UNPAID INTERNSHIP AND TRAINING PROGRAMS MAY VIOLATE WAGE AND HOUR LAWS
As unpaid “interns” on the set of the Oscar winning move “Black Swan” found out, the internship was anything but. They worked five day weeks and countless hours on the set doing such things as getting coffee, cleaning up, taking out trash and the like. They are now suing to recover the minimum wage and overtime under the federal wage and hour laws.
College students and others are often lured into unpaid “internships” or “training” programs by employers in hopes of finding permanent employment or burnishing their resume. The opportunities for abuse of are great: the unemployed student or trainee has visions of future employment and valuable training in their chosen field, while the employer gets free labor.
The federal minimum wage and overtime laws prohibit this abuse. The federal law broadly defines employment as “to suffer or permit work.” In short, an employer cannot sit by and let someone perform work for its benefit without paying them according to the law. Internships and training programs which do not provide training similar to an educational environment, benefit the employer and not just the intern, displace other employees and require little supervision by existing staff, and promise or imply there will be a job at their conclusion, are not internship or training programs in the eyes of the law and the “intern” or “trainee” must be paid the minimum wage and overtime. http://www.dol.gov/whd/regs/compliance/whdfs71.htm.
CAN AN EMPLOYER NOT HIRE YOU BECAUSE YOU SUED A FORMER EMPLOYER TO COLLECT OVERTIME DUE YOU?
The federal overtime laws prohibit your employer from retaliating against you because you have complained about not getting overtime or have sued to recover overtime. What about an employer you have applied to for a job? Can it refuse to hire you because you once sued a former employer to recover overtime? A federal court in Virginia said yes. Most employment laws that prohibit retaliation prohibit prospective employers, that is, employers with whom you apply for a job, from retaliating against you because you at some time in the past made a claim or filed a lawsuit against a different employer. Over a decade ago, the United States Supreme ruled this was true under the discrimination laws in the case of Robinson v. Shell Oil. Indeed, earlier this year, in the case of Thompson v. North American Stainless, the Supreme Court ruled that it was illegal for an employer to retaliate against the fiancée of an employee who sued the employer under the discrimination laws. It only stands to reason that this is so since the anti-retaliation laws are designed to encourage employees to bring valid claims so that the laws are enforced. If a prospective employer that you are applying for a job with can refuse to hire you because of a case you had against a former employer, then employees would be reluctant to bring valid claims for fear of being later retaliated against.
The Virginia court’s decision is based upon a very literal, narrow reading of the definition of “employee” under the anti-retaliation provisions of the federal overtime laws. It seems unlikely that it will be adopted by other courts because of the Supreme Court’s decision in the Robinson v. Shell Oil case. Also, it is possible that the U.S. Department of Labor will make changes to the law that will effectively invalidate the decision. Further, many states, like Florida, have anti-retaliation or “whistleblower” laws that should prohibit such retaliation. In any event, it will be interesting to see how the Virginia federal court’s decision is applied by other courts.
ARE YOU BEING DENIED OVERTIME BECAUSE YOUR EMPLOYER CLASSIFIED YOU AS AN INDEPENDENT CONTRACTOR?
The overtime laws only apply to “employees” of an employer. One way in which employers can avoid paying overtime to employees is to misclassify them as “independent contractors.” Employers not only avoid paying overtime, but the employer avoids paying other other employee benefits, including, among other things, payment of its share of social security, federal unemployment and Medicare tax withholdings. Instead of the employee only paying half, a little over 7.5% of earnings (it’s been reduced to 5.65% for 2011), the employee must pay the entire amount of over 15% of earnings - in addition to income taxes. Further, other employment laws, such as many of the discrimination laws, do not cover you if you are classified as an independent contractor.
The practice of misclassifying employees as independent contractors has become more commonplace than in the past, particularly in today’s economic hard times. In fact, the U.S. Department of Labor has launched a “misclassification initiative” to combat the problem. http://www.dol.gov/opa/media/press/whd/WHD20111721.htm.
If your employer has classified you as an independent contractor you may want to consider whether you’ve been misclassified. Whether you are an employee or an independent contractor is generally a matter of how much control the employer exercises over your work and the degree of independence you have to make decisions. The more control and less independence the more likely you are an employee and not an independent contractor. The courts, and the IRS, look at things like whether your employer tells you when, where and how to do the work, whether the employer provides you with tools and supplies to do the work, whether the employer pays your expenses, whether the employer sets your schedule, whether the employer limits your ability to work for others, whether you are hired for a definite period of time or indefinitely, and so on.
The IRS explains the rules in one of its publications which you can look at on-line at http://www.irs.gov/pub/irs-pdf/p15a.pdf.
NEEDED RELIEF IS ON THE WAY FOR IN-HOME HEALTH CARE WORKERS AND CARE-GIVERS
The federal wage and hour laws that require employees be paid the minimum wage and overtime have an exemption for those who are employed in domestic service in a private home. These employees include casual babysitters and persons employed in domestic service to provide companionship services for individuals who, because of age or infirmity, are unable to care for themselves. Often these employees reside in the household where they work. The exemption has come to be known as the “companionship” exemption.
The “companionship” exemption was originally intended to apply only where the person receiving the care actually employed the care-giver, not some third party; that is, where the care-giver was a family friend, babysitter, or neighbor and not dependent upon the job for a livelihood and family support. However, since the exemption was created there has been an enormous increase in demand for in-home health care. Large corporations have taken over much of the industry, fueled by the availability of Medicare and Medicaid to pay the cost. Among other things, corporations have engaged in numerous deceptions and ruses to make it appear the care-giver was employed by the person receiving the care when that was not really the case, and successfully lobbied the Department of Labor to allow the exemption to apply to care-givers employed by third parties. The result has been that many in-home health care professionals or “companions” employed by large corporations labor for long hours under difficult working conditions at appallingly low wages without the protection of the minimum wage and overtime laws.
The Department of Labor has just announced that it intends to revise its regulations to restore the exemption to its original scope; that is, rollback the expansion of the exemption and make sure that people employed in these important, albeit often thankless, jobs have the protections of the minimum wage and overtime laws. http://www.dol.gov/whd/flsa/CompanionshipNPRM.pdf. This is a welcome and long overdue change.
EMPLOYERS MUST PAY TIPPED WORKERS THE FULL MINIMUM WAGE FOR NON-TIP PRODUCING WORK
As most servers and bartenders know, employers can take a “tip credit” toward payment of the minimum wage so long as the employee is regularly and customarily engaged in “tipped” work. The “tip credit” under the federal wage and hour law is the difference between the minimum wage – today $7.35 – and $2.13; that is, employers today get a credit of $5.22 toward payment of worker’s minimum wage. So, instead of paying the employee $7.35, the employer only has to pay $2.13, and the employee must makes up the rest in tips.
Often, though, an issue arises whether the employee is actually engage in “tipped” work during her shift. That is, a server might be required to clean bathrooms and do other maintenance work, or may be required to roll silverware and the like in addition to actually serving customers.
A federal court of appeals has recently ruled that a 20% rule established by the Department of Labor determines when an employer can take the “tip credit” and when it can’t. That is, if the tipped employee works more than 20% of her time doing non-tipped work, such a maintenance, prep work, etc., then the employer loses the “tip credit” for this time and must pay the full minimum wage.
Employers often want to “push the envelope” on the tip credit because it saves them a lot of money. So, for instance, an employer might have tipped employees, like servers or bartenders, doing maintenance work that it should hire a full-time maintenance worker, who wouldn’t be a tipped employee, to do to avoid the extra cost.
The employer in the recent federal case was Applebee’s. Applebee’s asked the Supreme Court to overturn the court of appeals decision which applied the 20% rule. The Supreme Court refused. This is a good decision for workers in that it prevents employers from abusing the “tip credit” to avoid paying the full minimum wage for non-tipped work.