Contingent Workers Training for Supervisors: Parts V and VI Reviewed May 2013

Introduction Employers use various types of workers to perform the services they require. Most of these workers are classified as employees. Other types of workers are non-employees or contingent workers, such as temporary staffing agency employees and independent contractors. Correct classification of workers as employees or contingent staff has always been an important employer responsibility. It was not until the landmark Microsoft class action lawsuit, however, over a decade ago that employers became acutely aware of the costs of misclassification and the tax, the Employee Retirement Income Security Act (ERISA), employment law, and civil lawsuit consequences. To avoid these costly errors, employers need to train new and retrain current supervisors on the use of contingent workers. These sample presentations on contingent workers are structured to be given in three sessions and are organized into six parts. The first session (Parts 1-3) includes the definition and types of contingent workers and covers leased employees, temporary staffing agency employees and co-employment. The second session (Part 4) pertains to independent contractors. The third session (Part 5) covers interns and includes Part 6 which is a Quiz. The sessions are intended for presentation to supervisors and other individuals who hire and manage workers. They are designed to be presented by an individual who has comprehensive knowledge of contingent workers and relevant employment laws. These sample presentations must be customized to include state laws and the employer’s own policies and practices.

Presentation Contents This training session includes the fifth and sixth part of our six-part series on Contingent Workers. It is Part 5 – Interns and Part 6 – a Quiz.

Objectives At the close of this session, you will be able to: State what interns are Name the types of interns Cite the criteria under the Fair Labor Standards Act (FLSA) for paid interns (employees) and unpaid interns.

Definition of Interns Interns are persons who work as apprentices or trainees in an occupation or profession to gain practical experience.

Types of Interns Whether individuals classified as interns are employees or non-employees (contingent worker) is governed by the Fair Labor Standards Act (FLSA) Interns classified as employees would nearly always be considered nonexempt employees who must be paid at least minimum wage and overtime pay.

Types of Interns (cont’d) Interns not classified as employees may be unpaid under the FLSA when the following criteria is met: The individuals are students receiving college credit for participating in an internship program, under a college program and are getting real life experience from the internship that they would not receive in a classroom setting

Types of Interns (cont’d) Interns not classified as employees may also be unpaid under the FLSA even when they are not students as described in the previous criteria but are students or trainees who meet the following criteria : The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school. The training is for the benefit of the students/trainees. The trainees/students do not displace regular employees but work under their close supervision. The employer that provides the training derives no benefit from the activities of the students/trainees and may actually have its operations impeded at times.

Types of Interns (cont’d) The students/trainees are not necessarily entitled to a job at the conclusion of the training period. The employer and the students/trainees understand that the students/trainees are not entitled to wages for the time spent in training.

Questions? Comments?

Summary Interns are persons who work as apprentices or trainees in an occupation or profession to gain practical experience Interns classified as employees would nearly always be considered nonexempt employees who must be paid at least minimum wage and overtime pay.

Summary (cont’d) Interns not classified as employees may be unpaid under the FLSA when the individuals are students receiving college credit for participating in an internship program, under a college program and are getting real life experience from the internship that they would not receive in a classroom setting.

Summary (cont’d) Interns not classified as employees may also be unpaid under the FLSA even when they are not students in a college internship program as long as they meet specific criteria regarding the type of training being provided.

Questions? Comments?

Quiz – Question # 1 Albert Smith, manager of the Customer Service Call Center, wants to let Sally Jones, the niece of his next-door neighbor, spend three days per week in his office next summer. She is a college student majoring in Business Administration. Albert wants to assign Sally to the Call Center Department and after some quick training, have her handle calls and file invoices. Sally will be learning customer service skills that she may use in a job after graduation but would not receive any college credit for this summer job. The correct classification of Sally, if hired is: Intern - unpaid Intern – paid as hourly employee at least minimum wage and overtime when worked Independent contractor The answer is B

Quiz – Question # 2 Agnes Clark, Director of the Transcription Unit, has a former employee, JoAnne Adams, who is a whiz at medical transcription and wants to come back to work for the hospital. Problem is, JoAnne has moved to another state, has a new baby and wants to work from home. The hospital does not allow telecommuting. Agnes thinks it would be a good idea to hire JoAnne as an independent contractor and just cut her a check from Accounts Payable for $30 per every hour she works. Agnes would be able to hire JoAnne as an independent contractor Yes – state reasons No – state reasons B. No. Employer has control over behaviors, how to do work. No risk of loss for employee.

Quiz – Question # 3 Real-Time Marketing Agency, which has 73 employees, has a on-going agreement with the Ace Temporary Agency to provide temp-to-perm workers. It started using one of the Agency’s temporaries, Karen Nelson, on a temp-to-perm basis on June 15 of last year. Karen worked out so well that Real-Time hired her the following January. Karen is now expecting a child and has requested FMLA leave starting August 1. She said that a friend told her that her time worked as a temp-to-perm plus the seven months since her hire in January and the fact that she has worked full-time the entire time would make her eligible for the FMLA leave. Is Karen eligible for FMLA leave for the childbirth? No - Why not? Yes – Why? B. Yes. Time worked as a leased employee is counted towards FMLA eligibility

Quiz – Question # 4 David Franklin, is starting his own company. It is called Hi-Tech Solutions and will provide website design and management services. David knows he needs 10-15 workers. He will be spending most of his time marketing, visiting with potential and current clients and will not have time to recruit hire, and train workers. He wants to have well-trained individuals for whom he can provide benefits, such as health insurance and paid leave but has no background in these plans or in human resource management and does not want to spend his time on these activities. What type of worker do you think David needs to hire ? Temporary staffing agency employees Leased workers through a PEO Employees Give reasons for your choice. B. Leased workers through a PEO

Course Evaluation Please be sure to complete and leave the evaluation sheet you received with your handouts. Thank you for your attention and interest!