Category Archives: Federal Labor Standards Act (FLSA)

DOL Says Goodbye to Six-Factor Unpaid Internship Test

Contributed by JT Charron, January 10, 2018

On Friday, the Department of Labor abandoned its six-part test for determining whether an intern must be paid, and replaced with the more employer-friendly “primary beneficiary test.” This announcement came less than a month after the Ninth Circuit became the fourth federal appellate court to expressly reject the DOL’s six-factor test in favor of the primary beneficiary test.


Under the Fair Labor Standards Act (FLSA) employers must generally pay employees minimum wage for all hours worked, and overtime for all hours worked over 40 in a week. The FLSA, however, exempts certain individuals from these requirements, including bona fide interns. To determine whether an intern was bona fide, the DOL introduced a six-factor test in 2010, which required that:

  1. The internship was similar to training that would be offered in an education environment;
  2. The internship experience was for the benefit of the intern;
  3. The internship was not displacing a regular employee;
  4. The training provide by the employer to the intern may have impeded the employer’s operations;
  5. The intern was not expecting a permanent position at the conclusion of the internship; and
  6. Both the employer and the intern understand that there was no compensation.

    56243229 - interns wanted internship training trainee concept

    “interns wanted” sign

According to the DOL, if even one of these factors did not apply, the individual was an employee — not an intern — and was required to be paid minimum wage and overtime.

The Primary Beneficiary Test

First articulated in 2015 by the Second Circuit Court of Appeals, the primary beneficiary test is a case-by-case approach that gives consideration to the following seven 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.

Importantly, no single factor is dispositive, and the employee/intern distinction will be based on the unique circumstances of each case.

Bottom Line

While the primary beneficiary test will provide more flexibility for businesses preparing for the 2018 internship season, employers must still be careful in designing internship programs. As the above factors indicate, the primary beneficiary of any program must still be the intern — not the employer.

The Impact of Local Minimum Wage and Paid Sick Leave Ordinances on the Transportation Industry

Contributed by Michael Wong, January 5, 2018

Over the past few years, cities, counties and local municipalities have been enacting laws and ordinances increasing the minimum wage and requiring paid sick leave for employees. While there have been growing pains with how these apply to normal hourly non-exempt employees and tipped servers, do these apply to motor carriers and employees who are truck drivers?  This can be the most frustrating legal response of all, “it depends.”

In most cases, minimum wage laws enacted by states follow the Fair Labor Standard Act (“FLSA”) and provide exemptions for motor carriers.  Indeed, under Section 12(b)(1) of the FLSA, employees whose duties, wholly or in part, affect the safety of operation of a motor vehicle and are involved in interstate commerce are exempt from being paid overtime. Whether a municipality’s minimum wage ordinance applies, depends on the language and rules of the ordinance. For example, the rules of the Cook County, Illinois minimum wage specifically state that a regulated motor carrier subject to subsection 3(d)(7) of the Illinois Minimum Wage Law is not a “Covered Employer” that would be required to pay covered employees the Chicago or Cook County minimum wage. Similarly, the rules of the City of Chicago minimum wage states that individuals employed for a motor carrier who are subject to the Department of Transportation regulation are not subject to the Chicago minimum wage.

However, paid sick leave laws and ordinances are different.  Neither the Cook County, Illinois earned sick leave ordinance or City of Chicago earned sick leave ordinance have the same exclusion for motor carriers or truck drivers.  While neither expressly states that motor carriers are required to provide paid sick leave to employees who are truck drivers, they also do not state that motor carriers or truck drivers are exempt.  Due to the plain language exempting motor carriers and truck drivers from the minimum wage ordinances, there is a very strong argument that motor carriers are required to provide their employees who are truck drivers with paid sick leave.

Indeed, this interpretation is not unusual within the growing trend of states, cities and local municipalities expanding employee rights – including those of truck drivers. Currently there are 8 states and 30 cities and municipalities that have paid sick leave laws which include:  Illinois (local), Washington (state and local), California (state and local), Arizona (state and local), Oregon (state and local), Minnesota (local), Vermont (state), Massachusetts (state and local), Pennsylvania (local), New Jersey (local), New York (local), Connecticut (state) and Washington, D.C. (local).

Bottom line, the different paid sick leave laws do not address or expressly exempt motor carriers or truck drivers from being subject to the law or ordinance. By not addressing or expressly exempting motor carriers and their employees, these laws are creating significant exposure for motor carriers that fail to make changes by providing employees who are truck drivers with the ability to earn paid sick leave or considering how those employees are being compensated. Certainly, with the patchwork of laws and nuances in each jurisdiction, it can be extremely frustrating and difficult to try and implement a globally compliant policy.  Thus, special attention must be taken when crafting such policies and review by experienced counsel should be part of the process.  Moreover, motor carriers utilizing truck drivers who are independent contractors or owner/operators should take particular pause to consider the increased liability from misclassification claims and the potential damages under the paid sick leave laws, in addition to any applicable minimum wage law or ordinance.

The Cook County Wage Theft Ordinance Makes Compliance with Federal and State Wage and Hour Laws Even More Important

Contributed by Julie Proscia

The Cook County Board of Commissioners recently passed an ordinance which prohibits any company or individual who is found guilty or liable of wage theft from obtaining Cook County procurement contracts, business licenses or property tax incentives for up to five years. The ordinance is effective May 1, 2015. Cook County is now the largest municipal entity in the United States to have passed an ordinance of this nature.

Under the new Cook County Wage Theft Ordinance, businesses found to have violated the Fair Labor Standards Act (FLSA), Illinois Wage Payment and Collection Act, Illinois Worker Adjustment and Retraining Notification (WARN), Illinois Employee Classification Act, and/or any other similar state laws regarding the payment of wages may find themselves ineligible to do business with the County of Cook.  This is applicable to any person or entity who, within the prior five-year period, has admitted or has been adjudicated liable in any judicial or administrative proceeding of committing, absent a finding of “good cause,” a repeated or willful violation of federal or state wage payment laws. Under the terms of the ordinance, a business violator may:

  • become ineligible and/or disqualified from receiving or renewing business licenses in Cook County;
  • be barred from contracting with Cook County;
  • be found in default under existing Cook County contracts; and/or
  • become ineligible for property tax incentives.

As of May 1, 2015, businesses requesting tax incentives from the Cook County Assessor must certify, under oath, that for the past five years they have not been found in willful or repeated violations of federal or state wage and hour laws. Unless an express waiver is granted by the County Board, any person or business that has been found liable for a repeated or willful violation of state or federal wage payment laws will be ineligible for tax incentives. Moreover, if the County Assessor becomes aware that an employer has violated wage and hour statutes within the prior five years, the Assessor has the authority to revoke the incentive or classification unless the employer cures the violation within 45 days.

The new ordinance also requires that any person seeking to contract with the County of Cook must certify, under oath, that the applicant has not been found to have repeatedly or willfully violated federal or state wage and hour laws anywhere in the country, either by an administrative agency or a court. If a violation is deemed to have occurred, the County Chief Procurement Officer has the authority to issue a notice of default under existing contracts.

Because of the ramifications of the new Wage Theft Ordinance, it is even more important than ever that entities and individuals that do business within and with the County of Cook are in compliance with federal and state wage and hour requirements.  It is also important that, if your business has been found in violation of federal or state wage and hour laws in the prior five years, you have any applicable application to the County of Cook reviewed by counsel prior to submission to ascertain if a waiver can be sought or asserted. Lastly, it is imperative to have counsel involved in any settlement agreements that are drafted to ensure that the wording utilized does not inadvertently solve one problem while creating others.

Thinking About Hiring Interns? Tips for Doing It Right.

Contributed by Suzanne Newcomb

Despite winter-like weather across much of the country, it is March and that means college students are searching for internships. On January 30, a federal appeals court heard oral arguments on a pair of class action lawsuits in which interns in the film and publishing industries sued for unpaid wages. Although the court has yet to rule, there are steps your organization can take now to avoid this type of litigation.

Under the FLSA anyone who performs work is entitled to compensation. For non-profits, federal regulations clarify that “volunteers” who freely serve public agencies for civic, charitable or humanitarian reasons are not “employees.” In 1947, the U.S. Supreme Court carved out an exception applicable to for-profit businesses, holding that “trainees” were not “employees.” In 2010, the U.S. Department of Labor published Fact Sheet #71 which states an unpaid internship at a for-profit business is legally permissible only if:

  1. It is similar to training given in an educational environment;
  2. It primarily benefits the intern, not the organization;
  3. The intern is closely supervised by existing staff and does not displace regular employees;
  4. The employer derives no immediate advantage from the intern’s activities; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job after the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages.

Whether these factors are a rigid checklist or simply a guiding framework is at issue in the pending Second Circuit case. For now, for-profit businesses should consider this a checklist. If you fall short on any factor, the internship should be paid.

All organizations that hire unpaid interns — for-profit businesses and not-for-profit organizations alike – should:

  1. Make clear at the onset that the position is unpaid and is not likely to lead to a paid position with your organization (preferably this will be in writing signed by both parties).
  2. Coordinate with the student’s educational institution to provide credit for the internship whenever possible.
  3. Never use an unpaid intern to fill a paid position (even temporarily).
  4. Remember that internships are designed to provide educationally rich learning experiences, not a source of free labor.
  5. Recognize that while having an internship program may benefit the organization overall, the program itself will likely decrease efficiency and could negatively impact the organization’s bottom line.
  6. Follow all normal hiring protocol if you do consider a former intern for a paid position.

Supreme Court Rules No Pay for Employees’ Time Waiting in Security Line

Contributed by Sara Zorich

On December 9, 2014, the U.S. Supreme Court handed down a victory for employers in Integrity Staffing Solutions, Inc. v. Busk, No. 13-433, 2014 WL 6885951 (U.S. Dec. 9, 2014) when the Court held that time spent by employees waiting for and undergoing security screenings before leaving the employer’s workplace was not compensable under the Fair Labor Standards Act (FLSA).

Plaintiffs sued Integrity Staffing Solutions alleging that it required hourly workers to undergo anti-theft screening, taking about 25 minutes per day, before leaving the warehouse and the end of each shift and that such time was compensable time under the FLSA.

The Supreme Court overturned the Ninth Circuit by deciding that the security screenings were noncompensable postliminary activities under the FLSA.  The Court stated that the screenings were not the principal activities the employees were employed to perform.  Instead, employees were hired to retrieve products from warehouse shelves and package such for shipment.  Furthermore, the Court held that the activities were not “integral and indispensable” to the employee’s job activities.  The Court noted that “an activity is therefore integral and indispensable to the principal activities that an employee is employed to perform if it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.”

The Court’s decision rejected the Ninth Circuit’s test focusing on whether the activity was required by the employer and instead looked to whether the activity was tied to the productive work the employee was hired to perform.  The Court held that a test that turns on whether the activity is for the benefit of the employer is overbroad and would make activities compensable that the Portal-to-Portal Act was enacted to address.  The Court provided further guidance noting that an activity is compensable if the employee could not perform his/her principal activities without putting on certain clothes but would not be compensable if changing clothes was merely for the convenience of the employee and not directly related to his/her principal activity.

Conclusion: This decision clarifies and limits what are compensable activities under the FLSA.  If the pre or post activity is something the employee must do in order to perform the principal activities of his/her job then it is compensable.  In light of this decision, employers should review their pay policies and procedures and consult with employment counsel regarding the applicability of the Portal-to-Portal Act.


Security Screenings: Does the Boss Pay the Cost?

Contributed by Steve Jados

On March 3, 2014, the U.S. Supreme Court announced it will review Busk v. Integrity Staffing Solutions, Inc., in which the Ninth Circuit held that time spent in (and waiting for) post-shift security screenings is compensable under the federal Fair Labor Standards Act (“FLSA”).  The employees in Busk, who worked in a warehouse filling orders, were screened only at the end of their workdays for the purpose of preventing the theft of Amazon merchandise.  Accounting for time spent waiting to be screened, the screening process took approximately 25 minutes for some employees.

The Ninth Circuit Court of Appeals’ decision in Busk should be particularly concerning to employers because Busk is the most recent of only three federal appellate court decisions addressing whether security screening time is compensable under the FLSA.  The other two decisions both held that such time was not compensable.

The Ninth Circuit spent few words explaining why it chose not to follow the prior decisions, but two distinctions between Busk and the prior decisions are apparent.  First, the Ninth Circuit viewed the security screening in Busk as one in which only certain employees were subjected to screening.  In contrast, the workplaces at issue in the prior cases were an airport and a nuclear power plant, environments in which employees at all levels, along with customers and visitors, were required to be screened.

The second distinction is that the screening in the prior cases was related to broader safety concerns (e.g., preventing terrorists from accessing airplanes and nuclear material), as opposed to the concern in Busk, which was limiting employee theft of private property.

Whether the Ninth Circuit properly interpreted the FLSA is now in the Supreme Court’s hands.  If the Court sides with the plaintiffs, employers who conduct end-of-shift security screenings may have to make dramatic procedural changes.  For instance, the start and end times of shifts may have to be staggered so that employees are not required to spend as much as 25 minutes waiting to be screened.  Similarly, employers may have to employ additional screeners or implement new technology to ensure that screening is completed as quickly as possible.  Even employers with screening procedures much faster than those at issue in Busk may face significant exposure as the amounts of uncompensated time aggregate year after year for each and every shift every hourly employee works.

It is unclear whether the Supreme Court will use Busk as an opportunity to create a bright-line rule under which all security screening time is non-compensable, or whether the Court will carve out new rules under which some, or perhaps all, security screening time is compensable.  Whichever path the Court takes, it is clear, in light of the Court’s decision to hear Busk, and the Court’s recent decision in Sandifer v. U.S. Steel Corp., that this Court appears determined to leave its mark on the landscape of wage and hour law.  While we wait for the Court to rule on Busk, employers that use post-shift anti-theft searches may want to explore ways to make those searches more efficient.

Supreme Court Holds that Donning and Doffing of Work Gear Under a Collective Bargaining Agreement is “Changing Clothes” Under FLSA Section 203(o)

Contributed by Sara Zorich

On January 27, 2014, in Sandifer v. U.S. Steel Corp., 12-417, 2014 WL 273241 (U.S. Jan. 27, 2014), the U.S. Supreme Court upheld the Seventh Circuit decision that time spent donning and doffing protective gear was time spent “changing clothes” under Section 203(o) of the FLSA allowing parties to a collective bargaining agreement the ability to bargain over compensability of such time at the beginning and end of the work day.

Clifton Sandifer filed a collective action under the FLSA seeking compensation for the time he and others spent donning and doffing work gear items including: flame-retardant jackets, pair of pants, hoods, hardhats, snoods, wristlets, work gloves, leggings, steel-toed boots, safety glasses, earplugs and respirators.  U.S. Steel argued that such time was not compensable under the FLSA because it had bargained on the issue of donning and doffing and made it part of its collective bargaining agreement with Sandifer’s union.

Section 203(o) of the FLSA provides that compensability of time spent “changing clothes or washing at the beginning and end of each work day” is subject to the collective bargaining process.  However, the debate ensued as to what constituted “changing clothes” under the law. Sandifer argued that anything protective in nature could not be deemed clothes under the FLSA.  The Supreme Court disagreed with Sandifer finding that only three (3) of the items Sandifer was required to don and doff did not qualify as clothes: glasses, earplugs and respirators while the other nine (9) items should be deemed as clothes.  The Supreme Court then went on to hold that the proper standard for determining whether the time spent “changing clothes” is covered by 203(o) must be looked at for a period on a whole.  Thus, where an employee spends the vast majority of his/her time in question donning and doffing clothes then the time is not compensable, but if the majority of time is spent donning and doffing non-clothes items the entire time period is compensable.  Here, the Court held that the majority of time was spent changing clothes and little time was spent putting on and taking off non-clothes items thus the employee did not have to be compensated for any donning and doffing time under Section 203(o).  The Court choose to adopt the new method of view the period “on a whole” for 203(o) matters over applying the de minimus doctrine as had been previously done by the Seventh Circuit.

Practice Pointer – This case is only applicable to situations involving a union workforce and when the issue has been the subject of fair bargaining between the union and the employer.  Further, if the state in which the employee is employed has a more restrictive or stringent state law applicable to payment of time spent donning and doffing than the provisions of the FLSA, the employer must follow the state law and may not be afforded the Section 203(o) exception to compensating for donning and doffing.  This case is another reminder for employers to carefully review and regularly audit all payroll, time keeping and compensation practices.