Author Archives: Jared Wade

About Jared Wade

Jared Wade is a freelance writer and former editor of the Risk Management Monitor and senior editor of Risk Management magazine. You can find more of his writing at JaredWade.com.

When Unpaid Internships Become Illegal

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I’m not sure if you’ve heard, but times is hard on the boulevard. Even after some decent news on job creation in March that led President Obama to say “we are beginning to turn the corner,” the unemployment rate remains at a troubling 9.7%. That’s a really, really bad number — particularly when you look at the level of growth still needed to make any significant dent in the jobless rate.

The economy needs to add more than 100,000 jobs a month just to absorb new entrants into the labor market, let alone provide a livelihood for the 15 million Americans already looking for work. Without constant, robust growth, the unemployment rate won’t budge. Indeed, the Congressional Budget Office has projected that the rate will hover around 10 percent for the rest of the year.

It is no surprise, then, that more and more out-of-work people are more and more willing to do anything they can if it might lead to a job. Even work for free.

Students and recent college grads have suffered through unpaid internships in hopes that the experience would lead to something better in the future. Heck, I did two in addition to working at my college newspaper for free. But the economic downturn has created an environment where many companies are seeing these opportunities more as a chance to get some free labor rather than provide educational opportunities for the future middle managers of America. And not only is against the spirit of an internship — it is against the law.

Convinced that many unpaid internships violate minimum wage laws, officials in Oregon, California and other states have begun investigations and fined employers. Last year, M. Patricia Smith, then New York’s labor commissioner, ordered investigations into several firms’ internships. Now, as the federal Labor Department’s top law enforcement official, she and the wage and hour division are stepping up enforcement nationwide.

Many regulators say that violations are widespread, but that it is unusually hard to mount a major enforcement effort because interns are often afraid to file complaints. Many fear they will become known as troublemakers in their chosen field, endangering their chances with a potential future employer.

The Labor Department says it is cracking down on firms that fail to pay interns properly and expanding efforts to educate companies, colleges and students on the law regarding internships.

“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,” said Nancy J. Leppink, the acting director of the department’s wage and hour division.

As always (… OK … “as often”), we were out ahead of the curve on this story and ran a piece warning employers about unpaid internships waaaay back in July 2008. Joel W. Rice of the law firm Fisher & Phillips expected an increase in unpaid internships — for all the wrong reasons — as the economy faltered following the collapse of Bear Sterns and came up with the following guidance in regards to the Department of Labor’s six criteria for gauging whether or not an unpaid internship is legal.

In a nutshell, the spirit of the law is to ensure that the intern is getting more out of the experience than the employer, but Rice’s insights will help you recognize whether or not your internship program is kosher.

1. Is the training similar to that which would be given in a vocational school?

If the intern receives training in the types of skills or intellectual prerequisites for success in your field, it will increase the chances you satisfy this criterion. Certainly, if the internship is in conjunction with an academic program for which the intern is required to write a paper or provide periodic written reports, this will help satisfy DOL officials. If the intern is only performing basic clerical work-such as answering phones and handling mail, however, this would not be characteristic of vocational school training.

2. Is the training primarily for the benefit of the intern? Is there some indication that the intern is benefiting from the program, in terms of training, exposure to the industry and contacts for potential job opportunities?

If your interns are earning academic credit, this criterion is more than likely satisfied. The focus of the internship should not be upon the free labor that the intern is providing; it should be upon the educational benefit to the intern. Communications to the intern should stress the value of the program to them, not how valuable they are to you. Fairly or unfairly, your communications to the intern could convey the erroneous impression that the program is primarily for the company’s benefit.

3. Does the intern displace regular employees or work under their observation?

To the extent the intern is involved with tasks such as answering phones, delivering mail and other clerical activities, it could be perceived as lightening the workload of existing employees. If the intern is working under someone else’s close supervision, then displacement is less likely to be found. An individual should be assigned to observe, or at least periodically monitor, the intern’s activities.

4. Does the company derive immediate advantages from the intern’s activities?

To the extent the company is primarily utilizing the intern to get needed work accomplished, it looks like it is deriving an immediate economic advantage from the intern’s presence. Instead, to satisfy this component, there should be more of an emphasis on the learning opportunity for the intern, the training afforded by the company. It also helps if there is and an indication that the company is committing some of its resources to such training, perhaps to the detriment of operations.

5. Is the intern entitled to a job at the conclusion of the training period?

Interns are often hopeful that the experience will lead to a position with the company. Understandably, many companies view the internship program as a low-risk opportunity to evaluate potential candidates for full-time employment. While it is permissible to give consideration to your interns when assessing your employment needs, there should be no guarantee of employment at the end of the internship.

6. Does the intern understand they are not entitled to wages for the training time?

This final part of the test is self-explanatory. The best practice would be to write this in an introductory letter to the intern on the nature of the program.

internships interns

If you think this looks like “Free Labor,” the Department of Labor might want a word with you.

The FDA and Food Fraud

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In our April issue (which will be available online tomorrow available now), we feature an article about how the Consumer Product Safety Commission (CPSC) is ramping up its enforcement efforts of late. Our May issue will discuss how OSHA is doing the same. And this post last week talks about how the EPA is planning to re-new its mission to safeguarding the nation’s drinking water.

Will the FDA be the next watchdog to flex its muscle?

Some think it should, specifically when it comes to “food fraud.”

Increasingly, companies, retailers and consumers are pressuring the U.S. Food and Drug Administration (FDA) to act on the rising incidence of food fraud, the Washington Post reports.

Examples of food being mislabeled abound: “sheep’s milk” cheese really being made from cow’s milk; “Sturgeon caviar” being Mississippi paddlefish; grouper, red snapper and flounder actually catfish fillets from Vietnam; and honey diluted with sugar beets or corn syrup sold as 100 percent pure.

This type of “food fraud” has been found in fish, fruit juice, maple syrup, olive oil, spices, spirits, vinegar and wine. Those affected by the fraud include consumers and companies such as E&J Gallo and Heinz USA.

Rhetorically, the FDA definitely wants to increase its ability to monitor such violations, but the past few years have seen so many incidents of rampant — and at times deadly — food quality issues that the regulator has instead focused on that side of things.

And rightly so. I mean, look at this list of recalls in just November 2009 alone.

Still, one issue being more troubling doesn’t mean that the other one isn’t also a threat.

“We put so much emphasis on food and purity of ingredients and where they come from,” said Mark Stoeckle, a physician and DNA expert at Rockefeller University. “But then there are things selling that are not what they say on the label. There’s an important issue here in terms of economics and consumer safety.”

The CPSC and OSHA have both needed more funding and resources to expand their mission. Does the FDA deserve the same? In a vacuum, of course. And food fraud has the potential to cause some very serious health and safety problems.

But in a still-shaky economy and with a new, historic commitment to health care, can every agency in Washington really expect to get a higher budget?

maple syrup tootbrush

Brushing your teeth has never been so delicious … Hey! Wait! That’s not tooth paste.

State Farm Partners with Indie Rockers for Rube Goldberg-Styled Marketing in “This Too Shall Pass”

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State Farm has been branching out into nontraditional avenues to promote its products, services and brands for a while now — but never as extravagantly as its collaboration with the indie rock group OK Go.

The band, which hails from Chicago, gained internet fame in 2006 when its foray into treadmill choreography for the video of the song “Here It Goes Again” created a YouTube viral sensation. And when State Farm, which has been active on social media sites including Twitter, Facebook, Flickr and Youtube, saw an opportunity to help the band create its next viral vision, it jumped at the chance.

The result is a four-minute, Rube Goldberg journey through a warehouse, during which TVs are smashed, umbrellas are launched, dominoes fall and paint goes everywhere. Even if the song “This Too Shall Pass” wasn’t any good — which it is — the video would still be captivating to almost any audience. And by keeping its presence minimal and not obtrusively over-involving its brand in the production, the insurance company has helped create something that people will legitimately want to see. All of this helps increase its reputation, particularly among the younger, hipper audience who will most enjoy the video.

I had actually seen “This Too Shall Pass” twice before reading about the insurer’s involvement and didn’t even realize State Farm had anything to do with it. As you may or may not notice on your own, the red truck at the beginning that starts the dominoes and a State Farm logo after the video ends are the only evidence that the company was ever involved.

In the near-term, that may seem to trivialize State Farm’s reputational benefits. But as more and more people notice — and talk about — its involvement in a cool project, the brand becomes a little cooler. And it will likely become see as an innovative company that other creative types will want to partner with.

Essentially, rather than being a stuffy insurance company that awkwardly tries to convince people it is cool, State Farm is just sitting back and underwriting a project done by some guys who already are cool. And since underwriting is its specialty, that just makes sense.

Let’s face it, most insurance companies aren’t going to become hip on their own.

Check it out below. (video via Insurance Marketing HQ)

EPA Aims to Strengthen Drinking Water Regulations

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Obviously, EPA chief Lisa Jackson has been reading the Risk Management Monitor.

Because yesterday, just on the heels of some extensive coverage by us on water quality concerns (this one last week from Emily and this post yesterday from me), the EPA announced a major shift in how it will regulate the nation’s drinking water, focusing specifically on protecting people from the potentially harmful chemicals that have become increasingly prevalent in recent decades.

EPA’s current approach to protecting drinking water involves assessing each individual contaminant, which can take many years, according to the agency. The new strategy seeks to achieve protections more quickly and cost-effectively with strategies like advanced treatment technologies that address several pollutants at once.

Additionally, Jackson said, the agency plans to use programs in tandem to address water pollution, rather than view them in so-called silos. Jackson said EPA can use the Federal Insecticide, Fungicide and Rodenticide Act, which regulates pesticides, as well as the Toxic Substances Control Act to assess the risk of chemicals and stop contaminants before they get into drinking water.

Jackson broke down the new strategy at the Association of Metropolitan Water Agencies’ annual conference.

The strategy, Jackson said, contains four key components: addressing contaminants in groups rather than individually, fostering the development of new treatment technologies, using multiple statutes to safeguard water supplies, and enhancing state and local partnerships.

In its official release, the EPA went into even more depth, identifying several substances that would now be put under more scrutiny through regulations.

In the newly finalized review of existing drinking water standards, EPA determined that scientific advances allow for stricter regulations for the carcinogenic compounds tetrachloroethylene, trichloroethylene, acrylamide and epichlorohydrin. Tetrachloroethylene and trichloroethylene are used in industrial and/or textile processing and can be introduced into drinking water from contaminated ground or surface water sources. Acrylamide and epichlorohydrin are impurities that can be introduced into drinking water during the water treatment process. Within the next year, EPA will initiate rulemaking efforts to revise the tetrachloroethylene and trichloroethylene standards using the strategy’s framework.

Of course, nothing has changed yet legally and until the environmental watchdog actually does “initiate rulemaking efforts,” the status quo will remain the status quo.

Notes the New York Times:

Until new policies and rules are unveiled, it is difficult to say precisely how these shifts will affect Americans. Some within the E.P.A. and Congress remain skeptical.

“There is a history of this agency making big announcements, and then changing very little,” said an agency regulator who was not authorized to speak to the media. “The real test will be to see how many new chemicals have been regulated six months from now.”

Currently, only 91 contaminants are regulated by the Safe Drinking Water Act, though more than 60,000 chemicals are used within the United States. No chemicals have been added to that list since 2000.

Rhetorically, it’s a good start. We will see how long it takes to actually make any difference.

And, as evidenced by the graphic below (found at I Love Charts), there isn’t a lot of time — or water — left to waste.

global water supply