Tag Archive for 'Fair Pay and Safe Workplaces Executive Order'

Sirius XM Radio Settles Unpaid Internship Lawsuit

Sirius XM Radio has entered into a settlement agreement to pay up to $1.3 million to its interns who claim that the company was in violation of U.S. labor laws by not compensating its interns. The plaintiffs had performed work on a number of Sirius projects, including the Howard Stern Show, and stated that they had worked up to 40 hours a week without pay. They allege that this violates the Fair Labor Standards Act (FLSA) as well as the minimum wage law in New York State.

The principal test that courts apply in this type of case is whether internships were created mainly to provide an education to young people in a certain field. This is in contrast to the use of unpaid workers for the same duties carried out by employees. According to federal court papers filed on Monday, August 3rd, Sirius still thinks that it was not in violation of any laws by having an unpaid intern program. However, in an effort to avoid expensive litigation, the company has agreed to make payments to over 1,800 previous interns.

The settlement, which was presented by Sirius, and is pending approval by a judge, was announced one month following rulings made by the 2nd U.S. Circuit Court of Appeals in New York. Previous cases with similar decisions include those against Fox Searchlight Pictures Inc. and The Hearst Corp., in which the appeals court also determined that the legality of unpaid internships is dependent on whether they are relevant to the education of interns.  Paid internsihps

After the Fox case was filed in 2013, many other comparable lawsuits followed, including claims against Warner Music Group Corp., which entered into an agreement in June to pay hundreds of interns over $4.2 million. Prior to that, there were even more substantial settlements by Comcast Corp’s NBCUniversal, Condé Nast, and Viacom Inc.

In the complaint against Sirius, an intern for the Howard Stern Show named Melissa Tierney claimed that for a period of four months, she ran errands, placed orders, collected breakfast orders and carried out other menial tasks for Stern’s crew without pay. Her complaint cited the FLSA, which is explained by the Labor Department using a six-point test to decide whether an internship can be legally unpaid. According to the Department of Labor Wage & Hour Division, if the following six factors are present, then there is no employment relationship under the FLSA, and the Act’s minimum wage and overtime provisions are inapplicable to interns. The six factors are:

  1. The internship resembles training that would be provided in an educational environment;
  2. The internship experience is intended to be for the intern’s advantage;
  3. The intern does not take the place of the usual employees, but is closely managed by current staff;
  4. The employer that gives the training does not benefit from the work performed by the intern; in fact, its operations may be hindered;
  5. The intern is not guaranteed a job at the end of the internship; and
  6. There is an understanding that the intern is not to receive compensation for any work performed during the internship.

Given the fact that many of these factors were not present during the plaintiffs’ internship, the court ruled in favor of the interns. It appears that several large media companies are exploiting interns’ desire to work for them by requiring them to work really hard and to work long hours without pay. Some interns have said that they were even promised a job at the conclusion of the internship, but were never offered a position. In light of the recent settlements, hopefully, large media companies will think twice before taking advantage of interns.

Big Business Restricted from Mandatory Arbitration

On July 31, 2014, President Obama signed the “Fair Pay and Safe Workplaces Executive Order.” The order was inspired by previous legislation passed by Congress in 2010, which was in response to an attempted suit by a woman who was gang-raped while working in Iraq for a defense contractor. However, the woman was prevented from actually filing suit because she signed a mandatory arbitration agreement before the rape occurred.

Fair Pay and Safe Workplaces Executive OrderThis new law restricts companies with more than one million dollars in federal contracts from entering into mandatory arbitration agreements for disputes relating to sexual assaults or harassment. These two violations are actionable pursuant to both tort law and Title VII of the Civil Rights Act. The effect on modern employment law because of this order may be limited due to the confines of the offenses. However, significant debates within the field have already begun to emerge. Many legal experts predict that challenges will surface in the near future. A fear that companies have expressed is that the law will encourage frivolous lawsuits, which may force a business into bankruptcy.

One such challenge may be based on the theory that the new order conflicts with the Federal Arbitration Act (FAA). The FAA was passed in 1925 and provides for binding arbitration, as opposed to a judgment by a court of law. Unfortunately, it usually favors the defendant (often the corporation) and the plaintiff gives up the right to any appeal. Additionally, any state law that opposes the FAA is preempted by federal law and held invalid.

As a result, there is nothing the states can do to invalidate an arbitration agreement the employee signed, even if the employee is unaware they signed it. The U.S. Supreme Court cases upholding arbitration agreements (and usually sympathetic to the FAA) have only been applied to private employment contracts. It has yet to be expanded to a holding for federal employment contracts.

It is important to note that there is a provision in the Obama executive order that allows the parties to agree to arbitration after the dispute arises, but not before. Big business critics claim that this provision was included to weaken the argument that the order violates the FAA. However, it is usually against the plaintiff’s interest to submit to arbitration after the dispute arises. Therefore, the ban would likely remain throughout the case to the disadvantage of the business sued.

The fear from these corporations and other entites is that employment defense attorneys may circumvent the order by including other clause, such as a mandatory agreement to waive a jury trial. This kind of agreement will essentially achieve the same result as a mandatory arbitration agreement while still conforming to the law.

Additional provisions of the order include a requirement of disclosure of past violations by the company, a requirement that employers provide documentation to the employee of hours worked and any overtime or deductions from their pay.

The new order is a victory for plaintiffs who seek to be compensated for egregious violations in the work-place. Many employees are unaware that they even signed oppressive arbitration agreements and they are now barred from receiving their day in court. Although the order is not retroactive, it may force these companies to take preventative measures and offer more protection against sexual assault or harassment in the workplace.

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