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Recently, I was watching an episode of an HBO series entitled, “Girls.” Although the series is smart, creative and funny from many perspectives, and certainly has more to do about being a 20 something and less about work, as an HR person I was suddenly getting angrily transfixed over a work issue. Basically, the main character, Hannah, who has been working as an unpaid intern in a literary agency for two years since she graduated is being exploited by her boss.

Through the support of her parents up to now, Hannah has been able to modestly live in a shared New York City rent-controlled apartment. However, her parents suddenly cut her off and tell her to go and ask her so-called employer to pay her a salary finally after two years. Unfortunately, within 30 seconds of asking her boss for a salary, he kindly points to a stack of resumes for replacing her, informs her “I’m really going to miss your energy” and wishes her luck in finding a job.

Although Hannah is a fictitious character, there are possibly hundreds of thousands of real-life Hannah’s working as unpaid interns these days. Some employment experts estimate that undergraduates work in more than one million internships a year with almost half being unpaid. In addition, a recent released report stated that about 54% of Bachelor’s degree holders under 25
last year were jobless or under-employed, the highest percentage in at least the last 11 years.

A recent New York Times article this past weekend (NYT, May 5, 2012, “Graduates Flock to Unpaid Internships) brought back to mind Hannah and her dilemma. According to the article, unpaid post-college internships have existed for decades in the film and non-profit workplaces but have more recently spread to fashion house, book and magazine publishers, marketing companies, public relations firms, art galleries, talent agencies and even law firms. Most likely, as a sign of the tough economic times, lots of companies are trying to take advantage of a situation where they need to get work done but they can’t afford it because their budgets aren’t what they used to be before the financial crash.

The NYT article goes on to describe several interns, one being an intern performing unpaid personnel work for Fox Searchlight Pictures on the film, “The Black Swan.” He’s now part of a class-action lawsuit against that company to win back pay. The article also describes unpaid interns spending long working hours performing menial task including running errands, doing coffee runs for staff and picking up people’s dry cleaning.

If you’re an employer and reading this, here’s the deal or at least the legal one. First, if you’re going to “employ” an intern to do actual work (e.g., making copies, picking up your complicated coffee order at Starbucks, making a Staples run, etc.), you can do so. However, you do need to pay them at least minimum wage. Minimum wage laws prohibit employers from hiring employees for
less than a certain hourly rate. Unpaid interns can be exempt from these rules. However, the U.S. Department of Labor makes it clear that for the intern to be exempt from minimum wage laws, he/she must get something for his or her time.

With that said, there are six “enforcement criteria” that an employer must satisfy, in order to properly classify a worker as an intern:

  1. The intern’s training, even though it includes actual operation of the employer’s facilities, is similar to that given in a vocational school;
  2. The intern’s training is for the benefit of the trainee or student;
  3. The intern does not displace regular employees, but rather work under their close supervision;
  4. The employer does not obtain or receive an immediate advantage from the intern’s activities and, on occasion, the employer’s operations may be actually impeded;
  5. The interns are not necessarily entitled to a job at the conclusion of the training period; and,
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in training.

If the criteria are not met, the intern will be considered an employee and subject to federal and state wage and hour laws including that the intern must receive compensation and the employer must deduct all applicable taxes and follow all required regulations including meal and rest breaks. From a practical stand-point, most of the unpaid internships that I have witnessed don’t even come close to meeting these requirements. Plus, this certainly doesn’t come close to meeting good corporate governance practices that everyone spends so much time talking about in their recruitment literatures.

In summary, the Labor Department has been fairly pathetic in dealing with this growing issue up to now. However, it now says that it is going after firms that fail to pay interns properly. Furthermore, it is expanding its efforts to educate companies, colleges and students on the law regarding internships.

Labor Force Statistics from The U.S. Department of Labor’s Bureau of Labor Statistics (BLS) U.S. Employment Situation Report for April 2012.  Table B – Selected Establishment Data, seasonally adjusted. The Report provides the following job growth or decline changes in thousands.

Professional and business services were the leaders in new job growth with the addition of 62,000 jobs. Education and health services added 23,000; retail, 29,000, and Manufacturing, 16,000. On the opposite side, Transportation and Warehousing cut 17,000 jobs and governments reduced their numbers by 15,000, including 12,000 by local governments.

Group/Industry (numbers in
thousands)
Apr. 2011 Feb. 2012 Mar. 2012 Apr. 2012
Total Non-Farm 251 259 154 115
Total Private 264 254 166 130
-Mining/Logging 12 7 0 0
-Construction -1 -1 -3 -2
-Manufacturing 28 30 41 16
-Wholesale Trade 7.2 7.0 2.9 7.4
-Retail Trade 67.5 -15.2 -20.9 29.3
-Transportation & Warehousing 10.0 14.3 1.8 -16.6
-Information -1 8 -6 -2
-Financial activities -4 7 14 1
-Professional & business services 50 89 37 62
-Education & health services 55 71 45 23
-Leisure & hospitality 36 45 52 12
Government -13 5 -12 -15

 

05.07.2012

Labor Force Statistics from The U.S. Department of Labor’s Bureau of Labor Statistics (BLS) U.S. Employment Situation Report for April 2012. Selected information provided from Table A – Household data, seasonally adjusted.

Of particular note is the Labor Force Participation Rate. This number fell again in April to  63.6%. That’s the second decline in a row and the lowest rate since December  1981.

Category (numbers in
thousands)
Apr. 2011 Feb. 2012 Mar. 2012 Apr. 2012
Civilian Non-Institutional Population 239,000 242,435 242,604 242,784
Civilian Labor Force 153,420 154,871 154,707 164,365
Participation Rate 64.2% 63.9% 63.8% 63.6%
Employed 139,628 142,065 142,034 141,865
Unemployed 13,792 12,806 12,673 12,500
Unemployment Rate 9.0% 8.3% 8.2% 8.1%
Not in Labor Force 85,726 87,664 87,897 88,419

 

05.07.2012

The U.S. Department of Labor’s Bureau of Labor Statistics (BLS) released the U.S. Employment Situation Report for March 2012 on Friday, April 4 showing a second consecutive month of disappointing new job growth. Although new job growth had been making good progress between late autumn 2011 and into the winter of 2012, the numbers began to slide beginning with the February numbers. However, many economists are saying that unusually warm winter weather pulled forward construction and manufacturing activity to January and February resulting in reduced new job growth from the spring.

In general, non-farm employment increased by 115,000 in April with the unemployment rate slightly decreased to 8.1% from 8.2% the previous month. This is particularly disappointing in that between December and February, new jobs rose by an average of 252,000 a month. Beginning from the March Employment Situation Report, however, the numbers began to slide but were still over 200,000.

Professional and business services were the leaders in new job growth with the addition of 62,000 jobs. Education and health services added 23,000; retail, 29,000, and Manufacturing, 16,000. On the opposite side, Transportation and Warehousing cut 17,000 jobs and governments reduced their numbers by 15,000, including 12,000 by local governments.

Please refer to Employment Situation Summary – Tables A & B for additional detail.  05.07.2012

 

In late April 2012, the Equal Employment Opportunity Commission (EEOC) issued new guidelines for employers on the use of arrest and conviction records by employers under Title VII.

In general, the new guidelines make it harder for employers to have a blanket policy that excludes anyone with a criminal record.
The EEOC states that while employers may legally consider criminal records for making hiring decisions, a policy that excludes all applicants with a conviction could violate employment discrimination laws because it could have a “disparate impact” on racial and ethnic minorities. Furthermore, an employer wanting to exclude applicants with criminal records would need to show that the exclusion was job-related and consistent with business necessity.

The EEOC, with the updated guidelines, is calling for employers to conduct individualized assessments of job applicants in a way
that examines the nature and gravity of the criminal offense, the time passed since the offense and the nature of the job applied for.

The EEOC is pursuing this area in many ways because of a couple of trends over the past decade. First, there has been a huge
increase of employers accessing computer-based arrest and conviction records. In 1996, 51% of employers conducted criminal back checks on applicants. Today, 90% of employers are doing so. In addition, there are numerous reports of erroneous arrest and conviction records as well as many cases that are supposed to be sealed but being released to employment screeners. The second trend is even more important. Basically, there has been a huge increase in the number of Americans who have been arrested for minor offenses, due to “zero tolerance” policing.

The EEOC guidelines make it clear that an arrest alone is not evidence of illegal conduct or grounds for employment exclusion.
Furthermore, if an applicant does have a criminal conviction, the employer must review the seriousness of the offense, the time that has lapsed since the crime was committed, and the relevance of the crime to the specific job opening.

In summary, if you have an employment policy today where you reject anyone that marks, “yes” to the question, “Have you ever been convicted of a crime?” you could be in violation of the law. The following are some practices to consider regarding the new guidelines:

  1. Review your employment recruitment practices. If you are rejecting every applicant simply because of an arrest or conviction, you need to eliminate this practice.
  2. If you are going to reject an applicant because of a criminal offense, you need to identify the criminal offense based on all evidence, determine the duration of exclusions for criminal conduct based on all evidence, include an written individual assessment of the situation including a written justification for excluding the applicant from employment.
  3. Make sure anyone involved in hiring and employment decision making is aware of the new guidelines and subsequent policy changes in your practices.
  4. When asking questions to an applicant about criminal records, limit inquiries to records for which exclusion would be job-related for the job and/or business necessity.
  5. Make sure that background check information is kept confidential. This includes that you need to seriously consider how you organize your personnel files so that such information as arrest and conviction records are not readily available to
    any hiring decision maker requesting to review a personnel file.

The EEOC guidelines, contained in a 52-page publication, can be downloaded by going towww.eeoc.gov/laws/guidance/arrest_conviction.cfm.

 

The Labor Department’s Wage and Hour Division (WHD) announced in mid-April 2012 that it is launching an enforcement and education initiative focused on the restaurant industry in the Los Angeles area to ensure compliance with the Fair Labor Standards Act’s minimum wage, overtime, recordkeeping, and child labor provisions. In addition, the WHD announced in early April a similar enforcement initiative targeted at restaurants in the Portland, Ore., metropolitan area.

When WHD investigators find violations, they pursue appropriate remedies, including the collection of back wages, the assessment of civil money penalties and liquidated damages, and litigation

As part of the Los Angeles initiative, the division will conduct unannounced investigations at restaurants in the San Fernando Valley, Hollywood, West Hollywood, West Los Angeles, and other areas of Los Angeles County.

In the past six years, WHD’s Los Angeles office found FLSA violations at 72% of the restaurants it investigated. Those violations resulted in $2.2 million in minimum wages and overtime back wages owed to more than 1,400 workers.

From 2006 through 2011, the division’s Portland, Ore., office found FLSA violations at 79% of the 281 restaurants it investigated. Those violations resulted in more than $3 million in minimum and overtime back wages owed to more than 1,600 workers.

During the same period, the division conducted more than 1,800 investigations of restaurants along the West Coast and found that 71% were in violation of the FLSA, resulting in more than $12 million in back wages owed to more than 9,500 employees.

According to the Labor Department, limited profit margins—particularly at low-cost, ethnic food establishments—prompt some
employers to keep their labor costs low by using illegal tactics, including failing to pay employees for all their work hours, forcing employees to perform work duties “off the clock,” and incorrectly designating employees as exempt
from overtime.

Other violations include paying nonexempt employees a flat salary regardless of their overtime hours and paying cash wages completely “off the books,” which can lead to underpayment of wages and to tax liabilities.

Illegal deductions from workers’ wages for uniforms, breakages, customer walk-outs (instances of people leaving without paying for meals), and cash register shortages also are common. WHD also has discovered child labor violations, such as minors operating hazardous equipment such as dough mixers and meat slicers. 05.03.2012

Wal-Mart has agreed to pay $4.8 million in back wages and damages to more than 4,500 employees throughout the U.S. for unpaid overtime according to the U.S. Labor Department. In addition, Wal-Mart will also pay approximately $464,000 in civil penalties for violating federal overtime laws.

The violations cover both current and former Wal-Mart managers at Wal-Mart vision centers and certain security personnel at Wal-Mart Discount Stores, Wal-Mart Supercenters, Neighborhood Markets and Sam’s Club warehouses.

According to the Labor Department, the company improperly classified the workers as exempt from overtime pay.  05.03.2012.

On May 2nd, Maryland’s Governor signed the nation’s first law regulation an employer’s ability to demand that employees and/or applicants disclose their use name and passwords on internet sites. The new law becomes effective October 12 and applies to both
private and public employers in the state.

Under the statute, employers may not discharge, discipline, or otherwise penalize an employee for refusing to disclose password information covered by the legislation; nor may they refuse to hire an applicant for such refusal.

The law distinguishes between an employee’s personal accounts and any “nonpersonal accounts or services that provide access to the employer’s internal computer or information systems.” For the latter, an employer may require an employee to disclose user names and passwords.

The new law bars employees from downloading “unauthorized employer proprietary information or financial data to an employee’s personal website, an internet website, a web-based account, or a similar account.”

The statute reserves an employer’s right to conduct an investigation—based on the receipt of information about an employee’s use of various types of websites for business purposes—to ensure “compliance with applicable securities or financial law, or regulatory
requirements.”

Employers also retain the right to investigate an employee’s actions with regard to the downloading of unauthorized employer proprietary information or financial data.

Similar laws are now pending in California, Illinois, Minnesota and New York.  05.03.2012