Court Affirms That Conditional Offer Doesn’t Mean Employed

Job candidates can spend a lot of time and resources in pursuing employment – everything from preparing resumes, completing job applications, and traveling to interviews. A recent Ninth Circuit Court of Appeals decision, Johnson v. Winco Foods, addressed when a candidate might be considered an employee during the hiring process. The case looked explicitly at whether employers must reimburse candidates for travel expenses and time related to drug testing.

Like many employers in the U.S., the WinCo Foods supermarket chain extends contingent offers of employment during their hiring process. Typically, a hiring manager calls the job applicant with details like the job title, pay, and location. WinCo’s “Verbal Contingent Job Offer Talking Points” guide for managers includes the statement that, “as part of your contingent job offer with WinCo Foods, we will be conducting a pre-employment background check and drug test on you.” After the candidate accepts the conditions, they receive instructions to complete the necessary checks.

Candidates Seek Reimbursement

WinCo Foods covers the cost of pre-employment checks, including drug tests. However, WinCo candidate Alfred Johnson filed a class-action lawsuit against the company claiming employees should be compensated for the time and expense of getting the required drug test. Johnson made two claims:

1. Candidates with contingent job offers are employees based on California case law.

Johnson claimed he was an employee when he took his drug test. Established California case law looks at how much control an employer has over an individual to determine if there is an employment relationship. According to Johnson, Winco Foods “exerted sufficient control” over the testing process. The employer not only required the test, but determined where it would take place, the date and time of the test, and what substances it would test.

While WinCo Foods doesn’t dispute that they controlled the drug test process, the court rejected Johnson’s claim that he was an employee at the time of his test.

“In this case, the class members were not performing work for an employer when they took the preemployment drug test; they were instead applying for the job, and they were not yet employees.”

2. Under California law, drug tests are a “condition subsequent” to hire.

Johnson claimed that based on “contract theory,” the drug test is a condition subsequent, meaning that the employment relationship was formed before the drug test. He said WinCo Foods could terminate the employment relationship if someone failed their drug test.

WinCo countered this claim stating that the drug test is a condition precedent. The applicant is not hired at the time of a contingent offer. In fact, the employment contract is not enforceable until the applicant successfully passes the drug test. The court agreed with the employer that there was no subsequent condition because plaintiffs were not hired until they established they were qualified. The court held that the class members did not become employees until they satisfied the condition of passing the drug test.

Employers may want to review the decision with trusted legal counsel to determine how this may impact their hiring processes.