When do you need to pay a candidate for an interview?

HR professionals know an interview can only reveal so much about an applicant. You can discuss a candidate's experience, but it can be difficult to assess the quality of an individual's work based on his or her resume or perspective.

Consider the hiring process for a chef: If you're a restaurant manager hiring someone to lead your kitchen, it makes sense that you may want to see them in action and sample their work. That's why "working interviews" are common in so many industries, from food service to dentistry.

But such tests can spell trouble for an employer's wage and hour compliance efforts. There's no harm in asking applicants to prove they have certain skills, according to Paul DeCamp, partner at Epstein Becker Green. "The issue arises when the performance of that test delivers an economic benefit to the employer," he told HR Dive.

The risks

While job applicants aren't usually considered "trainees," it may be helpful to look them that way when it comes to interviews. Consider the trucking industry, in which employers sometimes maintain a training program that also creates an applicant pool: In 2017, the 9th U.S. Circuit Court of Appeals held in Nance v. May Trucking Co. (No. 12-cv-01655) that an employer's "orientation" test, despite being three days long, wasn't compensable because it truly was just an application process.

The U.S. Department of Labor has provided guidelines on what separates unpaid trainees (for many businesses, interns) from employees, emphasizing that training is generic, benefits the trainee and may or may not result in a job offer. And perhaps most importantly, the training doesn't give the employer an immediate advantage.

So if a prospective chef prepares a customer's meal, he or she is providing a free service to the company, Bryan Lazarski, partner at Lazarski Law Practice, explained. "What it boils down to is you can't use someone to do work for the company and not pay them," he told HR Dive in an interview.

When that happens, employers can face penalties. California, for one, considers all time compensable, said Sacramento, California-based attorney, Joe Rose, of Rose Law. When a company gains a benefit from a candidate's "volunteering," the consequences can be high, Rose told HR Dive. Those consequences include a company having to pay unpaid wages, attorney fees and additional damages.

Employers may not mean to take unfair advantage of candidates, DeCamp said. "A lot of times employers will look and say we're getting them up to speed — we're giving them a benefit." While that may be a genuine intention, the task can't benefit the employer. "[Companies] have an unrealistic view of what they're providing to the trainee during this period," he said.

The exceptions

Still, not every request to demonstrate a task without pay creates problems for employers, Lazarski said. Some exceptions exist.

For jobs like a paramedic's that requires a training period for general licensure before working, that training doesn't benefit a singular company, so an employer might have more wiggle room. But contrast that to training that is specific to the needs of a particular company, and an employer may easily cross the line. If the interview tasks are indistinguishable from what the employer does, they should be compensated, Lazarski said.

The alternatives

So where does that leave an employer that needs to confirm an applicant's abilities, the dentist that wants to ensure a hygienist has the required skills before entering into an employment arrangement?

The experts offered some suggestions for employers that want to glean certain information while staying on the right side of the law:

Ask candidates to complete hypothetical tasks. Instead of asking a chef to prepare a meal that is sold to customers, have him or her make one that is not served, so the restaurant does not benefit from the unpaid work.
Pay candidates for the time spent in the task-related interview. This will eliminate the wage and hour risk of non compensable interviews, but employers should note that it can create additional liabilities; employers will need to ensure they follow EEO and other rules for the short-term employee, DeCamp said.
Hire candidates for a probationary period. If you need to observe a candidate for more than a few hours or a day, consider a one-month or longer probationary period, during which the candidate is paid minimum wage, Lazarski said. At the end of that period, the candidate is evaluated and a second hiring decision can be made.
Partner with trade and vocational schools. As part of their programs, many of these schools administer skills training and assessments, Rose said. Employers can rely on these schools to provide the assessments and analytics it cannot gauge in a typical interview.

For employers that want to steer clear of interview wage and hour concerns, the primary question is whether the act of the interview is in any way generating revenue for the company, DeCamp said. "If that is occurring, we need to take a look at these issues and figure out if there is a concern here and if this has become work," he continued. "If so, figure out if there is a way to counteract or negate any economic benefit to the employer from the effort of the interviewer from the interview."