Thursday, September 18, 2014

Worth The Work? Why it is Risky To Not Pay Your Interns

Unless you were unplugged, you probably saw all the high profile names that made legal headlines last week. Included in that list was David Letterman. In a quick whirlwind of activity, a CBS intern filed a wage and hour lawsuit against CBS News and Letterman’s production company, Worldwide Pants, only to drop the suit a short time later with a public apology. In the lawsuit, the CBS intern claimed that unpaid “Late Show” student interns were employees and that the failure to pay them wages violated wage and hour laws. The suit, had it proceeded, would have sought to recover back wages, interest, and attorneys’ fees for six years’ worth of unpaid CBS interns. Ultimately, though, the intern dropped the suit. Several media outlets reported that the intern issued a public apology for the suit, claiming her attorneys coerced her into the filing.

Many employers who use unpaid interns have not been as lucky as CBS News and Letterman. As predicted in one of our blog posts two years ago, unpaid internships have created a wave of wage and hour class action lawsuits, many of them against well-known companies. The entertainment and media industries have been heavily targeted in particular, with lawsuits against Fox Searchlight, NBCUniversal, Warner Music Group, Conde Nast, and Clear Channel.

However, all variety of for-profit businesses that use unpaid student interns are vulnerable to wage and hour suits if they don’t tread carefully. Internship programs are a great way for students to get real-life work experience and get a foot in the door of a company. Because of these benefits to interns, companies sometimes lose track of their potential wage and hour obligations to interns. The U.S. Department of Labor’s Wage and Hour Division has issued guidance on strict requirements that must be met for an internship to be unpaid. Under this guidance, for-profit companies always have to pay interns – even those getting academic credit for the internship – to remain legally compliant  because the company almost always derives an "immediate advantage" from an intern's work. For an internship to be unpaid, the work done must be for the benefit of the student, not free labor for the company.

Admittedly, the Wage and Hour Division itself has not initiated as many investigations against companies with unpaid intern programs as some had expected. Still, that doesn’t mean that you can breathe a sigh of relief. The Division focuses its investigation resources on a number of competing priorities, but remains watchful for violations, as noted in an online post last spring. In addition, as noted above, the wave of lawsuit continues.

If you are a for-profit employer using unpaid interns, it’s a good time to review your risks and compliance requirements. Review your company’s internship policies and practices, along with the Department of Labor guidance noted above. When in doubt, paying interns the applicable minimum wage is usually far more cost-effective than fighting a subsequent legal claim.

Monday, September 8, 2014

Falling Back (or Springing Ahead): The Correct Method to Pay Employees

I was sitting by a campfire last night and, although it was a beautiful night, I could not help but notice that there are signs of fall everywhere. The leaves are beginning to change, the evening air had a slight nip, and darkness arrived much earlier in the evening. These reminders of fall mean that, because of Minnesota’s participation in Daylight Savings Time, we need to think about the semi-annual ritual of the changing of the clocks. Each spring we “Spring Ahead” by moving the clocks forward one hour at 2:00 a.m. on a designated date. Each fall, when Daylight Savings Time ends, we “Fall Backward” by changing the clocks back one hour. This year Daylight Savings Time will end on November 2, 2014.

This semi-annual ritual of changing the clocks is often a concern for those employers who have non-exempt (hourly) employees working the late shift (at 2:00 a.m. when the clocks change). When the clocks are moved back those employees usually work an additional hour for the shift. When the clocks are moved ahead those employees usually work one less hour for the shift. 

Under the Fair Labor Standards Act (“FLSA”) employers must pay employees for all hours worked and overtime for any hours worked in excess of 40 hours per week. So how do these basic rules apply during the changes related to Daylight Savings Time? Here is a summary:

Fall Backward:  Employees usually work one more hour per shift. Employers must pay the employee for the total number of hours actually worked. So, if the shift is normally eight hours, the employee must be paid for nine hours. The extra hour of pay must also be included in the employee’s regular rate of pay for calculating overtime.

Spring Forward:  Employees usually work one less hour per shift. Employers may choose to pay the employee for the normal number of hours worked for the shift; however, employers are not required to pay employees for the hour that was not worked. If the employer does choose to pay the employee for this hour, the employer does not have to include the extra hour in the employee’s regular rate of pay for calculating overtime. The employer may not, however, use the extra hour of pay as a credit to overtime compensation that is owed the employee.

As you enjoy these final waning days of summer you may want to add a review of your pay policies during the changes in Daylight Savings Time to your fall to-do list.

Thursday, September 4, 2014

“Wage Theft” – New Name, Same Concern

“Wage theft” is becoming a popular phrase in the media. A New York Times article recently announced that “More Workers Are Claiming ‘Wage Theft.’” Other news outlets are using the phrase to describe lawsuits brought by workers of a wide mix of employers, ranging from Jimmy John's to NFL franchises. “Wage theft” even has its own website.

At its core, “wage theft” is simply a catchphrase designed to draw attention to violations of wage and hour laws. The use of the term “wage theft” appears to be a relatively recent phenomenon. There were more references to “wage theft” in U.S. newspapers during the last six months than there were in the entire span from 2000 to 2010. 

While the “wage theft” catchphrase is relatively new, the wage and hour laws it references are not. Most of these laws have been around for decades. The primary wage and hour law—the federal Fair Labor Standards Act (FLSA)—was enacted in the 1930s. In addition, most states have longstanding wage and hour laws that similar to or more protective of employees than the FLSA. 

A heightened focus on wage and hour issues is also not new, despite the new “wage theft” lingo. Employers have been facing an uptick in wage and hour litigation and a political and social movement to increase wages for years. Employers should recognize, however, that the loaded “wage theft” terminology and the increased publicity about so-called “wage theft” is a sign of the growing sophistication and coordination among plaintiffs’ attorneys, unions, and government regulators. These publicity efforts are designed to increase knowledge of workers’ rights and they appear to be working. 

In light of the current wage and hour climate, employers should be vigilant about wage and hour compliance. Catchphrase or not, efforts to publicize “wage theft” will likely increase employees’ awareness of their rights and increase the risk of lawsuits. Employers should proactively seek to avoid wage and hour issues by:

·      Training human resources and managers on wage and hour compliance;

·      Carefully evaluating exempt and non-exempt job classifications;

·      Having compliant and well-publicized policies in place for employees on wage and hour  issues, including policies that address how to raise concerns about any improper pay deductions, the employer’s work week, non-exempt employee breaks and work rules, and any remote work by non-exempt employees;

·      Paying at least minimum wage and overtime pay to non-exempt employees for all working time;

·      Paying employees who engage in unauthorized work, addressing this problem through discipline (up to and including termination) rather than pay processes;

·      Keeping accurate records and avoiding even the appearance of pressure to falsify timecards;

·      Avoiding an improper designation of workers as independent contractors;

·      Taking care to consider state and local laws, in addition to federal regulations;

·      Seeking counsel on complex determinations and issues that are bound to arise; and

·      Revisiting and reevaluating these issues periodically, particularly when workers’ roles and duties change.

Week in Review

Some popular online services made legal headlines this week. After years of litigation, a federal appeals court held that Yelp did not extort businesses by manipulating user reviews to coerce advertising purchases. While Yelp still faces other legal claims for false advertising and securities fraud, this case is significant given that Yelp's handling of user reviews has been widely criticized.

While Yelp was presumably busy celebrating good news, the ride-sharing service, Uber, received bad news on its efforts to expand its services overseas. A German court banned Uber's ride-hailing services until a hearing occurs later in the year to determine whether Uber unfairly competes with taxis. And, as summer unofficially comes to an end and children return to school, check out the links below on back to school technology gear available to protect your student's (or your own) technology gadgets.

Technology and the Workplace
Modern Authors Delve Into Digital and Visual Storytelling (Mashable)
The Open Source Tool That Lets You Send Encrypted Emails to Anyone (WIRED)
Building a Robot With Human Touch (NYTimes)
The Future Could Work, if We Let It (NYTimes)
Google Is Working on a Chip that Lets Machines Think Like Humans (Yahoo)

Technology and the Law
Home Depot investigating a 'massive' hack (CNN)
Security Never Sleeps, Especially on Three Day Weekends (Forbes)
German Court Bans Uber Service Nationwide (NYTimes)
Apple and the FBI Are Investigating the Mass Celebrity Nude Photo Hack (Yahoo)
Court Says Yelp Doesn't Extort Businesses (Forbes)

There's an App for That
Protect and Power Back-to-School Gear (NYTimes)
The Top 10 Reasons Apple Rejects Apps From the App Store (Mashable)
This AI-Powered Calendar is Designed to Give You Me-Time (WIRED)
Why It's So Hard to Design New Emoji (Mashable)
Ikea Lampoons Apple to Promote Its 'Bookbook' (Mashable)

Thursday, August 28, 2014

Week in Review

The National Labor Relations Board continues to focus on employer social media policies and employee discipline for online activity.  In a ruling this week involving Triple Play Sports Bar & Grill, the Board concluded that Triple Play unlawfully fired two employees for their response to a co-worker's Facebook post.  One of these employees had only responded to the post by clicking the Facebook “like” option on the post.  The Facebook post at issue related to the employer paying taxes, and the Board concluded the exchange about the post, including the “like” response, was a protected group discussion about a term or condition of employment.  In addition, the Board found that the employer's social media policy was unreasonably restrictive because it prohibited "inappropriate discussions about the company." As we’ve discussed in numerous other posts, non-management employees have a protected right under labor law to engage in group discussion and activity to try to better their terms of employment.  You can read more below about the Triple Play case and how to stay on the right side of the National Labor Relations Board.  And, speaking of Facebook, anyone familiar with the social media site is aware of the viral ALS ice bucket challenge.  While the challenge has been an enormous fundraising success, check out the link below for a list of things employers should consider before hosting or approving a group workplace challenge.

Technology and the Workplace
Facebook firing causes unfair labor practice double play for NLRB (Ohio Employer's Law Blog)
A Cold Shower for Workplace Ice Bucket Challenges? (Connecticut Employment Law Blog)
5 Ways the Workforce Will Change in 5 Years (Mashable)
Uber Faces Storm Over Controversial Recruitment Tactics (WSJ)
When psychiatrists are on Facebook, their patients can get a case of TMI (The Washington Post)

Technology and the Law
Calif. governor signs smartphone 'kill switch' bill into law (CNET)
FBI Probes Possible Hacking Incident at J.P. Morgan (WSJ)
Judge Denies Apple Request for Injunction vs. Samsung Phones, Tablets (WSJ)
More than 1,000 businesses affected by same malware as Target (LA Times)
Dairy Queen confirms potential data breach (Minneapolis/St. Paul Business Journal)

There's an App for That
Wearables has become a household name.  Could nearables be next?  (The Washington Post)
Twitter Just Gave You Analytics Power.  Is It Useful? (WSJ)
TiVo goes after cord-cutters with post-Aereo device (CNN)
Waterproof e-reader launched for bath time bookworms (The Guardian)
Bye Bye, Birdie:  How to Delete All Your Tweets in an Instant (Yahoo)

Tuesday, August 26, 2014

Bordering the Obvious

Last week we learned in Olson v. Push, Inc. that Minnesota’s Drug and Alcohol Testing in the Workplace Act (DATWA) does not apply to a West Virginia employee working for a Wisconsin company. While at first blush this may seem like a no-brainer, there were facts in this case that made it a closer call. The plaintiff, Shawn Olson, applied for employment with Push while he was living in Minnesota. Push arranged for Olson to take a pre-employment drug screen, and for convenience sake, the test was arranged at a testing facility in Minnesota. Olson argued that because DATWA applies to employers “doing business in this state,” and that he was subjected to testing in Minnesota, it was sufficient to apply DATWA’s protections to his circumstances.  

A federal district court disagreed and dismissed Olson’s case. The court held that it was not the intent of the Minnesota legislature to apply DATWA to out of state employment relationships. The court determined that the place of the employment, and not the residency of the employees, is the key consideration. 

Minnesota laws are frequently unclear regarding their application beyond the Land of Lakes. The Olson decision is helpful in clearing up ambiguity surrounding the reach of DATWA and other state employment laws in cases where the connection to Minnesota is slight. This case will help determine the application of Minnesota employment laws in circumstances such as where an employee resides in Minnesota but works in a bordering state, or where an employee has a territory that includes, but is not limited to, Minnesota. Since courts rarely have an opportunity to analyze issues like these, it is oftentimes difficult to locate a definitive answer to some seemingly obvious questions.

Thursday, August 21, 2014

Think Before You “Snail Mail” Those FMLA Notices

When I conduct employment trainings, I often caution executives and managers to think before they email. In my experience, people tend to be more casual and to use poorer judgment when they email than when they write a memo or letter that, by its nature, seems more formal.

Now, it turns out, that you better be careful before you “snail mail” too. In what some commentators are calling a game changing decision, the U.S. Court of Appeals for the Third Circuit recently held that a former employee could proceed to trial in her lawsuit under the federal Family Medical Leave Act (FMLA) based on her assertion that she did not receive an FMLA notice that her employer sent to her by regular U.S. mail. In the case, Lupyan v. Corinthian Colleges, Inc., No. 13-1843, 2014 WL 3824309, at * 7 (3d Cir. Aug. 5, 2014), the plaintiff Lisa Lupyan went out from work on a medical leave. After Lupyan provided medical certification to take FMLA leave, her employer, Corinthian Colleges, mailed her a legally required FMLA notice stating that Lupyan’s leave was being designated as FMLA leave and that the FMLA provided for 12 weeks of leave. When Lupyan failed to return to work at the end of 12 weeks, the College terminated her. Lupyan then sued, claiming a violation of the FMLA. The College argued, however, that the case should be dismissed without a trial given that it mailed the required FMLA designation notice and Lupyan did not return within 12 week or comply with the FMLA notice contents. Lupyan claimed, however, that she never received the mailed FMLA designation form.

Siding with Lupyan, the Third Circuit Court of Appeals declined to follow the longstanding “mailbox” rule, under which courts have traditionally presumed that a properly addressed and stamped letter reached its destination. Noting the new technological age in which we live, the Court stated that:

In this age of computerized communications and handheld devices, it is certainly not expecting too much to require businesses that wish to avoid a material dispute about the receipt of a letter to use some form of mailing that includes verifiable receipt when mailing something as important as a legally mandated notice. The negligible cost and inconvenience of doing so is dwarfed by the practical consequences and potential unfairness of simply relying on business practices in the sender’s mailroom.

Lupyan Opinion (PDF).
 What does this mean for employers?  There are a couple of important take-aways:
  • While the Third Circuit’s opinion in Lupyan is not binding on courts in other jurisdictions, it should be a wake-up call for employers to think carefully about the manner in which they deliver legally required notices and other important information to current or former employees. If an employer will need to be able to prove unequivocally that a notice was both delivered and received, it should send the notice in a manner that allows it to be tracked and its receipt to be confirmed. Since the receipt of emails can be hard to verify and emails can sometimes be diverted by a spam filter, hand-delivery or certified or overnight mail, return receipt requested, may be preferable.
  • The Third Circuit’s ruling comes during a period of increased government focus on FMLA compliance. The U.S. Department of Labor’s FMLA Branch has announced its intention to step up FMLA enforcement and workplace audits. In connection with any FMLA audit, an employer can expect that the employer’s required posting, employee notice, and recordkeeping practices will be key. So, it may be time to consider a self-audit to ensure that your company is taking all the appropriate steps to comply with the FMLA and to make sure that required employee notices are being both delivered and received.
  • Finally employers should also remember that, apart from the FMLA, they may have disability accommodation obligations to employees who are unable to immediately return at the end of FMLA leave. As we’ve covered in past blogs, as the end of FMLA approaches, employers who face an employee request for additional leave time need to consider whether the employee may be disabled and whether additional leave time would be a form of “reasonable accommodation.”