Question: I am planning to hire a new employee soon. I have a few pre-employment activities planned for this new hire. Should I pay this person for these types of activities?
Answer: It depends. Some activities must be paid as hours worked while others fall into the general unpaid onboarding duties. Generally, activities related to assessing the individual’s qualifications or eligibility for employment are not paid. However, activities that go beyond this and primarily benefit the employer must be paid as normal hours worked. For example, if the employer is effectively shifting tasks that would otherwise occur on the employee’s first day of work to an earlier date, the time is likely compensable.
Given these general standards, employers should evaluate the compensability of each pre-hire and onboarding activity separately to ensure compliance. The California rules governing pre-hire and onboarding activities were recently examined in the federal case of Martinho v. Amazon.com, Inc. The court in Martinho analyzed the nature of various pre-employment activities and determined whether each should be paid as hours worked.
According to the Martinho court, examples of noncompensable pre-hire activities include submitting employment applications, undergoing drug testing, completing Form I-9 documentation, or participating in a background check. Note that these activities occur before an employer decides to hire an employee.
The analysis is more nuanced once the hiring decision has been made. This is because—at this point—the employer has already assessed the individual’s qualifications or eligibility for employment. If an employer requires an individual who has already accepted a job offer to complete additional pre-employment tasks, there is an increased risk that these will be seen as benefiting the employer and therefore should be paid. The ultimate question is whether the employer is advancing its own operational interests by shifting work that would otherwise occur during paid time.
Examples of compensable pre-hire activities may include taking a badge photo when the badge is required for daily facility access and timekeeping purposes. In that scenario, the employer benefits by saving time on the employee’s first day of work, and the activity does not assess the employee’s qualifications. Similarly, attending a welcome presentation, training, or setup activities that do not evaluate qualifications but instead provide job-related information may be compensable. This is because they may be seen as advancing the onboarding process before the official start date.
The Martinho decision also affirmed that the actual substance of the activity determines whether it is paid or not. Labeling an activity as “pre-hire” or “contingent” does not determine whether it is compensable. Even if a job offer is conditioned upon completing a particular activity, the activity may still be compensable if it does not relate to assessing the individual’s qualifications or eligibility for employment. Employers who do not compensate employees for certain pre-hire or onboarding activities may be exposed to claims for unpaid wages and related penalties.
The rules regarding whether pre-hire activities must be paid are complicated. A case- by-case analysis is required to ensure compliance with California wage and hour law. Employers with questions about pre-hire and onboarding practices are encouraged to connect with their employment counsel.