Professional Service Agreement

Week In Review

October 19, 2015

Court adopts new test for determining interns’ status
A federal appeals court has rejected the Department of Labor’s (DOL’s) six-part test for determining whether an intern working in the for-profit private sector is actually an employee and therefore entitled to the minimum wage and overtime pay under the Fair Labor Standards Act. The Court deemed the DOL’s test “too rigid” and instead adopted a flexible “primary beneficiary” test that focuses on whether the intern or the employer is the primary beneficiary of the relationship. The proper inquiry is made up of the following non-exhaustive set of considerations: (1) the extent to which the intern and the employer clearly understand that there is no expectation of compensation; (2) the extent to which the internship provides training that would be similar to that which would be given in an educational environment; (3) the extent to which the internship is tied to the intern’s formal education program by integrated course work 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; and (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.

Rude acts and company’s failure to investigate do not amount to hostile environment
A federal appeals court has rejected a claim that the plaintiff’s former employer ignored her repeated complaints about her co-worker’s retaliatory harassment as a result of her protected activities under Title VII. The Court found that since the occasional name-calling, rude e-mails, lost tempers, and workplace disagreements, which took place over the course of several years, were insufficient to create an actionable hostile work environment, the employer’s failure to remediate was not actionable. The Court held that alleged acts that make up a hostile work environment claim must be “adequately linked” to one another. Finding that the HR department’s inaction was not unlawful, the Court reaffirmed that “Title VII is aimed at preventing discrimination, not auditing the responsiveness of human resources departments.”

Pizza franchisees to pay nearly $500,000 in back wages and damages
Four pizza franchisees in New York have admitted to numerous labor law violations regarding 250 employees. The admitted violations include: (1) failing to pay employees the minimum wage and overtime wages required under the federal Fair Labor Standards Act and state law; (2) failing to pay an additional hour at minimum wage when employees’ daily shifts are longer than 10 hours, as required by state law; (3) failing to provide adequate uniforms for employees for the number of shifts in a week; and (4) failing to pay the required uniform laundry allowance.

SESCO recommends that clients review all applicable policy and practices to ensure compliance. For assistance, contact us at 423-764-4127 or by email at