California employers often struggle to determine whether time spent on new-hire activities such as drug testing, background checks, or onboarding tasks — is compensable. A recent California court decision involving Amazon (Martinho v. Amazon.com Services LLC) provides helpful guidance for employers navigating this gray area.
EMPLOYMENT ELIGIBILITY TASKS – NOT COMPENSABLE
The Court found that activities designed to assess employment eligibility are not compensable because they occur before employment officially begins. These tasks are part of the application or pre-employment process, not the performance of job duties.
EXAMPLES OF NON-COMPENSABLE ACTIVITIES:
- Drug testing: Considered an activity to secure a position, much like an interview or pre-employment exam.
- Background checks: Conducted to determine if a candidate qualifies for employment.
The Court emphasized that Amazon’s clear communication that the job offer was conditional—pending completion of these screenings—helped support its position that the time spent on these activities was not compensable. EMPLOYER TIP: Clearly communicate that the job offer is conditional until all pre-employment requirements are completed. This helps define when employment (and compensable time) actually begins.
EMPLOYER TIP:
Clearly communicate that the job offer is conditional until all pre-employment requirements are completed. This helps define when employment (and compensable time) actually begins.
COMPANY ONBOARDING TASKS – COMPENSABLE
The Court reached the opposite conclusion for onboarding activities that occur once the individual is considered an employee. These tasks are directly related to performing job functions and occur under the employer’s control.
EXAMPLES OF COMPENSABLE ACTIVITIES:
- Company badge photo: The badge provides building access and identifies the person as an employee.
- I-9 paperwork: Required to verify employment eligibility, not actual work.
- Welcome or orientation presentations: Designed to prepare the new hire for the workplace and streamline their first day of work.
- Any training or setup activity required before starting regular duties.
The Court found that during these activities, the worker was acting as an employee, and Amazon controlled the manner and means by which the activities were completed. Therefore, time spent completing these onboarding tasks must be paid.
EMPLOYER TIP:
If an activity is for the employer’s benefit — training, system setup, badge photos, or introductions — it’s compensable.
CLASS CERTIFICATION APPROVED
The Court allowed the case to move forward as a class action because Amazon’s system tracked when applicants attended new-hire events and completed specific tasks. This recordkeeping allowed the Court to determine time spent on compensable versus non-compensable activities across all class members.
KEY TAKEAWAYS FOR EMPLOYERS
The Martinho decision offers critical guidance on how to manage pre-employment and onboarding activities to reduce wage-and-hour risks:
- Differentiate clearly between pre-employment screenings (not paid) and onboarding activities (paid).
- Use precise language in offer letters — state that the offer is conditional until all screening steps are completed.
- Pay for onboarding time once the candidate becomes an employee and begins employer-directed activities.
- Track time accurately for all onboarding tasks to avoid potential class-action exposure.
- Review policies and handbooks to ensure they align with California wage-and-hour law and reflect current case guidance.
BOTTOM LINE
Employers should ensure that all pre-hire screening activities are clearly distinguished from post-hire onboarding tasks. Misclassification of these activities can expose your organization to significant wage-and-hour liability.
JorgensenHR helps clients evaluate their new-hire, onboarding, and compliance practices to reduce risk and maintain full compliance with California labor laws. We are happy to assist you with these activities.
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