Okay to recoup training costs from departing employees under federal law
Requiring an employee to repay training costs when they leave employment does not necessarily violate the federal Fair Labor Standards Act (FLSA), according to the Ninth Circuit Court of Appeals. The City of Oaklands collective bargaining agreement stated that the City had the right to collect a portion of the cost of an officers academy training if the officer voluntarily separated from employment prior to completing five years of service. Several police officers argued that the City was violating the FLSA by paying them less than minimum wage or requiring them to kick back a portion of their wage to the employer. The Ninth Circuit, however, determined that the arrangement violated neither provision of the FLSA and allowed the City to collect the money from the officers (Gordon v. Oakland, 9th Cir, Nov. 2010).
Tips: If you want to recoup money from a former employee for a specific expense incurred while they were working for you, you should have a written agreement specifying when repayment will be required and how. Although you may be allowed to do so, we dont recommend requiring repayment for training or expenses that you make a condition of continued employment (e.g. cost of attending a specific training seminar). Also, recouping the costs by payroll deduction from a final paycheck may be prohibited depending on the state in which the employee works. See our Legal Guide, Payroll Deductions (1620). For more discussion, contact your Vigilant staff representative.