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So Who Is a Paid Intern Now? | MD Benefit Advisors

On January 5, 2018, the U.S. Department of Labor’s Wage and Hour Division (WHD) created new guidance for determining whether a worker could be classified as an unpaid intern under the federal Fair Labor Standards Act (FLSA). The FLSA requires “for-profit” employers to pay employees for their work. Interns, however, may not be classified as “employees” under the FLSA and therefore are not entitled to compensation for their work. The new rules give employers more flexibility in establishing unpaid internships.

Under the previous six-factor test, an intern was considered an employee entitled to compensation unless all of the following factors were met:

  1. The internship, even though it included actual operation of the facilities of the employer, was similar to training that would be given in an educational environment;
  2. The internship experience was for the benefit of the intern;
  3. The intern did not displace regular employees, but worked under close supervision of existing staff;
  4. The employer that provided the training derived no immediate advantage from the activities of the intern, and on occasion its operations may actually have been impeded;
  5. The intern was not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understood that the intern was not entitled to wages for the time spent in the internship.

In its new guidance (Field Assistance Bulletin No. 2018-2), the WHD has adopted the “primary beneficiary test,” favored by several federal Circuit Courts, as the standard for determining whether interns at for-profit employers are employees under the FLSA. The primary beneficiary test examines the economic reality of the intern-employer relationship to determine which party is the primary beneficiary of the relationship. The following seven factors are used to make this determination:

  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 after the internship.

What is different now is that not ALL of the seven factors must be met in order to determine employee status. According to the WHD, no single factor is decisive and the determination must be made on the unique circumstances of each case.

If analysis of these facts reveals that an intern is actually an employee, then he or she is entitled to both minimum wage and overtime pay under the FLSA. Conversely, if the analysis confirms that the intern or student is not an employee, then he or she is not entitled to either minimum wage or overtime pay under the FLSA.

What This Means for Employers

As a result of the new guidance, employers should review the status of any person working for them that they consider an “intern” and update their current internship programs to consider the WHD’s new rules.

Originally posted by www.ThinkHR.com

Breaking News: Costly Overtime Rule Struck Down | Maryland Benefit Advisors

On August 31, 2017, Federal District Court Judge Amos Mazzant overturned the Fair Labor Standards Act (FLSA) Final Overtime Rule that would have doubled the annual salary level to qualify for exemption from overtime from $23,660 to $47,476. The same judge issued an injunction stopping implementation of the final rule nine months ago, and the Trump administration did not challenge the decision.

In granting summary judgment invalidating the overtime rule for plaintiffs in a lawsuit filed by several business groups and 21 states, Judge Mazzant stated, ““The Department has exceeded its authority and gone too far with the Final Rule,” he ruled. “Nothing in [FLSA] Section 213(a)(1) allows the Department to make salary rather than an employee’s duties determinative of whether a ‘bona fide executive, administrative, or professional capacity’ employee should be exempt from overtime pay.”

This may not be the end of the issue. Earlier, Labor Secretary Alex Acosta requested public comments on the rule and indicated that his department planned to review and possibly adjust the salary thresholds for exemption. The Department of Labor could also appeal the ruling.

For now, employers that have already made changes to their compensation plans can determine if they want to continue with the changes, suspend the changes, or roll back those changes pending new developments. These decisions should be made in accordance with any applicable state or local laws.

Originally published by www.thinkhr.com

The DOL’s Final Overtime Rule Saga Continues | Maryland Benefit Consultants

The change in the regulations that would increase the salary threshold for overtime exemption that was all over the news for the last several months may now be decided by the end of June.

The Fifth Circuit Court of Appeals has granted the U.S. Department of Labor (DOL) another 60-day extension of time to file its final reply brief in the in the pending appeal of a nationwide injunction issued by a federal district court in Texas blocking implementation of the DOL’s final overtime rule. As we reported at the time, the final rule, which raised the salary threshold for the white collar overtime exemptions, was scheduled to go into effect on December 1, 2016. The final brief is now required to be filed by June 30, 2017. In its unopposed motion, the DOL stated that the extension was necessary “to allow incoming leadership personnel adequate time to consider the issues” and noted that the nominee for Secretary of Labor has not been confirmed.

As a result of the extension, it is not likely that employers will see any resolution of this issue until midsummer at the earliest. This also assumes that President Trump’s nominee for Secretary of Labor, Alexander Acosta, is confirmed within the next few weeks.

By Rick Montgomery, JD
Originally published by www.thinkhr.com

The Overtime Rule Saga Continues… Maryland Benefit Advisors

All the hullabaloo about the potential new Department of Labor overtime rules was for naught as the implementation of the law has been delayed again. President Trump’s Department of Justice (DOJ) requested extensions to the appeal process to determine its strategy and finalize its standpoint on the proposed regulations. Some political experts theorize that the need for an extension is the result of delays in President Trump’s appointment of a Secretary of Labor. The President’s first nominee, Andrew Puzder, withdrew and confirmation hearings for his second nominee, Alexander Acosta, have not been scheduled.

Here’s where we are so far:

  • December 2016 was the effective date, but it was delayed by court order in November 2016.
  • Obama’s DOJ requested expedited review to get the law pushed through but Trump’s DOJ requested an extension; extension granted.
  • Trump’s DOJ requested another extension, unopposed, and it was granted.

In the legal world the result of these delays is that the appeal will not be fully briefed until May 1, 2017. This means the law is to enactment as Warren Beatty is to envelopes — no one knows what’s going on (at least until May) and the confusion may continue to go unresolved with no clear date of resolution.

What to Do Now

In the meantime, employers should be informed about how the rule, if implemented, would impact their workplace. You can read our blog post to learn more. As always, ensure that your company maintains compliance with current overtime rules and regulations, and use this time of legal indecision as an opportunity to review your practices and policies in accordance with state and federal wage payment laws.

By Samantha Yurman, JD
Originally published by www.thinkhr.com