BizLawBuz …. The Power of Know

You Get What You Pay For

I regularly receive inquiries from law school students (or their parents) asking whether our law firm offers unpaid internships that might provide exposure to the legal practice. As someone who routinely cautions employers about wage and hour issues under the Fair Labor Standards Act (FLSA), I am wary of the prospect of having someone working in our offices without receiving a paycheck. In a recently published Fact Sheet (Fact Sheet #73) the United States Department of Labor (DOL) reiterated the DOL’s six-prong test to determine whether an intern is truly exempt from compensation.

Six points must be satisfied
Under the DOL’s test, each of the following six points must be satisfied if the employer sponsors the internship but does not pay compensation to the intern:

1. The internship mirrors training that would be given in an educational environment;
2. The internship is for the primary benefit of the intern;
3. The intern works under close supervision and does not displace regular workers;
4. The employer gains no immediate advantage from the activities of the intern and, on the contrary, may actually have its operations slowed by the intern;
5. There is no guarantee of employment at the end of the internship; and
6. The employer and the intern both understand that there will be no compensation paid to the intern.

The most difficult point to satisfy
The most difficult point to satisfy is the fourth, to-wit, showing that the employer does not receive an immediate advantage. Using our office as an example, an intern who spent most of her day filing papers or updating the computer database would probably be entitled to compensation. On the other hand, if the intern spent most of her time performing legal research on general practice areas – as opposed to a specific, pending case – this prong would likely be satisfied.

Who receives the benefit
The best advice is to focus on who truly receives the benefit. If the employer is making accommodations in its workplace to allow a student to explore career objectives – and if the accommodations are as much of a hassle as a benefit to the employer – the employer is probably on the right track. Additionally, if an actual internship program is established and coordinated with a local school or university to complement student education, that internship program would be viewed much more favorably by the DOL.

You get what you pay for
At the end of the day, you really do get what you pay for. If you expect to get a day’s work without paying a day’s wage, you can also expect a critical eye from the DOL.

Dirk A. Beamer

Thought you might be interested in the article below:

DOL Issues COBRA Subsidy Model Notices

By Stephen Miller

(You can view the entire article here)

The American Recovery and Reinvestment Act (ARRA), signed into law in February 2009, mandates that plans notify certain current and former participants and beneficiaries about the COBRA premium reduction subsidy (see “COBRA Coverage Expansion: HR Action Steps to Take Now”).

The U.S. Department of Labor (DOL) has created model notices to help plans and individuals comply with these requirements. Each model notice is designed for a particular group of qualified beneficiaries and contains information to help satisfy ARRA’s notice provisions.

“The model notices we are releasing enable employers to quickly spell out for former employees and their families how to take advantage of COBRA coverage and the subsidy,” said Secretary of Labor Hilda L. Solis in a statement. “The ARRA provides a 65 percent tax subsidy for the cost of health benefits, making them more affordable for the unemployed and their families. Millions of individuals, including those who previously declined employer-provided coverage under COBRA, will be eligible to receive a subsidy on their premiums for up to nine months.”

General Notice (Full version). Plans subject to the federal COBRA provisions must send the General Notice to all qualified beneficiaries, not just covered employees, who experienced a qualifying event at any time from Sept. 1, 2008 through Dec. 31, 2009, regardless of the type of qualifying event. This full version includes information on the premium reduction as well as information required in a COBRA election notice.

General Notice (Abbreviated version). The abbreviated version of the General Notice includes the same information as the full version regarding the availability of the premium reduction and other rights under ARRA but does not include the COBRA coverage election information. It may be sent in lieu of the full version to individuals who experienced a qualifying event on or after Sept. 1, 2008; have already elected COBRA coverage; and still have it.

Alternative Notice. Insurance issuers that provide group health insurance coverage must send the Alternative Notice to persons who became eligible for continuation coverage under a state law. Continuation coverage requirements vary among states, and issuers should modify this model notice as necessary to conform it to the applicable state law. Issuers may also find the model Alternative Notice or the abbreviated model General Notice appropriate for use in certain situations.

Notice in Connection with Extended Election Periods. Plans subject to the federal COBRA provisions must send the Notice in Connection with Extended Election Periods to any assistance eligible individual (or any individual who would be an assistance eligible individual if a COBRA continuation election were in effect) who:

Had a qualifying event at any time from Sept. 1, 2008 through Feb. 16, 2009, and;

Did not elect COBRA continuation coverage, or elected it but subsequently discontinued COBRA.

This notice includes information on ARRA’s additional election opportunity as well as premium reduction information. This notice must be provided by April 18, 2009.

As you can see, the Department of Labor has issued model notices that relate to the 65% COBRA Subsidy provided to eligible employees as part of the federal stimulus package. These notices can be used by employers/plan administrators when communicating with eligible employees about their COBRA options.

Dirk A. Beamer