Robin Miller, et al v. Citizens Financial Group, Inc. et al
Filing
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Judge Indira Talwani: ORDER entered. MEMORANDUM AND ORDER. Defendants' Motion for Summary Judgment 44 is ALLOWED.(Kelly, Danielle)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
ROBIN MILLER, et al., Individually
and on Behalf of All Others Similarly
Situated,
Plaintiffs,
v.
CITIZENS FINANCIAL GROUP, INC.,
CITIZENS BANK, N.A., and CITIZENS
BANK OF PENNSYLVANIA,
Defendants.
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Civil Action No. 1:17-cv-12352-IT
MEMORANDUM AND ORDER
February 5, 2020
TALWANI, D.J.
I.
Introduction
Plaintiffs Robin Miller, Richard Grey II, and Stan Alemaskin allege that Citizens
Financial Group, Inc., Citizens Bank, N.A., and/or Citizens Bank of Pennsylvania (collectively,
“Citizens”) failed to pay overtime compensation, in violation of the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. §§ 201, et seq., and Massachusetts and Pennsylvania state wage laws, for
time Plaintiffs spent outside of regular work hours studying for required licensing exams.1 On
Defendants’ Motion for Summary Judgment [#44], the court finds that Defendants are not
entitled to summary judgment under the regulations promulgated by the Department of Labor
Plaintiffs bring this suit individually and on behalf of others. On the parties’ stipulation, the
court tolled the FLSA statute of limitations as of April 10, 2018, for claims of potential plaintiffs
who may seek to opt-in pursuant to 28 U.S.C. § 216(b).
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(“DOL”), but that Defendants’ motion is nonetheless ALLOWED under controlling First Circuit
precedent.
II.
Background
Viewing the evidence in the light most favorable to Plaintiff as the non-moving party, the
summary judgment record is as follows.
Citizens is a retail bank that provides financial services to customers, including both retail
banking services and licensed banking services. Pls.’ Response to Defs.’ Statement of
Undisputed Facts and Counterstatement of Material Facts (“Pl’s 56.1 Resp.”) ¶ 4 [#82]. Retail
bankers exclusively perform retail banking services, such as opening checking and savings
accounts and assisting with customers’ needs. Id. ¶¶ 4, 6. During the relevant period, Licensed
Bankers, such as Plaintiffs Robin Miller, Richard Grey II, and Stan Alemaskin, performed retail
banking duties and additional services, and are paid at a higher pay grade and have a more senior
title than employees in retail banker positions. Id. ¶ 5; Defs’ Resp. to Pls’ Counterstatement of
Facts (“Defs’ 56.1 Resp.”) ¶ 13 [#86].2
Licensed Bankers included employees who have obtained a Series 6 license, a Series 63
license, and Life and Health Insurance licenses specific for the state in which they are employed,
and employees who have not yet obtained these licenses. Pl’s 56.1 Resp. ¶ 6 [#82]; Defs’ 56.1
Resp. ¶ 14 [#86]. Employees in the Licensed Banker position who were not fully licensed were
required to develop a “basic awareness of core investment products.” Pl’s 56.1 Resp. ¶ 14 [#82].
They also made investment referrals but are not permitted to perform licensed banking services
2
Citizens changed job titles over time to reflect subcategories of Licensed Bankers, but for
purposes of this motion, both sides use the term “Licensed Bankers” to refer to the position held
by Plaintiffs. See Pl’s 56.1 Resp. ¶ 5 [#82]; see also Defs. Statement of Undisputed Facts 1 n.1
[#86].
2
directly. Id. ¶¶ 18-19. Licensed Bankers who obtained the required licenses could advise on
securities and other investment products. Defs’ 56.1 Resp. ¶ 13 [#86].
Citizens informed employees when they were hired or promoted into the Licensed
Banker position that they were required to obtain a Series 6 license, a Series 63 license, and Life
and Health Insurance licenses for their state if they did not already have those licenses. Pl’s 56.1
Resp. ¶¶ 5-6 [#82]. Citizens also informed them that the licenses were a condition of their
employment in the Licensed Banker position and that they would be subject to demotion or
termination if they failed to obtain the licenses. Defs’ 56.1 Resp. ¶ 21 [#86].
Citizens expected Licensed Bankers who were not fully licensed to study outside of
branch hours to prepare for their licensing exams and did not compensate them for studying
outside of regular working hours including when studying occurred beyond a 40-hour workweek.
Id. ¶¶ 22-24.3 Citizens provided Licensed Bankers study materials created by Kaplan, a test
preparation company. Pls.’ 56.1 Resp. ¶ 8 [#82].
Individuals who obtained their licenses were not limited to using the licenses at Citizens
but could potentially use those licenses to perform licensed banking duties at other financial
institutions. Id. ¶ 10. Employees who were unable to pass the licensing examinations within a
certain period of time were permitted to seek a demotion to a non-licensed job at Citizens or
otherwise would be terminated. Id. ¶ 6; Defs’ 56.1 Resp. ¶ 21 [#86].
3
In 2017, Citizens introduced the Paid Study Program, which compensated Licensed Bankers for
up to 40 hours of time spent studying. Defs’ 56.1 Resp. ¶¶ 26, 32 [#86]. Additional study time
remained uncompensated.
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III.
Summary Judgment Standard
Summary judgment is appropriate only if “there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). When
considering a summary judgment motion, the court views the evidence in the light most
favorable to the non-moving party and resolves any disputes of material fact in their favor. See
Prescott v. Higgins, 538 F.3d 32, 39 (1st Cir. 2008). A “genuine dispute” is one that, based on
the evidence submitted at this stage of litigation, “a reasonable jury could resolve ... in favor of
the non-moving party,” and a “material fact” is one that has “the potential to affect the outcome
of the suit under the applicable law.” Sanchez v. Alvarado, 101 F.3d 223, 227 (1st Cir. 1996)
(citations and quotation marks omitted). If further inquiry into the facts is necessary to apply the
relevant law, summary judgment is not appropriate. Mandel v. Bos. Phoenix, Inc., 456 F.3d 198,
205 (1st Cir. 2006).
The moving party is responsible for identifying those portions of the record which it
believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). If the moving party shows the absence of a disputed material fact, the
burden shifts to the non-moving party to set forth “specific facts showing there is a genuine issue
for trial.” Anderson v. Liberty Lobby Inc., 477 U.S. 242, 256 (1986).
IV.
Analysis
The parties do not dispute the material facts related to training time for the Licensed
Bankers, namely that Citizens did not compensate the Licensed Bankers for time they spent
outside of regular working hours studying for their licensing exams. Plaintiffs assert that this
practice violated the law; Defendants contend that its practice is legal, whether the court analyzes
the practice under either of two DOL tests or under First Circuit case law. The court begins with
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the DOL tests and then turns to First Circuit case law.
A. The DOL Regulation Concerning Employee Training
The first Department of Labor regulation cited by Defendants presents the general rule
for whether training hours for employees are to be considered “hours worked” for purposes of
the FLSA. The regulation provides that:
Attendance at lectures, meetings, training programs and similar activities need not
be counted as working time if the following four criteria are met:
(a)
Attendance is outside regular working hours;
(b)
Attendance is in fact voluntary;
(c)
The course, lecture or meeting is not directly related to the
employee’s job; and
(d)
The employee does not perform any productive work during such
attendance.
29 C.F.R. § 785.27. The Licensed Banker training at issue satisfies the first and last factor, but
not the second and third factor.
On the first factor, Defendants contend that all of the hours at issue here occurred outside
of Plaintiffs’ regular working hours, as any time spent studying during working hours was
compensated. Plaintiffs argue in response that some study hours occurred during their unpaid
lunch break. Plaintiffs fail to explain, however, why an “unpaid lunch break” would be a “regular
working hour” under the regulation. As this action seeks compensation for hours Plaintiffs spent
studying outside of their regular compensated work schedule, Defendants have established that
the hours at issue here are “outside regular working hours.”
On the last factor, Plaintiffs do not dispute that employees do not perform productive
work during the training.
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On the second factor, voluntariness, Defendants do not dispute for purposes of summary
judgment that the outside studying was required for employees in the Licensed Banker position
or that employees would be demoted or terminated from the Licensed Banker position if they did
not study and pass the required license exams. Citizens argues that the outside studying
nonetheless was “voluntary” because the requirements were disclosed to Plaintiffs before they
accepted the position. Under the DOL regulations, training is not “voluntary” if the employee’s
attendance “is required by the employer.” 29 C.F.R. § 785.28. Moreover, training is not
voluntary “if the employee is given to understand or led to believe that his present working
conditions or the continuance of his employment would be adversely affected by
nonattendance.” Id. The regulation includes no such exception for a pre-employment disclosure
of mandatory training.
Defendants also cite a DOL opinion letter to argue that if the requirement is imposed by
the state, the training would be voluntary. The cited letter concluded that where a state “requires
individuals to take training as a condition of employment with any employer in the child care
field” and “the employer does not impose additional requirements on the employee, such as
taking a particular course(s),” the training is voluntary. U.S. Dep’t of Labor, Wage & Hour Div.,
Opinion Letter, 1996 WL 1031798, at *1 (Sept. 9, 1996). Here, however, while the licenses may
be required by state or federal law before employees may provide certain discrete services,
Defendants have not shown that the state requires the licenses as a condition of employment in
the Licensed Banker position created by Citizens. Moreover, Citizens does require that its
employees take particular courses. For these reasons, Defendants have not demonstrated on
summary judgment that the voluntary prong of the regulation is met.4
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The parties do not address the question of whether an individual employee’s choice to spend
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The regulation provides additional guidance on the third prong, differentiating between
training that “is designed to make the employee handle is job more effectively as distinguished
from training him for another job, or to a new or additional skill.” 29 C.F.R. § 785.29. The
regulation provides further that “[w]here a training course is instituted for the bona fide purpose
of preparing for advancement through upgrading the employee to a higher skill, and is not
intended to make the employee more efficient in his present job, the training is not considered
directly related to the employee’s job even though the course incidentally improves his skill in
doing his regular work.” Id. Under this regulation, the critical question is whether the training is
for the employee’s current position or for the employee’s advancement. Here, if Citizens had
offered the training to employees in a lower job category, such as retail bankers, and had
promoted them to Licensed Bankers after they completed the training, the third prong would
have been satisfied as the training would have been to upgrade the employee to a higher skill.
But by requiring that the employees complete the training and pass the examination to stay in
their Licensed Banker position, the training must be viewed as intended to help the Licensed
Bankers handle their present job more effectively. Accordingly, the court does not find the third
prong met on the summary judgment.
For the above reasons, Citizens is not entitled to summary judgment based on the DOL’s
employee training regulation.
B. The DOL Regulation Concerning Special Situations Test
Citizens argues that it is also entitled to summary judgment based on the DOL’s special
situations test. Under 29 C.F.R. § 785.31, time spent in training, even if directly related to an
additional self-study time beyond the minimum outside study hours needed to complete the
Kaplan program should be considered “voluntary.” If the case went to trial, this issue would need
to be addressed.
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employee’s job, may not be considered hours worked where the course of instruction
“corresponds to courses offered by independent bona fide institutions of learning.” But this test
also requires “voluntary attendance.” Id. As explained above, the voluntary requirement has not
been met here. For this reason, Citizens is not entitled to summary judgment based on the DOL’s
Special Situations test.
C. The First Circuit’s Precondition Test
Defendants also rely on a “precondition test” set forth in two First Circuit cases as a basis
for their summary judgment motion. In Ballou v. General Electric Co., 433 F.2d 109 (1st Cir.
1970), apprentices hired by General Electric were not compensated for time spent in outside
classwork required by their employer. In Bienkowski v. Northeastern Univ., 285 F.3d 138 (1st
Cir. 2002), Northeastern University police officers were not compensated for training and study
time outside of their regular working hours to obtain a state Emergency Medical Technician
(EMT) certificate. 285 F.3d at 139-40. In each case, a panel of the First Circuit upheld summary
judgments on FLSA claims in favor of the employers. Defendants contend that these precedential
decisions mandate summary judgment here.
Plaintiffs argue first that those decisions only apply to trainee or apprentice employees
and Plaintiffs here do not fit into those categories. However, the Bienkowski court explicitly
declined to limit Ballou’s holding to cases involving an apprenticeship program. 285 F.3d at 14142. Instead, the Court found the fact that the employer mandated completion of training as a
condition of employment was a reason to find the training time non-compensable. 285 F.3d at
141 (“we will not hold Northeastern liable for overtime pay for time its employees spend as
students, rather than as workers, simply because Northeastern has decided to hire its employees
on a probationary basis until they complete the training required to hold the job on a permanent
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basis”). Here, as in both Ballou and Bienkowski, Plaintiffs were subject to termination or
demotion if they did not achieve licensure within a range of time. Defs’ 56.1 Resp. ¶ 21 [#86].
Study time was a condition of employment and this condition was communicated to new hires or
employees newly promoted at the time of offer. Pls’ 56.1 Stmt. ¶ 24 [#82]. Plaintiffs only could
get out from under this de facto probationary status by receiving their licenses and there is no
evidence in front of the court that Licensed Bankers could stay in that position indefinitely
without having passed their required licensing exams. Id. at ¶ 6. See also Ex. 6 (Pls.’ Opp’n
Mem.) 3-5 [#83-1] (stating in the offer letter that new hires had 60 days to obtain licenses and
would otherwise have 90 days to find alternative role within company if the employee failed to
pass the exams). Accordingly, Plaintiffs are not able to differentiate their circumstances based on
job titles.
Plaintiff’s second argument is that their study time is in fact “integral and indispensable”
to the principal work of the position. Here, the court is limited when considering this argument
by the First Circuit’s analysis.
Under the First Circuit’s application of this test, what matters is whether the employees
did “productive work” for the employer while studying. Bienkowski, 285 F.3d at 141; Ballou,
433 F.2d at 111. While Plaintiffs could successfully argue that there is a question of material fact
as to whether their studying directly related to the retail banking position in question, the
question posed by the First Circuit test is whether the employee, at the time of study, was acting
in a way that directly and immediately benefitted the employer. In Ballou, the apprentices
learned the theoretical context of their job, which the court found to be insufficiently directly
beneficial to the employer to deem the study time work. 433 F.2d at 111-12. In Bienkowski, the
police officers were not allowed to perform EMT work until they had completed their
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certification and so, even if they learned something in training that benefitted their police job, the
court held that they did no productive work for the employer while studying. 285 F.3d at 140-41.
Plaintiffs concede that the tasks they performed were limited until they passed their licensing
exams and the information they learned while studying was not used until they became fully
licensed. Pls.’ 56.1 Stmt. ¶ 6 [#82]. Like in Bienkowski, the non-licensed Licensed Bankers were
not able to perform certain duties until actually licensed. Id.
The court thus agrees that summary judgment is required based on these precedential
decisions. As in Ballou and Bienkowski, Citizens hired or promoted employees into the position
at issue before they completed certain training and on the condition that they would participate in
the mandatory training and obtain certain licenses. And under the test as articulated in those
cases, the fact that the employees performed a valuable role during their regular work hours that
may have been enhanced by the training does not matter.
The validity of this First Circuit test, however, may be ripe for reconsideration. The First
Circuit concluded in Ballou that, “it is consistent with the spirit of both the Portal-to-Portal Act
and the [FLSA] to say that as a matter of law, the principal activity of the apprentices as
employees is the work that takes place during their regular 40 hour work-training week and that
activity as students pursuing their required courses of study is neither integral nor indispensable
to that principal activity.” 433 F.2d at 112. The First Circuit thus held that “apprentices are
entitled to be compensated at the minimum wage for the productive work content of their
activities but not for the educational or training content which was for their own benefit.” Id.
Similarly, in Bienkowski, the First Circuit concluded that under the Portal-to-Portal Act, “the
time spent by the plaintiffs in EMT training is not an integral and indispensable part of the
principal activities for which they are employed,” and accordingly, that the Portal-to-Portal Act
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precludes a finding of liability. 285 F.3d at 142. See also id. at 141 (“employer’s decision to hire
its employees before the completion of training did not obligate it to compensate them for the
time spent in their status as students after their hiring.”) (emphasis in original) (citing Ballou,
433 F.2d at 112).
The reliance on the Portal-to-Portal Act may be misplaced. The Portal-to-Portal Act was
passed as a reaction to the Supreme Court’s decision in Anderson v. Mt. Clemens Pottery Co.,
which had held that time employees spent walking from timeclocks to their respective places of
work was compensable under FLSA. 328 U.S. 680 (1946). See also IBP, Inc. v. Alvarez, 546
U.S. 21, 34 (2005). The relevant part of the Act provides that an employer is not liable for failure
to pay wages or overtime compensation for “(1) walking, riding, or traveling to and from the
actual place of performance of the principal activity or activities which such employee is
employed to perform” or “(2) activities which are preliminary to or postliminary to said principal
activity or activities which occur either prior to the time on any particular workday at which such
employee commences, or subsequent to the time on any particular workday at which he ceases,
such principal activity or activities.” 29 U.S.C. § 254(a); see Integrity Staffing Solutions, Inc. v.
Busk, 574 U.S. 27, 38 (2014) (“the Portal-to-Portal Act of 1947 is primarily concerned with
defining the beginning and end of the workday”) (Sotomayor, J., concurring).
The Supreme Court explained shortly after the Portal-to-Portal Act was adopted that
while Congress intended to outlaw claims for activities performed before or after work, “it did
not intend to deprive employees of the benefits of the [FLSA] where they are an integral part of
and indispensable to their principal activities.” Steiner v. Mitchell, 350 U.S. 247, 255 (1956).
The Supreme Court has reiterated that “the term ‘principal activity or activities’” under the
Portal-to-Portal Act “embraces all activities which are ‘an integral and indispensable part of the
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principal activities.’” IBP Inc., 546 U.S. at 29-30 (quoting Steiner, 350 U.S. at 252-53). “[T]he
Portal-to-Portal Act does not remove activities which are “integral and indispensable” to
“principal activities” from FLSA coverage precisely because such activities are themselves
“principal activities.” Id. at 33 (quoting Steiner, 350 U.S. at 253). See also Integrity Staffing, 574
U.S. at 34 (collecting cases and DOL regulations).
The Department of Labor regulations specifically provide that “[a]n employer’s liabilities
and obligations under the [FLSA] with respect to the ‘principal’ activities his employees are
employed to perform are not changed in any way by [the Portal-to-Portal Act], and time devoted
to such activities must be taken into account in computing hours worked to the same extent as it
would if the Portal Act had not been enacted.” 29 C.F.R. § 790.8 (citing DOL regulations,
including the § 785 training regulations discussed above).
Ballou noted that under Walling v. Portland Terminal Co., 330 U.S. 148 (1947), and a
companion case, Walling v. Nashville, Chattanooga & St. Lois Railway, 330 U.S. 158 (1947), if
individuals were required to complete a future employers’ training program before they could be
employed, they would be entitled to no compensation under the FLSA. 433 F.2d at 111. Though
the court cites these cases, the First Circuit ignored the Supreme Court’s reasoning for denying
FLSA coverage, noting simply that these decisions were both litigated before the enactment of
the Portal-to-Portal Act of 1947, 29 U.S.C. § 254(a). Id. Given that the Portal-to-Portal Act did
not change principal activities under the FLSA, Portland Terminal Co. should not be ignored.
In Portland Terminal Co. the Supreme Court reasoned that while the FLSA defines
employment and employee broadly, these definitions could not be extended so broadly “to make
a person whose work serves only his own interest an employee of another person who gives him
aid or instruction.” 330 U.S. at 152 (emphasis added). Where the employer received “no
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‘immediate advantage’ from any work done by the trainees,” the Court found that the trainees
“are not employees.” Id. at 153 (emphasis added). Non-employees, the Court explained, are not
covered by the FLSA, as the applicable section “only relates to learners who are in
‘employment.’” Id. at 152.
The Supreme Court stated further, however, that “[w]ithout doubt the Act covers trainees,
beginners, apprentices, or learners if they are employed to work for an employer for
compensation.” Id. at 151 (emphasis added). As to trainees or learners who are also employees,
the FLSA explicitly allowed the DOL to grant special certificates for employment of such
employees in order to increase their opportunities for gainful employment, without allowing a
“blanket exemption” in terms of statutory coverage that “might have left open a way for
wholesale evasions.” Id. The Supreme Court therefore draws a line between employees who
engage in training (who are to be compensated for the training), and persons who “without
promise or expectation of compensation, but solely for his personal purpose or pleasure,” engage
in training provided by a potential future employer. Id. at 152.
Ballou found the Supreme Court’s distinction between the requirements for employee
and non-employee learners illogical, asserting that “[t]he fact that in addition to such a [training]
program, [the employer] also provides work-training for which it pays well above the minimum
wage would not seem to be sufficient to require” the employer to pay for times spent in
classroom study. 433 F.2d at 112. But this view of the workplace includes an assumption that the
employer gains nothing from the training of current employees. The employer’s responsibilities
to its shareholders and its bottom line make it unlikely that that is so.
Considering an employer’s options helps elucidate the issue. If training is necessary for a
position, an employer can choose only to hire individuals who have already completed the
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training. This option would not have required training hours at all. The record does not show
whether Citizens did not choose this option because of generosity to those without licenses, as
the First Circuit assumes, or because it was unable to hire individuals who already had the
required licenses without offering higher pay, or for some other reason. Alternatively, an
employer can hire employees without training and offer them a promotion if they voluntarily
complete the training. Training in those circumstances would not have needed to be paid under
the DOL training test as it would have been voluntary and would have provided skills for
advancement. The record does not show whether Citizens did not choose this option because it
did not want to risk having a larger number of untrained employees who chose not to study for
the licenses, or for other reasons. The final alternative is the one Citizens chose: hiring
probationary employees and requiring them to complete the training or face termination. This
may have allowed Citizens to hire employees at a lower wage than hiring fully licensed
employees, while ensuring that these employees gained skills for the existing jobs. But if the
training was directly related to the Licensed Banker position at issue, as appears to be the case
here, the training is integral and indispensable to the principal activities of the position and
therefore compensable under the FLSA and the DOL regulations.
V.
Conclusion
This court is bound by precedent. Eulitt v. Maine, 386 F.3d 344, 349 (1st Cir. 2004).
Accordingly, for the aforementioned reasons, under Ballou and Bienkowski, Defendants’ Motion
for Summary Judgment [#44] is ALLOWED.
IT IS SO ORDERED.
February 5, 2020
/s/ Indira Talwani
United States District Judge
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