Wage and Hour Law Update : Wage & Hour Lawyer & Attorney : Jackson Lewis Law Firm : Minimum Wage, Overtime & Service Contracts

The FLSA requires that employers pay employees for all work time, as well as for any time that the employee is “engaged to wait.”  An employee is “engaged to wait” when the employee is idle, but is constrained with respect to engaging in personal activities. Thus, the employee’s time is deemed to be “for the benefit” of the employer.  Examples may include time spent waiting to respond to on-site incidents, monitoring a work location, or maintaining a presence in a particular area for public safety reasons,. When the employee is deemed free to pursue personal interests, the employee is “waiting to engage”, and need not be compensated. The United States District Court for the Southern District of Iowa recently issued a decision analyzing and applying the  “engaged to wait” concept to lunch breaks in regard to security employees required to remain on-premises and on-call during their meal period.

Aiken v. Catholic Health Initiatives, No. 4:07-cv-018, 2010 U.S. Dist. LEXIS 79782 (S.D. Iowa 2010), concerned private security guards who worked on the premises of defendant’s hospitals.   The security guards were  allotted 30 minute unpaid meal breaks pursuant to defendant’s written policy and practice. However for the duration of this break they were required to: (1) remain on-premises; (2) carry their hospital radios;, and (3) respond to any incidents or assignments in the hospital, should they arise. If a security guard was unable to take a full thirty-minute meal break during his/her shift due to an incident, the employee was instructed to notify their supervisor so that they could be paid for the entire thirty-minute period. The security guards sought compensation for these unpaid meal periods under the FLSA

The court held that the security guards were not “engaged to wait” during this time, but rather were free to pursue personal interests, such as making personal calls, playing card games, and surfing the Internet, and therefore their meal breaks were not compensable. Although the court acknowledged that the employer derived some benefit from the security guards’ “deterrence value” when they remained on premises—especially considering that each hospital had only one security guard per shift—it nonetheless found that the “predominant benefit” of the meal break fell to the employees themselves. 

Interestingly, the security guards argued that they were free to pursue personal activities during extensive “down time” during their compensable work hours, and therefore the activities pursued during “working time” and during the meal breaks were indistinguishable and, thus, equally compensable. The court flatly rejected this argument, finding such time was plainly not work, even if the employer chose to compensate for such personal time during the actual workday. 

In rejecting Plaintiffs’ claims and holding that neither 1) the potential to have to perform work nor 2) the actual performance of work on an occasional basis converted all meals breaks to compensable time, the court did note that if the security guards’ meal breaks were interrupted with a high level of frequency then the meal breaks could potentially be considered working time. However, the interruptions here were too infrequent to rise to that level, and regardless employees were paid whenever they notified their supervisors of a meal break interruption,. 

Employers who wish to require employees to remain on-call during meal periods must be cautious of state laws and ensure that any such on-call time does not regularly restrict employees from engaging in personal activities.

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For years, students and recent graduates have accepted internships with employers to gain work and practical experience.   Many, if not most, employers have treated and continue to treat these internships as “unpaid.” What’s more, in many industries (including film and advertising) this practice is an institutional rite of passage – part of “dues paying”.  Recent actions and pronouncements by representatives of the federal and various state departments of labor require employers to review their practices to ensure that good intentions (or professional rites of passage) are not leading to wage and hour liability. 

Technically, under the FLSA, there is no such thing as an “intern.”  In general, in order for an employer to avoid any minimum wage obligations an individual must be a “volunteer” or a “trainee”.  Since volunteers generally are not recognized in the for-profit sector, the utility of that classification is limited.   Thus interns, if they are to be unpaid, most likely must be “trainees” for FLSA purposes. In order to determine if an individual is a “trainee” exempt from minimum wage, the following six factors generally must be satisfied. 

1.      The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational instruction;

2.      The training is for the benefit of the trainees;

3.      The trainees do not displace regular employees, but work under their close observation;

4.      The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded;

5.      The trainees are not necessarily entitled to a job at the conclusion of the training period; and

6.      The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

The rub is that in many instances the intern is performing productive work that would normally be performed by a paid employee. In such a situation, even if the intern is receiving school credit, minimum wage is due under the FLSA.  In fact, per Nancy J. Leppink, the acting director of the USDOL’s Wage and Hour Division: ““If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law.”   It is also vital for those with internship programs to note that M. Patricia Smith, the Solicitor of Labor responsible for coordinating the Wage and Hour Division, initiated investigations against several businesses for their use of interns during her tenure as New York Commissioner of Labor.

As always, state law also must be considered.  While many states track the FLSA standard, there are various differentiations particularly relevant to multi-state employers.   For example, in New York, if an individual is receiving school credit, the individual generally is exempt from minimum wage payment obligations under state law.

What is the takeaway?  Businesses need to analyze exactly what the intern will do during the internship.  If the intern’s time will be spent primarily on productive work that would normally be performed by another employee, the business should consider paying the intern minimum wage to avoid any trailing legal issues.

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