DOL Abandons 6-Factor Internship Test

The U.S. Department of Labor has updated its fact sheet on internship programs to adopt the
"primary beneficiary" test followed by the Second, Sixth, Ninth and Eleventh Circuit Courts of Appeals. It previously used a six-factor text that refused to allow unpaid internships under the Fair Labor Standards Act if the employer derived any immediate advantage from the relationship. The new seven-factor test adopts a flexible approach, with no single factor being determinative. The seven factors are:

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.

The Department relied on the following Court of Appeal decisions in formulating its test:

Solis v. Laurelbrook Sanitarium and School, Inc., 642 F.3d 518 (6th Cir. 2011).

Schumann v. Collier Anesthesia, PA, 803 F. 3d 1199 (11th Cir. 2015).

Glatt v. Fox Searchlight Pictures, Inc., 811 F. 3d 528 (2nd Cir. 2015).

Benjamin v. B & H Education, Inc., Case No. 15-17147 (9th Cir. Dec. 19, 2017).

DOL Gives Continued Attention To Joint Employment

In recent years, the U.S. Department of Labor has paid particular attention to misclassification of employees as independent contractors. It has worked with other federal and state agencies to help misclassified employees get the wages, benefits, and protections to which they are entitled. On January 20, 2016, the Administrator of the Department's Wage and Hour Division issued Interpretation No. 2016-1, entitled Joint employment under the Fair Labor Standards Act and Migrant and Seasonal Agricultural Worker Protection Act. The interpretation emphasizes that joint employment should be defined expansively. It discusses two different types of joint employment:

• Horizontal joint employment occurs when two or more employers each separately employ an employee and are sufficiently associated with or related to each other with respect to the employee. DOL regulations address this type of joint employment at 29 CFR section 791.2.
• Vertical joint employment occurs when an employee of one employer (which the Administrator calls an “intermediary employer”) is also, with regard to the work performed for the intermediary employer, economically dependent on another employer.

To determine whether horizontal joint employment exists, the following questions should be asked: (1) who owns the potential joint employers (i.e., does one employer own part or all of the other or do they have any common owners), (2) do the potential joint employers have any overlapping officers, directors, executives, or managers, (3) do the potential joint employers share control over operations (e.g., hiring, firing, payroll, advertising, overhead costs), (4) are the potential joint employers’ operations inter-mingled (for example, is there one administrative operation for both employers, or does the same person schedule and pay the employees regardless of which employer they work for), (5) does one potential joint employer supervise the work of the other, (6) do the potential joint employers share supervisory authority for the employee, (7) do the potential joint employers treat the employees as a pool of employees available to both of them, (8) do the potential joint employers share clients or customers, and (9) are there any agreements between the potential joint employers.

The interpretation provides the following example of horizontal joint employment: An employee is employed at two locations of the same restaurant brand. The two locations are operated by separate legal entities (Employers A and B). The same individual is the majority owner of both Employer A and Employer B. The managers at each restaurant share the employee between the locations and jointly coordinate the scheduling of the employee’s hours. The two employers use the same payroll processor to pay the employee, and they share supervisory authority over the employee.

To determine whether vertical joint employment exists, the following factors should be considered: (1) Directing, Controlling, or Supervising the Work Performed, (2) Controlling Employment Conditions, (3) Permanency and Duration of Relationship, (4) Repetitive and Rote Nature of Work, (5) Integral to Business, (6) Work Performed on Premises, and (7) Performing Administrative Functions Commonly Performed by Employers.

The interpretation provides the following example of vertical joint employment: A laborer is employed by ABC Drywall Company, which is an independent subcontractor on a construction project. ABC Drywall was engaged by the General Contractor to provide drywall labor for the project. ABC Drywall hired and pays the laborer. The General Contractor provides all of the training for the project. The General Contractor also provides the necessary equipment and materials, provides workers’ compensation insurance, and is responsible for the health and safety of the laborer (and all of the workers on the project). The General Contractor reserves the right to remove the laborer from the project, controls the laborer’s schedule, and provides assignments on site, and both ABC Drywall and the General Contractor supervise the laborer. The laborer has been continuously working on the General Contractor’s construction projects, whether through ABC Drywall or another intermediary.

You can find a summary of the DOL's views on joint employment in Fact Sheet 35.

Help DOL Review Its Regulations For Cost Savings

The U.S. Department of Labor is inviting the public to participate in a discussion about its plan to review existing regulations to determine whether they are outmoded, ineffective, insufficient, or excessively burdensome. This effort is part of the federal government's commitment to ensure that agency regulations (1) take into account costs and benefits to society; (2) are developed in a manner that allows public participation; (3) are coordinated among agencies and simplified; (4) use the least burdensome methods to achieve regulatory goals; and (5) are based on the best available science. That commitment is embodied in Executive Order 13563.

If you are interested in joining the discussion, review the Department's Preliminary Plan for Retrospective Analysis of Existing Rules, and then go to the Department's interactive web page for discussion of DOL regulations.

New FMLA Regulations

The U.S. Department of Labor has issued its long-awaited amendments to its regulations under the Family and Medical Leave Act. Published on November 17, 2008, the new rules will take effect on January 16, 2009. The Department issued a press release that summarizes the changes. The full text of the publication in the Federal Register is available here. The Department has also published a fact sheet that describes the amendments.

The basics of FMLA remain the same, but employers should take note of the following significant changes:

1. The Department has exercised its authority under the new military family leave provisions of the FMLA to define the qualifying exigencies for which employees with relatives who are in the National Guard or Reserves can use FMLA leave as follows: (1) short-notice deployment, (2) military events and related activities, (3) childcare and school activities, (4) financial and legal arrangements, (5) counseling, (6) rest and recuperation, (7) post-deployment activities, and (8) other activities that the employer and employee agree on.

2. When paid leave is substituted for FMLA leave, all forms of employer paid leave (vacation, sick leave, personal time off, and so on) will be treated the same.

3. The regulations revamp the employer notice obligations. Employers must provide (1) a general notice about FMLA rights, (2) an eligibility notice, (3) a rights and responsibilities notice, and (4) a designation notice. The regulations include new forms to assist employers in complying with their notice obligations. The forms (which include ones tailored to the new military family leave provisions) do not yet appear independently on the Department's website, but are included as appendixes to the regulations.

4. The regulations rework the medical certification process, and provide a new suggested form for obtaining certification. California employers should note that the new Form WH-380 medical certification still asks the medical provider for "medical facts" (including "diagnosis") about the employee's condition. A California Family Rights Act regulation prohibits employers from obtaining such information without patient authorization.

Whistleblower Protection for Consumer Product Complaints

A federal statute that became law on August 14 provides remedies against employers for employees who suffer adverse employment action for having complained about unsafe consumer products made or sold by their employer. The Consumer Product Safety Improvement Act of 2008 establishes an administrative complaint procedure backed by the possibility of a civil lawsuit if the agency does not act.

The protection is limited to employees of manufacturers, private labelers, distributors and retailers. It prohibits such employers from discharging or otherwise discriminating against employees who provide the federal government or a state attorney general with information about a violation of any law enforced by the federal Consumer Product Safety Commission, or who participate in a proceeding concerning such a violation, or who objected or refused to participate in any activity that the employee reasonably believes is a violation.

The Commission is concerned with "consumer" products, which means products (i) for sale to a consumer for use in or around a permanent or temporary household or residence, a school, in recreation, or otherwise, or (ii) for the personal use, consumption or enjoyment of a consumer in or around a permanent or temporary household or residence, a school, in recreation, or otherwise, but does not include on-road motor vehicles, boats, aircraft, food, drugs, cosmetics, pesticides, alcohol, tobacco, firearms, and medical devices.

According to the Department of Labor, the enforcement agency for the whistle blower provision, "otherwise" discriminating includes laying off, blacklisting, demoting, denying overtime or promotion, disciplining, denying benefits, failing to hire or rehire, intimidation, reassignment affecting promotion prospects and reducing pay or hours.

A person who believes that his or her employer has violated the new whistle blower provision may file a complaint within 180 days with the closest OSHA office (the responsible bureau within the Department of Labor). If the OSHA office determines that there was a violation it may order reinstatement with the same seniority and benefits, payment of back pay with interest, and compensatory damages, including compensation for special damages, expert witness fees, and reasonable attorney's fees. The losing party may seek a hearing before an administrative law judge, from which there is one administrative appeal.

A party dissatisfied with the final result may obtain review of the Department's decision in the United States Court of Appeals for the circuit in which the violation occurred. The employee may file a civil action in federal district court if the Department does not issue a final order within 210 days from the filing of the complaint, or within 90 days after issuance of a written determination by the OSHA office.

Although the statute does not say so directly, the administrative enforcement procedure appears to be the exclusive means for a private party to seek relief for a whistle blower violation.

The full text of the new statute is available at the Consumer Product Safety Commission website. Further information about enforcement is available at OSHA's Office of the Whistleblower Protection Program.