June 2015 HR Advisor Newsletter

June is here and with it, the beginning of summer. This is the perfect time to connect with your employees through fun activities like a company picnic or trip to the ballgame. It’s also the time of year when seasonal help is most readily available. Whatever your summer plans, this month’s advisor has you covered. We’ll examine the legalities of hiring interns and highlight some fun, morale-building summer activities.

HR Alerts

The Number of States With Paid Sick Leave Laws Will Triple on July 1
Just one month from now, employees in Massachusetts and California will begin to earn paid sick leave under their respective state paid sick leave laws, putting the total number of states with paid sick leave requirements at three. While the specifics of each law are different (e.g. how many hours may be used each year, if all sizes of employers must offer the leave as paid), both new laws require attention from employers even if they already have a sick leave policy in place. Affected employers should ensure, before July 1, 2015, that their policies are compliant and that they are fulfilling all the notice and posting requirements of the law. Employers all over the country should become familiar with the issue as we expect the number of states and municipalities with paid sick leave requirements to grow significantly in the next few years.

Summer Workplace Activities

Summer is quickly approaching! It’s that time of year when you start to dust off your grill, coordinate that river or poolside vacation, and crank “Surfin’ USA” on your commute to work.

It’s also a fantastic time for employers to brainstorm seasonal activities to strengthen the company culture and keep workers refreshed and engaged. Annual company picnics are classic (and delicious), but there are other ways to bolster employee relationships and ultimately enhance the identity of your workplace.

Start by thinking about your company. What is the personality or general character of your organization? What are your values? How are they reflected in the day-to-day operations of your business? Now ask: what summertime activities would capture these values?

Remaining On-Site
If you want to keep employees on location while fostering teamwork and embracing your culture, there are many dynamic events you can organize. Have a chili cook-off or bring a chef into the office for a cooking lesson. Create an indoor mini golf course or fashion a makeshift bowling alley. Host an afternoon of improv or karaoke. There’s a lot you can do to transform space normally reserved for work: simple things like music, decorations, or rearranging furniture can do the trick.

Volunteering
A great way to build community inside and outside of your office is through volunteering. Research shows that intentional acts of kindness boost levels of one of the body’s “happiness” neurotransmitters, serotonin. A 2013 survey by UnitedHealth Group determined that four out of five employees who volunteered through their workplace said they felt better about their employer because of the philanthropic involvement.

You could organize a fundraising walk or run to support a cause reflective of your organization’s values. Take half a day to volunteer with employees at a food bank or help with a park clean up. Encouraging your team to roll up their sleeves will create a lasting sense of purpose and comradery.

Exploring the Neighborhood
Getting your employees outdoors can also help shake things up and renew their collective energy. If you still want to host a picnic or barbeque, mix it up—bring Frisbees or organize a ballgame, meet near a lake that offers pedal boats, or create a treasure hunt spanning the park. Make sure to keep accessibility issues in mind, especially if you have any employees with disabilities, so that everyone who wants to be involved can be.

Organizing activities that are outside the box makes for a memorable day. Think about coordinating a food cart tour or challenging the team to an urban scavenger hunt (there are apps and websites you can use for ideas). Book an excursion billed as tourism for your town and watch employees bond while playing tourist for the afternoon. Organize a trip to the local zoo or aquarium, a historical site, or even a museum with a special exhibit. Many places even offer discounts for large groups!

Be aware that not every employee will be excited about an organized event. Some employees may feel uncomfortable with the physical demands or the pressure to socialize. Whatever the case, clearly communicate that the activities are not mandatory. And perhaps offer events at a variety of times—some during work hours, some after work hours. Once you decide on events for the summer, make sure that you devote enough time to planning and ensure that your leadership expresses enthusiasm. Poorly run or negatively talked about events can have the opposite effect of that which was intended.

Strengthening employee relationships and enhancing the identity of your workplace should be year round goals, but the summer warmth and sunshine make for a great time to put your goals into action and create memorable events and activities.

Question & Answer

Q: What are we required to do in order to specify that an employee is a salaried, exempt employee? Are there any documents that we have to complete?

A: Under the Fair Labor Standard Act (FLSA), which establishes federal wage and hour law, an employer is not required to fill out any specific governmental or legal form to indicate that an employee is a salaried, exempt employee. Generally, this is a designation that the employer makes internally in order to ensure that employees are paid appropriately (e.g. not paid overtime, or not docked pay for partial-day absences). Some states, such as California and New York, do require a wage notice for new hires that details items such as the amount and manner of wage payment.

While the FLSA does not require any particular documentation of status, any employer that is the subject of a Department of Labor Wage and Hour Division audit or a wage and hour claim from an employee must be able to show that they pay employees according to all applicable wage and hour laws. Any position that is classified as salaried, exempt must meet the federal criteria, including satisfying duties and salary requirements, to be considered exempt from overtime and minimum wage laws. In addition to anticipating possible Department of Labor audits, employers should ensure that employees are properly classified, and that the classification is adequately documented, in order to defend against any employee claims of FLSA violations.

As a best practice, an employee’s job description and your payroll records should indicate whether the employee is exempt or non-exempt, and hourly or salaried. The employer should also make sure that employees have a clear understanding of their classification status and the wage payment method that applies to them.

Unpaid Internships

As summer is just around the corner, a common question we receive is whether it is acceptable to engage unpaid interns. Assuming the organization in question is a for-profit company, this is an area in which to exercise extreme caution.

While most interns must be compensated at least minimum wage plus any applicable overtime in accordance with the Fair Labor Standards Act (FLSA) (and thus will be treated as employees for wage and hour purposes), the US Department of Labor (DOL) has laid out specific circumstances under which an organization may bring on an unpaid intern.

At a for-profit company, the more an internship is used to benefit the employer, and the more an intern performs productive work, the more likely it is that the intern is an employee and therefore entitled to be paid as such. When a for-profit employer structures an unpaid internship program around a classroom or academic experience as opposed to the employer’s actual operations, however, it is less likely the internship will be viewed as employment.

The DOL uses the six factors below to evaluate whether a worker is a trainee (intern) or an employee for purposes of the FLSA. These 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 that 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 intern is not necessarily entitled to a job at the conclusion of the internship;
  5. 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; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all of these six conditions are met, a company may be able to classify the worker as an unpaid intern. Keep in mind, however, that this is a very high bar to meet. More often than not, the work done by an intern benefits the employer. Consequently, it’s often safest to simply pay minimum wage and overtime (if applicable) to interns.

If you decide not to pay interns, we recommend doing the following to help ensure that the internship benefits the intern and not your organization:

  • Teach skills that can be used in multiple settings, not just your work environment.
  • Design interns’ tasks and activities to give them substantial, real-world experience.
  • Allow them to have time where they may job-shadow and aren’t expected to do any work.
  • Provide the intern access to relevant speakers, presentations, and on-the-job trainings.
  • Require that student interns receive college credit for their participation.
  • Limit their administrative tasks and don’t allow them to assist customers.
  • Do not allow an intern to supervise other interns or employees.
  • Do not use the internship as an “introductory period” as this will make the internship appear to be employment.
  • Create a written agreement with a finite duration specifying that the internship is primarily for learning.

If a court or government agency decides that the work of unpaid interns qualifies them as employees, the company could face penalties that include owing back pay, taxes not withheld, Social Security, unemployment benefits, interest, attorneys’ fees, and liquidated damages.

Recent high profile cases underscore the seriousness of this matter: NBC settled an unpaid interns’ class action lawsuit for a reported $6.4 million; Fox Searchlight was unable to defend their internship program in a 2013 case; Condé Nast shut down its internship program and paid $5.8 million to about 7500 former interns at publications like Vogue, Vanity Fair, and The New Yorker. Such cases and the developing case law are leading many employers to abandon unpaid programs and pay minimum wage to interns.

In the non-profit and government sectors, the incentives to pay interns are not as strong. The Wage and Hour Division recognizes an exception to the employment relationship for individuals who volunteer their time, freely and without anticipation of compensation for religious, charitable, civic, or humanitarian purposes to non-profit organizations.

Interns at a non-profit should have clear volunteer agreements. Some non-profits wish to pay a “stipend” to such interns, but as a stipend is compensation, organizations that use them need to make sure their interns do not qualify for minimum wage. It is safer to treat an intern as an unpaid volunteer than to pay a stipend which doesn’t meet minimum wage requirements. In the event any payment is made by a non-profit to an intern, the safest course of action is to pay minimum wage and overtime, if applicable.

Another consideration to make regarding unpaid internships is that, aside from legal considerations, these internships are usually only available to those students who can afford to take unpaid work. Not paying interns furthers a system of privilege. Providing payment, on the other hand, allows access and opportunity to a wider variety of individuals.

Lastly, one other important item regarding the intern relationship is to consider the scenario of an intern being injured in your workplace. Some courts have ruled that a paid or unpaid student intern providing services to an organization is generally considered to be an employee of the organization and should be covered under the organization’s workers’ compensation insurance policy. Therefore, we recommend contacting your workers’ compensation carrier and requesting that the intern be added to the policy. While an intern agreement may contain a release for workplace injuries sustained by the intern, some courts have not recognized such agreements as legally binding. Therefore, we strongly recommend including the intern on the company’s workers’ compensation plan.

 

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Legal Disclaimer: This message does not and is not intended to contain legal advice, and its contents do not constitute the practice of law or provision of legal counsel. The sender cannot be held legally accountable for actions related to its receipt.

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