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Read this if you hire student interns and you want to avoid FLSA claims

January 19th, 2018  |  Lorene Park

The Department of Labor, apparently recognizing the trend among federal appellate courts in addressing whether interns should be considered “employees” for purposes of the FLSA’s wage and hour requirements, has now updated its Fact Sheet #71 and adopted the “primary beneficiary” test first set forth by the Second Circuit in Glatt v. Fox Searchlight Pictures, Inc. and subsequently adopted by the Ninth and Eleventh Circuits.

The “primary beneficiary” test. In determining whether an intern/trainee is an “employee,” the “non-exhaustive” factors considered under the Glatt test include:

  1. whether it is clearly understood there is no expectation of pay;
  2. whether the internship provides formal training similar to that provided in an educational environment;
  3. whether it is tied to a formal educational program or earns academic credit;
  4. whether the internship corresponds to the academic calendar, accommodates academic commitments;
  5. whether it is limited in duration to the period it provides beneficial learning;
  6. whether the intern’s work complements, rather than displaces, work by paid employees and simultaneously provides a significant educational benefit to the intern; and
  7. whether it is clearly understood that the intern is not entitled to a paid position after the internship. Courts are to take a “totality of the circumstances” approach.

No factor is dispositive. The Second Circuit recently explained in Wang v. The Hearst Corp. that the Glatt factors intentionally omitted the DOL’s original requirement that an employer “derive no immediate advantage from the activities of the intern.” For an employer, “[i]t is no longer a problem that an intern was useful or productive,” explained the court.

The Eleventh Circuit in Schumann v. Collier Anesthesia agreed with the Second Circuit that the focus should be “on the benefits to the student while still considering whether the manner in which the employer implements the internship program takes an unfair advantage of or is otherwise abusive towards the student.” The Ninth Circuit in Benjamin v. B & H Education, Inc. also followed the primary beneficiary analysis, finding that it best captures the Supreme Court’s economic realities test in the student/employee context. Under this approach, the court found that students at beauty schools in California and Nevada were not statutory employees and affirmed summary judgment against their FLSA claims.

The Seventh Circuit in Hollins v. Regency Corp. cited both Glatt and Schumann but did not expressly adopt the seven-factor test, focusing instead on the economic realities as considered in the Supreme Court’s 1947 decision in Walling v. Portland Terminal Co. It concluded that cosmetology students were not employees during their time working on the “performance floor” because state law required that the students perform “hands-on” work and the accrediting commission required the use of “practical learning methods.” Thus, the incidental tasks they performed, such as acting as receptionists, stocking products, and cleaning the floor, did not make them “employees.”

A few pointers. Lisa Milam-Perez, a senior employment law analyst at Wolters Kluwer, suggests that employers consider the following pointers if interns are a regular fixture in their organization:

  • Create a formal internship program, working in close conjunction with a local college or university, so that interns earn college credit for their efforts pursuant to an academic program. Set a clear start and end date, perhaps tied to a school semester or break.
  • Ensure the university plays a meaningful oversight role; such scrutiny helps to show that the intern’s duties are educational, not merely operational, and that the internship is primarily academic in nature.
  • Structure tasks around the intern’s academic goals, not the employer’s operations. “Grunt work” should only rarely be assigned.
  • Provide the intern with opportunities to develop skills that are readily transferable to other employers within the industry, rather than know-how on procedures that are unique to your organization.
  • Establish the duration before the internship begins, and don’t schedule it around the organization’s busy season or an employee downsizing.
  • Don’t schedule your interns based on your busy season or your productivity needs, but in accordance with their academic goals. (As a practical matter, if you’re reliant on interns to get the work done, then they are probably employees.)
  • Heed federal tests for “trainee” status under the FLSA, but note that state wage and hour laws apply too.

In the end, concludes Milam-Perez, “it might just pay to pay.”

Special briefing. For a more in-depth analysis of the Glatt test and other contexts in courts may find an employment relationship for purposes of liability under federal labor and employment laws (e.g., franchisors, successor owners, and companies that use gig workers), see Employment Law Daily’s special briefing, L&E Evolution Part I: Redefining Employment Relationships, written by Senior Employment Law Analyst Lorene D. Park.


L&E Evolution Part I – Redefining Employment Relationships

January 7th, 2018  |  Lorene Park

In the first of a series of Special Briefings by Employment Law Daily, Senior Employment Law Analyst Lorene D. Park summarizes key developments in the evolution of employment relationships, including the not-so-basic question of who may be considered an “employer” liable for violations of Title VII, the FLSA, and other labor & employment laws.

Highlights of this Special Briefing include:

“Joint employment,” including the NLRB’s shifting position and the Hy-Brand opinion, as well as variations in the right-to-control, economic realities, and “hybrid” tests for who is a “joint employer” under the FLSA, Title VII, or other labor & employment laws.

The “gig economy” and lessons from recent decisions in cases against Uber.

Franchisor liability for franchisee violations, with examples of the type of control necessary for liability (e.g., more than just logos or training) and ways to reduce risk.

Successor liability, including the importance of notice and continuity of operations, the successor bar doctrine and bargaining rights, and cases under the ADA and WARN Act.

Others who might be liable as “employers” under the FMLA and other federal laws, such as corporate parents, owners, supervisors, and HR managers.

Interns, trainees, and the Glatt “primary beneficiary” test for whether a student worker is also an “employee” protected by the FLSA.

The Special Briefing also provides suggestions on how businesses can, given the changing realities of the workplace, reduce the risk of liability under federal employment laws for sexual harassment, discrimination, retaliation and more.


Suit challenges Facebook, employers using features that may hide job opportunities from older workers

December 21st, 2017  |  Pamela Wolf

The Communications Workers of America (CWA) and three workers have filed a class action in in federal court challenging how Facebook’s paid advertising platform is purportedly used to hide job advertisements and opportunities from older workers nationally. The suit, filed in the Northern District of California, names T-Mobile US, Inc., Amazon.com, Inc., Cox Communications and Media Group, LLC, and similarly situated others. Notably, the plaintiffs are represented by former EEOC General Counsel David Lopez and other attorneys at Outten & Golden.

The complaint alleges that through in-depth investigation the plaintiffs discovered that hundreds of employers and employment agencies are illegally targeting their employment ads on Facebook to exclude older workers who fall outside specified age ranges (such as ages 18 to 40, or ages 22 to 45), purposely blocking older workers from seeing the ads or pursuing job opportunities. This practice violates federal, state, and local laws that bar age discrimination in employment advertising, recruiting, and hiring, according to the complaint.

The plaintiffs seek class certification under Rule 23 to represent what they say are millions of job seekers, age 40 and older, who have been denied the chance to even learn of potential job openings. The defendants are large employers and employment agencies in a variety of industries, including technology, entertainment, retail, health care, energy, real estate, staffing firms and agencies, and others. Identified class members would include Capital One, Citadel, Defenders, Fairfield Residential, Leidos, Sleep Number, Triplebyte, and Weichert Realtors.

Targeted audiences. A significant chunk of large employers and employment agencies “routinely use Facebook’s ad platform to exclude older workers from receiving employment ads, primarily by selecting an age range for the ad population that excludes older workers,” according to the complaint. Many companies also purportedly “use Facebook’s Lookalike Audiences feature to send employment ads to workers who are demographically similar to their younger workforces.”

T-Mobile US, a lead defendant in the case, used Facebook ads to recruit applicants for retail stores and other positions nationwide, stating in its employment ads that T-Mobile “wants to reach people ages 18 to 38,” the complaint asserts. The other lead defendants allegedly sent similar ads: Amazon to reach people ages “ages 22 to 40” and “ages 18 to 50,” and Cox to reach people “ages 20 to 45” and “ages 20 to 50.”

Discriminatory process previously identified. This is not the first time the allegedly discriminatory process at Facebook has surfaced. The complaint points to an investigation by ProPublica, which found that Facebook’s platform made it possible for African Americans, Latinos, and Asian Americans to be excluded from receiving ads for various economic opportunities, including housing and employment advertisements.

Despite what the complaint asserts was the widely known fact that its platform could be used to exclude individuals with other protected characteristics, such as age, from receiving employment ads, Facebook continues to profit from purportedly unlawful employment discrimination by helping employers and employment agencies exclude older workers from receiving job ads and information.

Relief requested. The complaint, among other things, asks the Court to declare that the practice of excluding older workers from receiving job ads on Facebook violates laws that prohibit age discrimination in employment; issue an injunction to stop T-Mobile, Amazon, Cox, and all other large employers and employment agencies from continuing to engage in acts that violate antidiscrimination laws; require the defendants to compensate older workers who have been denied job opportunities; and award punitive damages.

“In decades as a civil rights lawyer, I have never seen job ads like these that expressly target young workers and exclude older workers,” Lopez said in a statement.

The case, Communication Workers of America v. T-Mobile USA, Inc., is No. 5:17-cv-07232.


NLRB’s “quickie election” rule changes are having no impact on union election wins

December 19th, 2017  |  David Stephanides

The NLRB reported in December 2017 that the number of union-filed representation petitions fell to 1193 in FY 2017 (Oct. 1, 2016 to Sept. 31, 2017), down from 1299 in FY 2016. Unions won 71 percent of the petitioned-for elections, down from 72 percent in FY 2016. However, over 92,000 eligible employees voted in FY 2017, up from over 86,000 in 2016.

There were 172 decertification petitions filed over the same period, with employers winning 68 percent of the elections. In FY 2016, there were also 172 decertification petitions, with employers winning 61 percent of the elections.

Representation petitions filed by employers rose to 26 in FY 2017 from 25 in FY 2016. Unions won 30 percent of the elections versus 32 percent in 2016.

In his dissent to the proposed rule published June 22, 2011, Board Member Brian Hayes stated that, “In truth, the ‘problem’ which my colleagues seek to address through these rule revisions is not that the representation election process generally takes too long. It is that unions are not winning more elections.” As these statistics demonstrate, the election rule changes are not driving up the number of election wins, if that was indeed its intended purpose.


Agency calls for federal legislation to protect LGBT employees from workplace discrimination

December 14th, 2017  |  Deborah Hammonds

The U.S. Commission on Civil Rights has released a report calling on Congress to enact legislation addressing workplace discrimination based on sexual orientation and gender identity. The report, “Working for Inclusion: Time for Congress to Enact Federal Legislation to Address Workplace Discrimination against Lesbian, Gay, Bisexual, and Transgender Americans,” examines the main social and economic arguments made for and against enacting federal legislation to provide federal nondiscrimination workplace protections for lesbian, gay, bisexual, and transgender (LGBT) employees.

The report is based on testimony and written materials submitted to the Commission. The report also includes extensive social science research and surveys, and reflects the reality that many LGBT Americans experience prejudice and discrimination in the workplace.

The Commission evaluated rates of LGBT employment and employment-related discrimination, arguments for and against enacting federal legislation to address this discrimination, and the landscape impacting legal protections available to LGBT Americans at work.

Key findings from a majority of the Commission include:

  • Lesbian, gay, bisexual, and transgender (LGBT) workers have faced a long, serious, and pervasive history of official and unofficial employment discrimination by federal, state, and local governments and private employers.
  • Federal data sources do not effectively capture rates of LGBT employment or rates of LGBT employment discrimination.
  • An inconsistent and irreconcilable patchwork of state laws against anti-LGBT workplace discrimination and federal court decisions interpreting existing law render LGBT employees insufficiently protected from workplace discrimination.

According to the Commission, 28 states offer no sexual orientation or gender identity protections; of the 22 states that do protect LGB employees, two exclude transgender employees from protection. The Commission’s primary recommendation is for Congress to immediately enact a federal law explicitly banning discrimination in the workplace based on sexual orientation and gender identity.

The report also recommended:

  • Federal data sources such as the Census, American Community Survey, and federal agency surveys should include sexual orientation and gender identity questions in population-based surveys of the workforce.
  • Federal agencies should issue and —where relevant—reaffirm specific guidance for federal and private employers outlining protections for LGBT individuals in the workforce, including specifically enumerating protections for transgender persons; federal agencies should also collect workplace discrimination data about LGBT employees.

The Commission’s report was submitted to President Trump, Vice President Pence, Speaker of the House Ryan and Senate Majority Leader McConnell. The report is also available to the public on the Commission’s website, www.usccr.gov.

The U.S. Commission on Civil Rights, established by the Civil Rights Act of 1957, is the only independent, bipartisan agency charged with advising the President and Congress on civil rights matters and reporting annually on federal civil rights. More information can be found on the agency’s website, Twitter or Facebook.