New York Labor and Employment Law Report : New York Employment Lawyer & Attorney : Bond Schoeneck & King Law Firm : NY Labor Relations, Employee Benefits

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
    
2. The internship experience is for the benefit of the intern;
    
3. The intern does not displace regular employees, but works under close supervision of existing staff;
    
4. The employer that provides the training derives no immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded;
    
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.
    

In determining whether an intern is really an employee, DOL distinguishes those experiences that are similar to an educational environment from those that are not. If the program is structured around a classroom or academic experience, the student gets educational credit, or the experience provides skills that could be used in multiple employment settings the intern is less likely to be deemed an employee. If, however, the business is dependent on the intern’s work or the intern is performing productive work, the intern is more likely to be deemed an employee – even if the intern may receive some benefits (e.g., developing a new skill or improving work habits).

Another key consideration is workforce displacement. According to DOL, an intern is an employee if the employer would have employed additional workers or would have required existing employees to work additional hours but for taking on the intern.

A determination that an unpaid intern is, in fact, an employee can have consequences beyond minimum wage and overtime obligations. Discrimination laws, worker’s compensation coverage, state and federal tax laws, employee benefits and unemployment insurance coverage are all implicated in the event of a misclassification. Because the impact of a potential misclassification is so significant, before accepting any unpaid interns an employer, in particular, a for-profit employer, should, at a minimum, take the following steps:

1. Provide an agreement or letter making it clear there is no pay and no guaranteed job in the future;
    
2. Adopt a policy that sets up strict supervision of the internship program and the intern and assigns a mentor;
    
3. Train supervisors and managers regarding the limits of what interns are permitted to do;
    
4. Ensure the primary benefit of the internship is for the student, not the employer -- minimize assigning the same duties given to regular employees, and do not use interns to displace any employees;
    
5. Arrange for a structured program of internal and, if possible, external instruction; and
    
6. If possible, formalize arrangements with the intern’s college or university, and ensure that the work is being done for college credit.
    

The employer got it wrong. As the Court observed, DOL’s regulations are quite clear: one of the requirements for the exemption is that the work must be in a field of science or learning customarily acquired by a prolonged course of specialized study, and the best evidence of this is a specialized academic degree. The crux of the dispute then centered around the term “customarily,” the employer arguing that use of that term showed an academic degree was not required in all circumstances and that the plaintiff’s engineering experience was an adequate substitute. Under the employer’s view, the lack of a degree requirement for the position did not matter, because the duties of the position required knowledge of an advanced type. The Second Circuit disagreed, noting that the regulations dealt with that issue as well. The Court concluded that “customarily” means a specialized degree is required in the vast majority of cases. In the Court’s view, this means that a rare individual could still be exempt without having a degree, but only in a situation where other individuals performing the work typically held such a specialized degree. As the Court observed, the term “customarily” does not mean that the degree requirement can simply be ignored in favor of focusing solely on the type of work being performed. In the case before it, the plaintiff was not the only employee holding the engineering position and no one who held it had anything more than a high school degree. As a result, it could not be said that advanced education in a specialized field was customarily required for the position.

The lesson for employers is clear: in order for the professional exemption to apply, the duties performed must require use of knowledge of an advanced type in a field of science or learning and the position must typically require an advanced degree in that specialized field of science or learning. Having the right duties alone is not sufficient.

On a side note, the plaintiff apparently did not complain about being treated as exempt until he lost his job in a reduction in force after holding the position for three years. This in itself is a small lesson in how exemption issues can pop up unanticipated.
 

The action was commenced on behalf of current and former security guards at the Ginna Nuclear Power Plant in Ontario, New York. The plaintiffs sought additional compensation for donning and doffing activities that allegedly occurred before and after their scheduled workdays; specifically, the time spent “arming up and clearing through security and arming down.” In ruling for the employer, the court acknowledged that under the Portal-to-Portal Act (an amendment to the FLSA), employers need not compensate employees for activities that are “preliminary to or postliminary to" their “principal” work activities. In Alvarez, the Supreme Court held that such activities are only compensable if they are “an integral and indispensable part of the principal activities.” In finding that the activities involved in the case before it were not “integral” to the performance of the guards’ principal activities, the Albrecht court analogized the tasks at issue to those found to be non-compensable by the Second Circuit in Gorman v. Consolidated Edison Corp., 488 F.3d 586 (2d Cir. 2007) and Reich v. New York City Transit Auth., 45 F.3d 646 (2d Cir. 1995). The court in Albrecht further ruled that the time spent arming up and arming down involved non-compensable preliminary or postliminary activities because the tasks could be accomplished with minimal effort and were not difficult or time consuming.

In addition, the court supported its ruling on an alternative ground. It held that to the extent the donning and doffing activities might otherwise be compensable, they were nevertheless de minimis in nature. Relying on the Second Circuit’s decision in Singh v. City of New York, 524 F.3d 361 (2d Cir. 2008), the court noted that the “continuous workday rule,” which generally requires inclusion of all time after the start of an employee’s workday, is not triggered when an employee engages in principal activities that are de minimis. The court observed that while there is no “bright line” test for determining how much time is de minimis, several courts have found time periods of fifteen minutes or less to be de minimis. The court then found that even if all of the pre- and post- shift activities alleged were considered, the time period at issue was de minimis under that standard.

The defendant in Albrecht was represented by Robert A. LaBerge and Christa R. Cook of BS&K. This is the second donning and doffing case in the past year in which BS&K has successfully represented the employer. In Delitta v. City of Mount Vernon, current and former police officers brought a similar suit which was withdrawn after limited discovery. Equally significant, the resolution did not require the City to pay any monies to the plaintiffs. BS&K attorneys Terrence M. O’Neil and John S. Ho represented the City in that case.