Malloy Signs Intern Anti-Discrimination Bill
Malloy Signs Intern Anti-Discrimination Bill

Capitol Watch — The Hartford Courant’s political site – tweeted the following yesterday:

And a review of the Governor’s website reflects that approval in the bill notification release. (I read them so you don’t have to!)

So, what does that mean for employers? Well, I’ve covered the bill before so I won’t recap everything here.

But the bill’s provisions now become effective October 1, 2015.  Thus, employers who regularly use interns should update their employee handbook and anti-harassment provisions to explicitly cover interns.

One of the other things to consider that hasn’t been discussed much is the extent to which the bill’s definition of “intern” may get adopted in the context of establishing whether an intern is really an “employee” for wage/hour purposes.

What do I mean? Well, back in 2012, I talked a lot about how employers could properly structure internship programs. In that post, I noted that there were six factors that the U.S. Department of Labor would look at:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Now, let’s compare this with the definition of “Intern” in the new anti-discrimination bill.  An intern is defined as an “individual who performs work for an employer for the purpose of training, provided”:

  1. the employer is not committed to hire the individual performing the work at the conclusion of the training period;
  2. the employer and the individual performing the work agree that the individual performing the work is not entitled to wages for the work performed; and
  3. the work performed:
    1. supplements training given in an educational environment that may enhance the employability of the individual,
    2. provides experience for the benefit of the individual,
    3. does not displace any employee of the employer,
    4. is performed under the supervision of the employer or an employee of the employer, and
    5. provides no immediate advantage to the employer providing the training and may occasionally impede the operations of the employer.

If you track each item carefully, you’ll notice that they are actually fairly similar. That’s a good thing.  While there are subtle differences, it’s unlikely that those differences will be meaningful in their application.

As a practical matter, that means employers that adopt the defintiion of “intern” in the new state statute are likely to be following the federal interpretation as well, reducing the risk of a wage/hour claim as well.

The bottom line, however, is that employers who just use interns without much worry as to the liability that using interns may create should rethink their practices. The new law is yet another area where new rules will make using those interns may expose employers to possible claims.  Is it a small risk? Perhaps. But small risks can turn into big ones if employers aren’t mindful.

Last week, a federal judge in New York ruled that unpaid interns on the movie “Black Swan” should have been paid for their work, under the Fair Labor Standards Act (FLSA).

You can download the decision in Glatt v. Fox Searchlight here.  The court relied on the six factors that have been outlined by the U.S. Department of Labor before.

I talked about these factors in a 2012 post and they are worth reviewing again:

  • The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  • The internship experience is for the benefit of the intern;
  • The intern does not displace regular employees, but works under close supervision of existing staff;
  • The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  • The intern is not necessarily entitled to a job at the conclusion of the internship; and
  • The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Put another way, if you’re bringing on unpaid interns to do work in place of regular employees, it’s probably not going to fly.

While the mainstream press is professing some shock at the decision, most employment lawyers saw this as inevitable. As one blogger, Philip Miles, stated, it’s just “difficult for unpaid internships to be FLSA-compliant”.

Or, as Jon Hyman from the Ohio Employer’s Law Blog stated:

Employers that use unpaid interns should pay careful attention to this issue. It is far better to scrutinize interns under the DOL’s six factors before the agency, or a group of plaintiffs, swoop in and do it for you. It is even better to formalize the relationship in a written internship agreement that formally spells out how each of these six questions is answered in your favor. Or maybe it is best simply to assume that except in rare cases, there is no such animal as an “unpaid intern,” and you should simply accept the fact that if you are going to label entry-level employees as interns, you need to pay them for their services.

Is this decision good or bad? Suzanne Lucas (otherwise known as the “Evil HR Lady”) writes this morning in Inc. that ultimately the decision will only hurt college students, not help them:

Why? We already know that college is expensive, and that having a degree does not guarantee a job. We also know that your best chance of getting a job after getting that shiny new degree is if you have a slew of internships on your resume. Without those, you don’t stand out. It’s hard to convince a hiring manager that you are ready to be a financial analyst with a transcript and three summers working fast food. They want someone who has experience.

Internships have been the way people gained experience. Companies were willing to take on interns as a sort of community service as well as the ability to get some of grunt work done for free. Though the latter has been illegal for a very long time, it’s mostly ignored. Now, it can’t be.

More companies will be paying for their interns: It sounds good on its face. But it also means that some companies, particularly small ones, will just skip the interns altogether. If they have to pay, then why hire someone completely inexperienced who will only be there for three months anyway? Why not hire a real person who has experience and will stick around past the training phase? Which means the number of internships available will drop.

What the decision should remind companies yet again is that unpaid internships are a risky endeavor.  If you have some this summer, make sure that they meet the DOL’s guidance on the subject.

Back in 2010, at the same time the U.S. Department of Labor was making a big publicity push on its interpretation of rules regarding unpaid interns, the New York Times ran piece noting how employers were skirting the law when it came to internships:

The Labor Department says it is cracking down on firms that fail to pay interns properly and expanding efforts to educate companies, colleges and students on the law regarding internships.

“If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law,” said Nancy J. Leppink, the acting director of the department’s wage and hour division.

The biggest problem, according to the article is that the employer should derive “no immediate advantage” from the intern’s activities — “in other words, it’s largely a benevolent contribution to the intern.”  The takeaway from this article, as I said back in 2010 is that employers should not use interns to do real work. 

Flash-forward to 2012. The New York Times over the weekend ran another piece on internships. This time, however, it was critical of employers who only assigned the interns menial tasks.

Although many internships provide valuable experience, some unpaid interns complain that they do menial work and learn little, raising questions about whether these positions violate federal rules governing such programs.

So, within the span of two years, you have two articles on internships: One critical of employers that assign unpaid interns real work and one critical of employers that assign unpaid interns menial work.

What’s an employer to do?  

Well, I talked quite a bit about this on Thursday on The Proactive Employer radio show and there were really two solutions (you can listen to the entire broadcast below).

First, if you’re going to have interns do real work, you can do so — you just need to pay them minimum wage.  Second, if keeping interns unpaid is important, it’s critical that employers follow six criteria outlined by the U.S. Department of Labor. 

The articles in The New York Times are well-timed to make sure that employers are aware of their obligations.  What I said back in 2010 holds true today: “As the summer season approaches, employers are now on notice that their use of interns is going to be under closer scrutiny than ever before. ”

 

With summer fast approaching, summer internships will start picking up their pace as well.

Fortunately, there are a lot of great resources for employers to learn about how to do internships without violate the law.  I’ll be discussing the legal side of internships on The Proactive Employer podcast that will be broadcast live this Thursday at 3 p.m. ET.

Tweet your questions using the hashtag #TPE or call in at 1-866-472-5790 to talk. The show will be available for on-demand listening at The Proactive Employer website, on the VoiceAmerica Business Channel and via iTunes following the broadcast.   For more information, check out Stephanie Thomas’ blog post here. 

I’ve written about the subject in a prior post last month here.

The word “Interns” has turned into a dirty word for employment lawyers lately. But before you panic, it’s time to separate fact from fiction.

Now, it IS true that a few years back, the United States Department of Labor signaled employers that it would start cutting down on the practice that some employers used of hiring unpaid interns to do real work instead of paying employees.  (And yes, I covered THAT too.)

The USDOL released a fact sheet on the subject too at the time. But over the last two years, we just haven’t seen an epidemic of cases about this issue.

That’s not to say that there haven’t been notable cases; but misclassification of employees remains a much larger issue for employers to be concerned about. 

Nevertheless, as employers start to think about their summer plans, it’s important to think about how you structure your internship program.    How so? By reviewing six factors that the USDOL will look at too.

  • The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  • The internship experience is for the benefit of the intern;
  • The intern does not displace regular employees, but works under close supervision of existing staff;
  • The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  • The intern is not necessarily entitled to a job at the conclusion of the internship; and
  • The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Here’s a simpler “test”: If you’re bringing on unpaid interns to do work in place of regular employees, it’s probably not going to fly.

An “intern” doesn’t have to be a dirty word.

 

As if to say, "…And We Really Mean It", the United States Department of Labor continued its publicity campaign on the issue of unpaid interns by releasing a Fact Sheet this week on whether and when interns need to be paid minimum wage or be treated as employees.

If you recall, earlier this month, the New York Times ran an article on this very topic, which I discussed in an post here

Fact Sheet 71 — entitled " Internship Programs Under The Fair Labor Standards Act" sets forth a six-part test to determine whether the individuals are more akin to employees, than interns.  As the Fact Sheet is quick to state, a determination will depend on all the facts and circumstances of the situation, but these factors are to be examined closely:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

As this post from the Ohio Employer’s Law Blog on the subject points out though, the DOL is going to be skeptical of such arrangements. The DOL Fact Sheet states: 

[I]f the interns are engaged in the operations of the employer or are performing productive work (for example, filing, performing other clerical work, or assisting customers), then the fact that they may be receiving some benefits in the form of a new skill or improved work habits will not exclude them from the FLSA’s minimum wage and overtime requirements because the employer benefits from the interns’ work…. If an intern is placed with the employer for a trial period with the expectation that he or she will then be hired on a permanent basis, that individual generally would be considered an employee under the FLSA

As the summer season approaches, employers are now on notice that their use of interns is going to be under closer scrutiny than ever before. 

With my work on the Law & Technology Symposium for the Connecticut Bar Foundation last week, there are several employment law topics that I haven’t had time to discuss in full.

While I’ve shared some of these links via my Twitter feed (which you can find at twitter.com/danielschwartz), I thought I would recap some of the most newsworthy items of the month so far.