is not actually required by statute or ordinance but the employer requires either the training or the licensing (or both) simply as a requirement of employment. In that case, the provisions of Labor Code [section] 2802 would require the employer to reimburse the cost. (DLSE Op. Ltr. (Nov. 17, 1994) at p. 1, fn. omitted.)

The court also differentiated itself from a 2008 case, City of Oakland v. Hassey (2008) 163 Cal.App.4th 1477, because the employees in Hassey did not claim Labor Code 2802 as a defense—so the previous court never analyzed the issue—and the City of Oakland did not require its officers attend the additional training.

The court announced the following rule: where an individual must, as a matter of law, have a license to carry out the duties of his or her employment, the employee must bear the cost of obtaining the license. It is also consistent with this purpose to require an employer to bear the cost of training which is not required to obtain the license but is intended solely to enable the employee to discharge his or her duties.

To put it another way: If the law requires the training, an employer can require an employee to pay for training.  If the employer requires the training, the employer is responsible for the costs.

The court held that section 4.1700 and the agreements were void to the extent they required officers to reimburse training other than statutorily mandated basic “POST” training.  The court concluded that basic POST training is not employer-mandated training and is not an expense of discharging the duties of employment. Therefore, the individual officers could be forced to pay for the state-mandated POST training.  To the extent a City required training beyond the legally-required training, such “department required” training is for the benefit of the employer” and an employer cannot require an employee to bear that cost.

I have handled several cases against an employer that uses a very similar scheme in order to keep employees from leaving their employment within one year of being hired.  Although I made the Labor Code section 2802 argument, there were no reported cases directly on point, and the cases all resolved before trial.  With this new case, that particular employer’s policies are clearly void, and could subject the company to significant liability.  Employers should carefully review their expense reimbursement and training reimbursement policies to ensure they do not violate Labor Code section 2802 and 2804.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

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