Unpaid Interns and Trainees Can Become a Big Expense

By Andrew Moskowitz, Esq.
amoskowitz@pashmanstein.com

On February 1, 2012, a former Hearst Corporation intern filed a lawsuit in the Southern District of New York.  The suit was filed as a class and collective action under the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq., and purportedly involves hundreds of former Hearst interns.  The case, Wang v. The Hearst Corp., Civ. No. 12-0793, highlights the  dangers that companies face when they employ unpaid individuals to perform routine work tasks.

Employers are required to pay most employees minimum wage (which is $7.25 per hour under New York and New Jersey law) and “time-and-a-half” for all hours worked in excess of 40 hours per week.  Under federal law, to classify someone as an unpaid “trainee,” employers must meet some or all of the following criteria:

  1. The trainees do not displace regular employees, but rather work under close observation;
  2. The training is for the trainees’ benefit and the employer derives no immediate advantage from the trainees’ activities and, on occasion, its operations may actually be impeded;
  3. The trainees are not necessarily entitled to a job at the completion of the training;
  4. The training, even if it includes the actual operation of the employer’s facilities, is similar to that which would be given in an educational environment such as a vocational school; and
  5. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.In general, under federal law, all of the above criteria need not be met; rather, courts look at the totality of the circumstances.

In contrast, under the New Jersey Wage and Hour Law, N.J.S.A. 34:11-56a et seq., all of the above-listed criteria must be met.  In addition, New Jersey law imposes additional requirements.  Specifically, the training must occur outside regular work hours.  Moreover, the employee may not perform productive work while attending the training and the program cannot be directly related to the employee‘s present job.

An employer that fails to comply with the above does so at its peril.  Under federal law, an employee may recover not only back pay but also “liquidated” or double damages and reasonable attorney’s fees and costs.

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