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Family Employers And Offices That Use Interns: Do You Know The Requirements And Risks?

A Nashville jury recently rendered a verdict that singer Martina McBride and her husband, sound engineer John McBride, are liable for retaliating against an employee who filed a complaint about their unpaid internship program.

The jury awarded the employee $100,000 in compensatory damages, $59,000 in back pay, and $59,000 in liquidated damages.

The plaintiff worked as the operations manager for five years at Blackbird Studio, the couple's recording studio in Nashville. He alleged that the defendants violated the law by having unpaid interns tear down studio equipment; pick up groceries and takeout food; and clean bathrooms.

The plaintiff argued that the primary beneficiaries of the internship program appeared to be the McBrides rather than the unpaid interns. He claimed the couple made it clear to the employee that the intern program was a means of getting work done for free for which the defendants would otherwise have had to pay wages.

The plaintiff alleged that he was ignored when he voiced his concerns about the program, and that John McBride terminated him an hour after the plaintiff informed the defendants that he had filed an official complaint with the state about Blackbird's intern program.

The plaintiff filed a retaliation suit against the defendants couple in June 2018, claiming violations of the federal Fair Labor Standards Act (FLSA) and the Tennessee Public Protection Act. Sterling Whitaker "Martina McBride, Husband John Held Liable in Employee Retaliation Lawsuit" tasteofcountry.com (Feb. 14, 2020).

 

 

 

Commentary and Checklist

To help avoid liability, family employers who have an internship program must make sure to follow all requirements for internship programs set by the federal Department of Labor (DOL) and any applicable state laws.

The Wage and Hour Division (WHD) of the DOL has regulations to prevent employers from using interns to provide services that an employer would otherwise pay an employee to perform, while providing little learning opportunity for the intern.

Interns must either be paid minimum wage plus any overtime hours worked or their program must meet the six criteria for an unpaid internship outlined by the Fair Labor Standards Act:

Here are the six criteria:

1.   The internship, even though it includes actual operation of the facilities of the employer, is similar to training in an educational environment;

2.   The internship experience is for the benefit of the intern;

3.   The intern does not displace regular staff, but works under close supervision of existing staff;

4.   The employer providing the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded by the internship;

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.

 

Interns who perform the same duties as staff, or replace staff, must be paid minimum wage and compensated for any overtime. If an intern performs tasks that benefit you and do not contribute to the intern’s education (for example, running errands or performing chores), then the intern must be paid.

If you are uncertain if your internships fit these guidelines, consult legal counsel or call the DOL on its toll-free information helpline. If you benefit in any way from the work of interns, compensation is a best practice.

These tips will help you make the right decision regarding intern compensation:

•      If you choose not to pay interns, make sure you comply with the six criteria set forth above. Requesting an opinion letter from the WHD might provide the best assurance.

•      If you are uncertain whether unpaid internships comply with federal law, err on the side of paying the interns.

•      Make sure interns are treated the same as all other employees with regard to wage and hour, anti-discrimination, retaliation, and all other federal and state employment laws.


 

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