Unpaid Internships: The Return

2014 saw an explosion in lawsuits surrounding the proper identification and payment of interns. In January 2014, Elite Model Management settled with former unpaid interns. Months later in October, NBC Universal closed a $6.4 million settlement with its unpaid interns. Then in November, Condé Nast settled with its former unpaid interns for $5.8 million. This lawsuit also resulted in Condé Nast terminating its unpaid internship program.

For some time, it was anticipated that the existence of unpaid internships would decline. Most of the lawsuits mentioned here revealed each employer’s inability to meet the U.S. Department of Labor’s (DOL) six factor test for unpaid internships.

On January 8, 2018, however, the DOL announced adjustments, thereby updating the guidelines for “The Test for Unpaid Interns and Students.” The updated fact sheet explains that “Courts have used the ‘primary beneficiary test’ to determine whether an intern or student is, in fact an employee under the FLSA (Fair Labor Standards Act). In short, this test allows courts to examine the ‘economic reality’ of the intern-employer relationship to determine which party is the ‘primary beneficiary’ of the relationship.” A concern for many courts with the original test was determining whether “the employer doesn’t gain an immediate advantage from the intern’s activities.”

What are the new seven factors for determining a lawful unpaid internship? Do these adjustments make it easier for organizations to provide meaningful unpaid internships?

The Seven New Factors

1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
4.  The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

With the inclusion of the possible academic credit / formal education tie in, the new test is more flexible than the previous one. Determination on whether an employee should be paid is now based on an overall view of the circumstances. This makes it possible for organizations to meet the standard. It is still suggested, however, that employers ensure the intent and design of their internship programs are primarily beneficial to the interns.

Reactions, of course, vary. For example, Eric Glatt was a plaintiff from a lawsuit involving his unpaid internship with Fox Searchlight. In a comment to Bloomberg Business online, Glatt mentioned that “I don’t like the legal implications of this new test…but the practical implications may make the kinds of internships I did [entry-level jobs disguised as educational opportunities] go away.” Some labor advocates worry that these new guidelines may permit an organization to justify any program as benefitting an intern. On the other hand, due to the wave of lawsuits in previous years the on-going trend has been for employers to be safe and pay minimum wage. We look forward to seeing how organizations and future interns utilize these new adjustments.

What about your organization? Have you hosted an unpaid internship program? Have such programs been discontinued in recent years? Share your thoughts in our comments section below!

Leaving 2017…Embracing 2018

We are here again, the end of another year! 2017 came and flew by! As in previous issues of Astronology®, we would like to take our last issue of 2017 to look at HR trends and topics that could possibly be impactful for the coming new year.

Workplace Culture and Human Resources Policy
With the recent increasing reports of sexual harassment in a variety of workplace sectors, 2017’s fourth quarter has been filled with talks about workplace culture and Human Resources policy. A pressing concern in this area is some organizations’ negligence in reinforcing HR policies surrounding this issue of workplace harassment. We expect continued talk into 2018, as well as actions to promote workplace environments where employees feel comfortable reporting alleged harassment incidents, with the confidence that the organizations they work for will support and follow through with proper procedure. Other areas for expected HR policy adjustment include equality in the workplace, in areas such as gender, race, and sexuality.


Talent Management and the Multigenerational Workforce
This past May, we released an article on alternatives means to measure performance. This was largely due to continued growth in organizations breaking away from traditional performance reviews. Why the movement? There are many factors, including the nature of work changing due to technology and the impact of new generations in the workplace. For the last few years, we’ve studied and prepared for the wave of Millennial (born 1981 to 1995) generation workers. This meant understanding what this age group values and structuring organizations to appeal to these values, in order to gain and retain talent. A noted value of this age group has been continuous feedback. As a result, many organizations have sought ways to meet this need, resulting in a new wave of measuring performance.

There are also early notes that a new wave of generational employees already is moving into the workforce. The earliest born iGen, or Generation Z (born in 1996 and later), have started to hit the workforce. This means now, more than ever, organizations have to learn to strike balance within a multigenerational workforce. This means designing retention tools and a work environment to fit the ever evolving employee collective. A recent Forbes online article even suggests that such a dynamic environment leads to a competitive advantage. We expect this to be a continuing trend well beyond 2018.

Federal Policy
As mentioned in a previous Astronology® there are some anticipated policy changes or adjustments expected in 2018. To recap:

• Fair Labor Standards Act (FLSA): In October 2017, the Department of Justice filed a notice of appeal on an August 31, 2017 summary judgement against the FLSA’s Overtime Final Rule. Although it isn’t completely clear on what the US Department of Labor’s practical arguments will be, it is suggested that the DOL will
• Not defend the Obama selected $913 a week figure, and
• Argue that a salary test is legally permissible under the white-collar exemptions.
• National Labor Relations Board (NLRB): By September 2017 the NLRB became a Republican majority five member Board. It is anticipated that this newly adjusted board may reverse some recent rulings such as a 2015 Joint-Employer ruling and even a few 2014 rulings. On December 17, Phillip Miscimarra’s term on the NLRB will expire. He already has vocalized that he will not seek a second term, vacating a seat and position in 2018. We look forward to seeing who eventually takes the vacated seat and what decisions will be made with this new board in 2018.
• Occupational Safety & Health Administration (OSHA): In July 2017 an updated agenda was released indicating that 469 proposed federal regulations were being removed, and another 391 regulations deemed “long-term” or “inactive” for further review. There are a few regulations in the “pre-rule” stage that we are anticipating to appear in 2018:
• Communication Tower Safety,
• Mechanical Power Presses Updated,
• Powered Industrial Trucks,
• Lock-Out / Tag-Out Update, and
• Blood Lead Level for Medical Removal.
• Affordable Care Act (ACA): 2017 found four different appeals (the American Health Care Act, Better Care Reconciliation Act, Skinny Repeal, and the Graham-Cassidy Plan) either being dismissed or vetoed from even being brought to a vote. This means for now, we should follow the currently mandated Affordable Care Act in order to avoid penalties. We do anticipate more talk on health care reform in 2018, however.

HR Technology
We also expect to see continual advancement of HR Technology in a variety of ways. Cloud-based HR software has been becoming the norm for many organizations, small to large. It allows for mobility, “on the go” around the clock access, and has become increasingly affordable. As remote work continues to be a possible work option, such access has becoming increasingly appealing. Gamification also has shown growth in HR, as it can be used to encourage performance, employee engagement, and training. Also expecting to make an appearance in 2018 is the use of big data to make HR decisions on hiring staff and increasing retention rates. It also is suggested that organizations can use data analysis to predict performance.

Closing Out 2017
As 2017 comes to a close, we eagerly look forward to 2018 for some answers to questions in regards to HR policy, and undoubtedly some surprises in Human Resources overall. Are there other topics that you think may make some impact in 2018? Why not share your thoughts with Astronology®! We’d love to hear your opinions!

Reflecting on 2017 Federal Policy Changes

The time certainly has flown by as we close the first year of the current political administration. In June, Astronology® reflected on the first six months on Capitol Hill in 2017. In this issue of Astronology®, we review current and potential future policy changes in four areas that affect Human Resources: the Fair Labor Standards Act exemption rules, NLRB seat changes, OSHA regulation rollbacks, and the Affordable Care Act.

Fair Labor Standards Act (FLSA) Exemption Rules Update
Around this time last year, many were preparing for possible changes to the FLSA to determine exempt and non-exempt roles moving forward. However, by the end of November 2016, an injunction was made on the Final Rule, halting its December 1st start date.

On August 31, 2017, U.S. District Court Judge Amos Mazzant granted summary judgement against the Overtime Final Rule. The US Department of Labor’s (DOL) website explains that “The court held that the Final Rule’s salary level exceeded the Department’s authority, and concluded that the Final Rule is invalid.”

What happens next? On October 31, 2017, on behalf of the DOL, the Department of Justice filed a notice to appeal the decision. The notice does not indicate what the US DOL’s motivations are or what practical arguments will be used. It is suggested that the DOL will

• Not defend the Obama selected $913 a week figure, and
• Argue that a salary test is legally permissible under the white-collar exemptions.

It’s likely we won’t hear much else until sometime in 2018. Stay tuned for future updates!

National Labor Relations Board (NLRB)
Many have kept their eyes peeled regarding nominations for and appointments to the National Labor Relations Board, which had a few seats left vacant in 2017. In January, the Trump administration appointed Philip Miscimarra as Chairman. In August, former GOP House staffer Marvin Kaplan was approved by the Senate to an open seat on the Board. The following month, William Emanuel was confirmed to the NLRB with a 49-47 Senate vote. Emanuel’s confirmation currently gives the Republicans a majority on the five member Board.

It is anticipated that with the newly adjusted Board there may be some reverse rulings in the future, namely the Joint-Employer ruling that gave franchisors responsibility for labor law violations committed by their franchisees. Other possible rollback rulings could include 2014 rulings that sped up union elections.

Phillip Miscimarra’s term expires on December 17, at which time he will not seek a second term. We look forward to learn what becomes of the vacated seat and position in 2018.

Occupational Safety & Health Administration (OSHA)
On July 20th the Department of Labor released an updated agenda indicating many OSHA regulatory actions would be cut. 469 proposed federal regulations are being removed. Another 391 regulations have been reclassified as “long-term” or “inactive” for further review. Some of the regulations being removed include efforts to regulate worker exposure to construction, noise, and combustible dust. Two regulations that are listed in the “long-term” category are regulations regarding emergency response & preparedness, and regulations regarding infectious diseases in the health care industry. There are also a few regulations in the “pre-rule” stage:

• Communication Tower Safety,
• Mechanical Power Presses Updated,
• Powered Industrial Trucks,
• Lock-Out/Tag-Out Update, and
• Blood Lead Level for Medical Removal.

We look forward to seeing what will happen with these proposed regulations.

Affordable Care Act (ACA)
In our June 27th Astronology® we described the then newly presented Better Care Reconciliation Act (BCRA). It was the Senate’s amendment to the House of Representatives’ American Health Care Act of 2017 (AHCA). The BCRA did not gain the needed votes to pass. In July, a third attempt, the “Skinny Repeal,” also failed to pass the Senate. Late September another attempt was dismissed. Republicans decided to not bring the Graham-Cassidy Plan to vote, as they believed they would not secure the needed votes.

What does this mean for us now? We should follow the currently mandated Affordable Care Act in order to avoid penalties. Nothing else has changed.

We eagerly wait for what 2018 brings the Human Resources sector! In addition, are there other federal or local regulations that have made an impact on you and your Human Resources role? Please let us know in the comment section below.

End of 2016, Beginning of 2017 - Astronology® Looks Back on an Exciting Year in HR

We find ourselves again at the end of another year! Can you believe the 4th quarter of 2016 is coming to a close? Continuing with previous year ending Astronology® releases, we will review some hot button issues & events in Human Resources in 2016, and how they may reappear in the HR realm during 2017.

Work Stoppage…to reappear again?
In September, many were surprised to learn that a college campus, Long Island University’s Brooklyn Campus (LIK-Brooklyn), was undergoing a faculty lockout. In a September Astronology®, we discussed work stoppages and learned that they are not held often. Lockouts and other forms of work stoppage occur with even large organizations, such as the NFL and Kellogg’s. Is it possible that other organizations can possibly find themselves in a similar bind in 2017? We certainly hope not. However, there have been murmurs of another sports franchise narrowly avoiding a lockout in the upcoming year. As a result, we do need to be mindful of the issue.

Minimum Wage Challenges?
In recent years, we have been peppered with discussions over living wages, the “Fight for $15” campaign, and their impacts on Human Resources and compensation. In April of this year, we saw New York Governor Andrew Cuomo reveal plans to raise the minimum wage to $15 by 2021. Other cities have also followed suit…or have already begun rolling schedules to reach higher wages. With the presidential elections over, and President-Elect Donald Trump making cabinet selections, many wonder what will become of the federal minimum wage. We all eagerly wait to see what happens with the minimum wage in 2017.

FLSA Final Rule. Is it on? Or off?
A number of organizations worked closely with their Human Resources partners and departments to prepare for the enactment of the FLSA Final Rule announced in May 2016. In some cases, job descriptions had to be clarified in order to help distinguish levels of positions. In other cases, adjustments in pay had to be made to ensure compliance. Then suddenly in November, a few days shy of the December 1 active date, an injunction was called and everything was put on pause. With a new presidential administration coming in, organizations are left with questions. Will the FLSA Final Rule push through? Will it be completely thrown out? Is it possible the mandate will be reformed? Only time will tell. We all anxiously await. In the meantime, it’s been suggested that organizations that have already made adjustments keep them, as the federal hold on the FLSA rule does not change any city or state laws.

Technology Marches Onward!
It’s predicted that by the year 2020, millennials will make up 75% of the workforce. This advancing change in workforce makeup also has accompanied an advance in technology. This technology can take many forms, including automation, gamification in performance reviews, and data analysis. Astron is especially hopeful to seeing more advancements in the area of HR technology and data analysis as a part of organizations’ strategic decision making processes.

As 2016 comes to a close, we eagerly look forward to 2017 for some answers to questions and some surprises in Human Resources. Were there other topics from 2016 that you think may make a resurgence in 2017? Why not share your thoughts with Astronology®! We’d love to hear your opinions!

FLSA Overtime Rules Delayed

Prior to November 22, 2016, many in the Human Resources field had been abuzz about the enactment of the Fair Labor Standards Act (FLSA) Final Rule. For some organizations, months of preparation for the December 1st change included reviewing job descriptions, in order to determine the position’s exemption status, and making changes to employee salaries vis-à-vis the new exempt threshold. However, on November 22, 2016, Judge Amos Mazzant III enacted an injunction, successfully halting activation of the new FLSA rules. The preliminary injunction is based off the challenge by several states, business groups, and the U.S. Chamber of Commerce. The plaintiffs claim the DOL has overstepped its authority by raising the salary threshold for exempt status excessively high. Of course, this injunction raises new questions. What is the Department of Labor’s (DOL) response? What do organizations do in the meantime?

The DOL’s official response to injunction was as follows: “The Department strongly disagrees with the decision by the court, which has the effect of delaying a fair day's pay for a long day's work for millions of hardworking Americans. The Department’s Overtime Final Rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule. We are currently considering all of our legal options.”

So what do organizations do in the meantime? While some may speculate that with a Trump administration taking office soon, this mandate may disappear. However, it may not be safe to assume so. The attempt to rollback this rule may not happen right away. There is also the possibility that the Trump administration could issue a smaller increase to the salary threshold than the one initially included in the Final Rule.

Notwithstanding these developments, Michael Maciekowich of Astron Solutions reminds us that the FLSA tests for determining position exemptions have not changed. It is better to be safe than sorry, as a previous court case in Kinkead v. Humana, Inc. demonstrates.

The court case involved a final rule to extend minimum wage and overtime protections to workers who work in live-in domestic services or companion services beginning January 2015. In very similar fashion to the current FLSA overtime adjustments, the companionship exemption enactment was postponed in January 2015, as a federal judge from D.C. struck the rule down, charging that the DOL was overstepping its authority. However, in October of 2015 the U.S. Court of Appeals for the District of Columbia reversed this district court order. Humana argued that they shouldn’t be liable during the period the companionship exemption had been vacated. The courts decided Humanawas liable.

Another aspect to consider is your city and /or state regulations. If adjustments for your organization’s city or state are equal to or higher than the Final Rule’s regulations, organizations would still need to be in compliance with the law that’s most generous to the employee. As always, it is best for organizations to seek legal counsel in order to assuage any concerns from both employers and employees.

What was your organization’s reaction to the late initiated injunction? We look forward to hearing our readers share their input and thoughts on this late-breaking news!