A group of Cutco knife sales representatives who went through mandatory unpaid training sessions have been awarded a $6.7 million settlement.

U.S. District Judge Edward M. Chen certified the FLSA collective action as well for employees in five states. He granted the plaintiffs’ motion for preliminary approval of the $6.7 million settlement.

Vector Marketing Corp allegedly violated the Fair Labor Standards Act and state laws in California, Florida, Illinois, Michigan and New York by mandating unpaid training.

Vector required recruits to take 15 hours of unpaid training over the course of three days so that they could learn how to sell Cutco kitchen merchandise through in-home demonstrations.

The plaintiffs say the recruits should be classified as employees according to FLSA and California state laws. As employees, they would be entitled to be paid for their hours spent in the training program.

However, according to Vector’s web site, all sales reps are independent contractors, NOT employees.

In California, a large factor in determining whether a person is an employee or an independent contractor is the amount of control the employer demonstrates over the worker.

By making the three-day period of unpaid training a requirement, Vector exhibits control over the worker’s schedule for three days. This belies the contractor title.

Vector’s Unpaid Training

Vector is a direct-selling company that allows people to sell kitchen knives and other products directly to consumers. Court papers state the company gives recent high school graduates and college students the chance to sell these items after they finish the company’s initial training, which is unpaid time.

Recruits are asked to create lists of potential customers and to schedule appointments with those people after the training period is over. No recruits are allowed to sell Cutco knives while still in the midst of their training period.

Approximately 4,500 people in the U.S. are included in the FLSA collective class because they either attended all three days of Vector’s training program or attended part of the program and provided a list of personal contacts during the training.

Vector took the stance that everyone who completed the unpaid training was then eligible to become a Vector sales representative.

Vector also has claimed that their turnover is so high that nearly 50 percent of their representatives never make a sale, nor do they continue making sales after just ten days. The company might fear losing money if the company has to start paying for the recruits’ unpaid training.

The plaintiffs claim they qualified as employees under the FLSA and were entitled to minimum wage pay during training.

The Cutco Unpaid Training Class Action Lawsuit is Woods et al. v. Vector Marketing Corp., Case No.: 3:14-cv-00264, in the U.S. District Court for the Northern District of California.

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