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Unpaid Interns Create Exposure For Family Employers

A former manager at the recording studio owned by Martina McBride and her husband, John, is suing the couple and the recording company for retaliation and unlawful termination.

The plaintiff managed the unpaid internship program at Blackbird Studios from June 2012 until June 2017. He alleges the couple "made it a practice to assign unpaid interns job tasks that provided little or no education or training benefits."

Interns allegedly cleaned the bathroom, went grocery shopping for the couple, and even had to check their house in the middle of the night for an intruder. According to the plaintiff, the couple assigned these tasks to interns so they would not have to pay an employee to do them.

The plaintiff further alleges that the couple would yell at, or scold, unpaid interns who did not perform these menial tasks. Multiple interns allegedly left the program, claiming, "This is not what I signed up for."

The manager believed that the interns were entitled to minimum wage and the program violated the Fair Labor Standards Act (FLSA). He alleges that the couple refused to fix the internship program, so he reported it to the U.S. Department of Labor (DOL).

The plaintiff alleges that the couple wrongfully terminated him in retaliation for reporting the program to the DOL. Elyse Dupre "Martina McBride and Her Husband Face $1 Million Lawsuit Over Retaliation Claims," eonline.com (Jun. 12, 2018).


Commentary and Checklist

The former manager blew the whistle on what he viewed as a violation of the wage and hour laws regarding interns. Retaliation liability is one of the most costly and disruptive for family employers.

Interns cannot simply provide services that the family employer would otherwise pay staff to perform. Consult with your attorney to make sure you are in compliance with federal and state laws concerning interns.

In January of 2018, the U.S. Department of Labor announced changes to the rules regarding internship. Internships must be evaluated in view of the “primary beneficiary test”, which is a “flexible test” with seven factors, that are non-exhaustive:

  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.”
     

No single factor is determinative. It is a case-by-case determination. See the DOL’s updated “Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act” .


 

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