Dividing Lines
Dividing Lines | Human Resource Executive Online
Maintaining the differences between temporary workers and full-time employees has implications for the Family and Medical Leave Act, Fair Labor Standards Act and union-organizing. This month, we also explore when interns need to be paid for attending mandatory training sessions.
By Keisha-Ann G. Gray
Budget-conscious employers have been utilizing less permanent ways to staff workplaces and outsourcing positions traditionally filled by full-time employees with temporary employees provided by staffing agencies. Also, the number of workers looking for unpaid job opportunities in the hopes of building their resumes to position themselves for future employment opportunities is on the rise.
This month's article addresses questions pertaining to how to reduce employer liability for both temporary as well as unpaid workers.
Question: Can you provide some additional guidance regarding joint employment -- specifically the use of temporary agencies? Our manufacturing location has both full-time employees and temp employees. There has been some confusion in the management staff about the extent to which we can consider temp staff the same as full-time staff. (We're all one team. Treat everyone the same.)
I understand that the Family and Medical Leave Act and the Fair Labor Standards Act are common areas where the issue comes into play. But how about union avoidance and the ability of the temps to come back and say they deserve the benefits of the full-time employees since they were treated the same.
Answer: A joint-employment relationship refers to two or more unrelated entities that exercise enough control over an individual to both be considered employers. Various factors are used to assess the totality of circumstances when determining if a joint-employer relationship exists. 29 C.F.R. § 825.106(b)(1). Although the determination is highly fact-specific, it normally will be found to exist where:
* There is an arrangement between employers to share an employee's services or to interchange employees;
* One employer acts directly or indirectly in the interest of the other employer in relation to the employee; or
* The employers share direct or indirect control of an employee because one employer controls, is controlled or is under common control with the other employer. 29 C.F.R. § 825.106(a).
It is generally accepted, however, that a joint-employment relationship will typically be found to exist where, as in the reader's description above, a temporary or staffing agency supplies employees to its client employer.
Implications for the FMLA
For FMLA purposes, where a joint-employment relationship arises, the joint employee must be counted by both employers together with all full-time employees to determine employer coverage and employee eligibility. 29 C.F.R. § 825.106(d).
For example, a joint employer with 45 full-time employees and an additional 10 workers employed on a temporary basis, is covered by the FMLA since the total number of employees exceeds the threshold 50-employee coverage requirement. See Id.
However, once a joint-employment relationship arises, only the "primary" employer is responsible for circulating copies of the employee's rights under the FMLA, for maintaining the employee's health-insurance benefits, while out on FMLA leave, and for job restoration upon return from FMLA leave. 29 C.F.R. § 825.106(c).
While job restoration is the primary responsibility of the "primary" employer, the "secondary" employer is responsible for accepting the employee returning from FMLA leave, and complying with the prohibited acts provisions, i.e., discrimination, retaliation or interfering with such employee's FMLA rights. 29 C.F.R. §§ 825.106(e), 825.220.
The factors distinguishing a "primary" from a "secondary" employer include the following: (1) which employer has the responsibility and authority to hire and fire employees; (2) which employer places the employees and assigns work; (3) which employer lists the employee on its payroll; and (4) which employer supplies employee benefits. See U.S Department of Labor, Wage and Hour Division, Opinion Letter, FMLA-8 (Oct. 15, 1993).
Implications for the FLSA
With respect to the FLSA, if the facts establish that a joint-employment relationship exists, all of the employee's work for all of the joint employers over the course of the workweek is considered as one employment. 29 C.F.R. § 791.2(a). Therefore, all employers are jointly and severally liable for compliance with all FLSA provisions, including minimum wage and overtime requirements. Id.
However, in discharging the overall employment obligations, each employer may take credit toward the FLSA obligations for all payments made by the other joint employer. Id.
Implications for the Employee Free Choice Act
Turning now to the specific question raised by the reader, the Employees Free Choice Act (H.R. 1409, S. 560) ("EFCA"). The EFCA is the most significant amendment of the National Labor Relations Act proposed in the last 50 years.
As such, the Act has heightened employer sensitivity to union-avoidance issues and, more importantly, highlighted the need to be proactive on that front. If passed in its current state, EFCA will streamline the union-certification process through the use of a card-check system, abandoning the traditional formal-election process and making the process to unionize easier and more simplistic. EFCA will also allow for the negotiation of first contracts through a combination of mandatory mediation and binding arbitration.
In planning for union avoidance with or without EFCA's passage, remaining non-union is highly dependent upon employers being proactive in addressing employee concerns and maintaining fair workplace environments.
In the situation described by the reader, the fact that temporary employees are treated equally with the full-time employees can both positively and negatively impact union avoidance.
For instance, if you treat all employees equally, it can help to keep union organizing at bay because it diminishes the likelihood that you will have a large percentage of disaffected employees who are more likely to be open to unionization. On the other hand, treating the temporary employees similarly might upset the full-time employees and increase the likelihood of unionization.
Under either scenario, employers should consider implementing a union-avoidance training program. Additionally, the following tips are especially helpful in combating union-avoidance issues from the inside out:
* Be pro-worker, not anti-union. Employees who believe they have a voice at work are unlikely to look to an outsider, i.e., a union, to provide them with one.
* Keep the lines of communication open. Poor communication is a key cause of unionization.
* Run a safe, secure and fair workplace. Less-than-ideal working conditions, such as unequal treatment and lack of respect for employees, have been shown to statistically increase the chance of unionization.
* Conduct a compensation survey to confirm that hourly wages and benefits, as well as the similarity of working conditions, are always competitive with comparable union jobs in your area.
In the end, acute awareness, combined with constant vigilance, will be the key to union avoidance.
Question: Should employees who are classified as non-paid interns or non-paid students be paid for coming to new-hire orientation, which is mandatory?
Answer: More facts about the internship program would be needed to definitively answer this question. However, in order to be lawful, unpaid internships must comply with the federal FLSA and the particular law of the state in which the intern will be employed.
Interns or Employees?
In addressing this question, it is most important to first determine whether the non-paid interns or students are really that -- interns or students -- and not employees such that the employer is required to pay them in order to comply with the FLSA and related state and city laws.
The Wage and Hour Division of the U.S. Department of Labor has promulgated a six-prong standard for assessing whether trainees, interns, students and the like should be considered employees, thereby triggering the FLSA's minimum wage and overtime requirements.
The standard for making this determination is whether the "educational or training programs are designed to provide students with professional experience in furtherance of the education and the training is academically oriented for the benefit of the students." See U.S. Department of Labor Wage and Hour Division, Opinion Letter, FLSA2004-5NA (May 17, 2004).
This, the most recent opinion letter, explains that all of the following six criteria must be met in order to exclude an "intern or student" from minimum wage and overtime requirements:
* The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
* The training is for the benefit of the trainees or students;
* The trainees or students do not displace regular employees, but work under their close observation;
* The employer that provides the training derives no immediate advantages from the activities of the trainees or students and, on occasion, its operations may actually be impeded;
* The trainees or students are not necessarily entitled to a job at the conclusion of the training period; and
* The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.
Id. While federal courts have not reached consensus as to whether allof the six factors must, in fact, be present, in the interest of caution, employers should design their internship programs to comply with all six factors listed above.
This is particularly true because Wage and Hour Division's most recent guidance on the subject indicates that the existence of an employment relationship will be present unless an internship satisfies all six factors. Id.
Of the six factors, however, the one that appears to be of primary importance in making this determination is whether the employer or the trainee/student is the primary beneficiary in the relationship. Generally, this factor can be satisfied if the student receives ongoing instruction at the employer's worksite and close on-site supervision throughout the learning experience, with the result that any productive work that the student performs is offset by the burden to the employer from the training, supervision and shadowing opportunities provided.
In addition to satisfying the six-factor test under federal law, employers are also required to comply with the wage and hour laws in their particular states, which may be more demanding than the federal law.
For example, under New York law, in order for a student to not be deemed to be an "employee" under the wage and hour law, the internship program utilized by the employer must be tied to the student's individual educational objectives and that student must be eligible to receive school credit for the internship. 12 N.Y. Comp. Codes. R & Regs. § 142-2.11.
New Jersey's requirements mirror those in New York and require that students receive school credit and that the work done by the students must be closely supervised and of a nature that is narrowly tailored to their learning objectives and potential future occupation.
In both states, employers utilizing interns are required to take the additional step of coordinating with the students' schools to insure that 1) the internship fits into the student's training curriculum at school and 2) the student can receive school credit for the work being performed under the employer's supervision.
Of all the states, however, California has, arguably, the strictest criteria to surmount in order for interns not to be deemed employees. In addition to the federal Department of Labor's six factors, California's Division of Labor Standards Enforcement requires that employers meet the following additional five factors if their interns not to be deemed employees:
* The training should be part of an educational curriculum;
* The students should not be treated as employees for such purposes as benefits;
* The training should be general in nature so as to qualify the students to work for any employer rather than designed specifically as preparation for work at the employer offering the program;
* The screening process for the program should not be the same as for employment and;
* Advertisements for the program should be couched in terms of education rather than employment.
See Cal. Div. of Labor Standards Enforcement, Opinion Letters, 1998.11.12 and 1996. 121.30.
Attending Mandatory Training
Consequently, in order to maintain a lawful, unpaid internship, the general rule is that the employer must ensure that the intern or student is the primary beneficiary of the employment relationship or risk compensation liability.
Therefore, if the mandatory training you are speaking of is oriented in a way that complements and/or buttresses the intern's educational goals or experience, then compensation is not required. If, however, the mandatory training is for the benefit of the employer, e.g., company orientation, safety awareness, sexual harassment training, etc., then it is compensable under the controlling minimum-wage standards.
Keisha-Ann G. Gray is senior counsel in the Labor & Employment Law Department of Proskauer Rose in New York and co-chair of the Department's Employment Litigation and Arbitration Practice Group.
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September 8, 2009 Copyright 2009© LRP Publications
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