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SHRM Newsletter- Black Swan... Unpaid Intern Lawsuits
Posted on Jun. 24, 2013

This is Utah SHRM Legal-mail no. 2013-11 prepared for Salt Lake SHRM, the Human Resources Association of Central Utah (HRACU), the Northern Utah Human Resources Association (NUHRA), the Color Country Human Resources Association (CCHRA), the Bridgerland Society for Human Resource Management and Utah at-large members of the national Society for Human Resource Management (SHRM).

CONTENTS:

-  BLACK SWAN...UNPAID INTERN LAWSUITS DEMONSTRATE FLSA RISK

-  SUPREME COURT ALLOWS CLASS ACTION ARBITRATION

-  IMMIGRATION REFORM BILL TAKING SHAPE IN SENATE

-  EEOC SUES OVER CRIMINAL BACKGROUND CHECKS

-  ANOTHER ANNIVERSARY- EQUAL PAY ACT TURNS 50

-  STAY TUNED FOR THE SUPREMES...                                                            

BLACK SWAN...UNPAID INTERN LAWSUITS DEMONSTRATE FLSA RISK: Every summer, I send out a reminder to employers reminding them about the risk of using unpaid interns and the legal standards (under the Fair Labor Standards Act or FLSA) for evaluating the same. This year, several recent lawsuits underscore the risks in this process, including the Black Swan lawsuit. This case involved a claim by a former intern at the company producing the Oscar-winning movie Black Swan. The movie, of course, is interesting for its depiction of the mental deterioration of the main character (portrayed by Natalie Portman) as she earns and dances the lead role in Swan Lake. The lawsuit portrays the story of an employer who retained an unpaid intern without understanding the rules of the game. The intern, soured on a movie career, later went to law school and figured out how to sue the movie production company because it had not paid him. He won, because the court found that the interns were doing the same work as comparable paid employees and thus provided value to the company. The court followed the six part test articulated by the United States Department of Labor, which DOL describes as: “There are some circumstances under which individuals who participate in ‘for-profit’ private sector internships or training programs may do so without compensation. The Supreme Court has held that the term ‘suffer or permit to work’ [under the Fair Labor Standards Act] cannot be interpreted so as to make a person whose work serves only his or her own interest an employee of another who provides aid or instruction. This may apply to interns who receive training for their own educational benefit if the training meets certain criteria. The determination of whether an internship or training program meets this exclusion depends upon all of the facts and circumstances of each such program. The following six criteria must be applied when making this determination:  (1) The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment; (2) The internship experience is for the benefit of the intern; (3) The intern does not displace regular employees, but works under close supervision of existing staff; (4) The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;  (5) The intern is not necessarily entitled to a job at the conclusion of the internship; and  (6) The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.” For more details, see:

http://www.dol.gov/whd/regs/compliance/whdfs71.pdf.

SUPREME COURT ALLOWS CLASS ACTION ARBITRATION: The United States Supreme Court has sustained an arbitrator’s decision to allow a class-wide arbitration under the Federal Arbitration Act. The Court had previously held (in 2010) that a party cannot be compelled to submit to class action arbitration unless there was a clear agreement to do so. In the most recent decision (involving doctors suing for insurance reimbursements), the court held that the arbitrator correctly concluded that the arbitration agreement at issue allowed such class action arbitrations because the agreement itself did not address the point. The lesson? Many employers use arbitration agreements to compel arbitration of employment claims. Employers should study this decision and make sure that their employment arbitration agreements do not similarly allow for class actions in arbitration, and indeed, that they use proper class action waiver language to exclude such actions.

IMMIGRATION REFORM BILL TAKING SHAPE IN SENATE: An immigration reform bill is taking shape in, and may pass, the United States Senate within the next few weeks. The bill includes provisions for enhanced border security and a pathway to citizenship for undocumented workers already here. The employment provisions likely will include clear restrictions on employment of undocumented workers and mandated use of the E-Verify system. News reports indicate the bill will likely pass the Senate with bipartisan support but faces an uncertain future in the House of Representatives. Here is a brief summary of the bill’s provisions and status:

http://www.huffingtonpost.com/2013/06/19/senate-immigration_n_3469674.html.

If you are a member, you can use the national SHRM email system to contact your Senator to express your views on this issue, see: http://www.shrm.org/Advocacy/PublicPolicyStatusReports/Pending/policyactioncenter/Pages/default.aspx.

EEOC SUES OVER CRIMINAL BACKGROUND CHECKS: News reports indicate that the Equal Employment Opportunity Commission (EEOC) recently sued two companies over their use of criminal background checks. While there is no general protected status for convicted criminals, the EEOC has long contended that some employers use criminal background checks as a ruse, i.e., as a way to weed out minority employees and applicants who tend to have higher conviction rates. In one of the new lawsuits, the employer fired 88 workers (70 of them African-American) after they failed criminal background checks. Some had worked for the company for a decade without apparent incident. The other case involves claims by two African-American job applicants who were denied work, one for a six year old conviction for use of a controlled substance. The EEOC contends that such blanket exclusions from employment are improper because they do not consider the nature of the involved offense and its relevance to the job, i.e., whether the offense disqualified the person from doing the involved job.

ANOTHER ANNIVERSARY- EQUAL PAY ACT TURNS 50: It is a rash of employment law anniversaries...FLSA just turned 75, the Family and Medical Leave Act is almost 20 years old, and the Equal Pay Act just turned 50. The Equal Pay Act requires that men and women be given equal pay for equal work in the same establishment. The jobs need not be identical, but they must be substantially equal. It is job content, not job titles, that determines whether jobs are substantially equal. Employees can sue for violations and the EEOC helps administer the law. Click here for more information: http://www.eeoc.gov/laws/types/equalcompensation.cfm.

STAY TUNED FOR THE SUPREMES: No, I do not refer to those wonderful Motown singers of “Baby Love” and “Stop, in the Name of Love,” but rather to those folks in black robes in DC. The United States Supreme Court will be issuing some important opinions next week that could significantly impact employers. These will include long-awaited decisions on same sex marriage, affirmative action, sexual harassment claim defenses and the proper standard of liability in retaliation claims. In fact, the Court has waited so long to issue these decisions that maybe those other Supremes had a good point when they sang: “Set me free why don’t ya baby...cause you just keep me hangin’ on!” Stay tuned...

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Author

mikeAttorney Michael
Patrick O'Brien

Mike O’Brien is an experienced and accomplished employment attorney, media lawyer and courtroom litigator.  He is active in SHRM and has received the highest possible reviews from rating services like Martindale - Hubbell (AV rating), Chambers USA, Utah Business Legal Elite, Best Lawyers in America, Who’s Who Legal USA, and SuperLawyers.  HR Executive Online has named him as one of America’s most powerful 100 employment lawyers, but keep in mind, this does not mean he is good at moving heavy furniture.

Awards and Recognition

OBrienAV

OBrien Best

Chambers 2011 Attorney

Super Lawyers
Michael Patrick O'Brien
 

Best Lawyers In America, “Salt Lake City Best Lawyers Employment Law Lawyer Of The Year,” 2011-2012

Best Lawyers In America, First Amendment Law, Labor And Employment Law, 2005-2012

Chambers USA, Labor & Employment, 2003-2011

Employment Lawyer Of The Year, Utah State Bar, 2001

Human Resources Executive, Nation’s Most Powerful Employment Lawyers In America, 2010

Mountain States Super Lawyers, 2007-2012

Utah Business Magazine, Legal Elite, Labor And Employment, 2006-2012