Employment Flash - January 2018

The January 2018 edition of the Employment Flash looks at the Department of Labor's (DOL) new seven-factor internship test, a provision in the new tax law that seeks to reduce the use of nondisclosure agreements in sexual harassment and abuse settlements, and the DOL's reissuance of 17 Fair Labor Standards Act opinion letters. This edition also examines the National Labor Relations Board's new guidelines for mandatory submission of certain cases to the its Office of the General Counsel and the U.S. Supreme Court's denial of certiorari in a case involving the Employee Retirement Income Security Act's venue provision, among other recent developments.

DOL Adopts New Seven-Factor Internship Test

DOL Reissues 17 FLSA Opinion Letters

Sexual Harassment and Abuse Provision of a New Tax Bill

NLRB Memo’s Treatment of Significant Legal Issues

ERISA Forum Selection Clauses

Amendment to NYCHRL Regarding ‘Cooperative Dialogue

Breastfeeding Discrimination Banned in New Jersey

On January 5, 2018, the U.S. Department of Labor (DOL) published a new fact sheet (#71) that offers guidance on whether interns and students should be classified as employees and thus eligible to receive minimum wage and overtime pay under the Fair Labor Standards Act (FLSA). The DOL adopted a seven-factor test to determine whether interns qualify as employees under the FLSA. The test follows the “primary beneficiary” standard that several appellate courts have recognized. The primary beneficiary standard examines the “economic reality” of the relationship to determine which party is the primary beneficiary of the relationship. The primary beneficiary standard is flexible, and none of the seven factors alone are determinative of whether an intern-employer relationship exists. The seven factors are that the internship: (1) does not involve an expectation of compensation; (2) provides training that would be similar to that given in an educational environment; (3) is tied to the intern’s formal education program; (4) corresponds to the academic calendar; (5) is limited to a period of beneficial learning; (6) involves work that complements, rather than displaces, the work of paid employees; and (7) is conducted without entitlement to a paid job at its conclusion.

The U.S. Court of Appeals for the Second Circuit established the seven-factor test in Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528, 536-37 (2d Cir. 2016), when it declined to defer to the six-part test laid out by the DOL in its 2010 guidance, which is now rescinded. The DOL’s six-part test had required that all six criteria be satisfied to establish an intern-employer relationship. In a press release issued on January 5, 2018, the DOL noted that “the Ninth Circuit [recently] became the fourth federal appellate court to expressly reject the U.S. Department of Labor’s six-part test.” The DOL Wage and Hour Division noted that it will update its enforcement policies to align with its new position and recent case law, and will analyze purported internships on a case-by-case basis.

On January 5, 2018, the DOL reissued 17 advisory opinion letters that had been published at the end of President George W. Bush’s administration but were subsequently rescinded. President Donald Trump’s administration has indicated that it will reinstate the practice of issuing opinion letters. The 17 advisory opinion letters contain the DOL’s responses to specific compliance questions from employers regarding a range of FLSA issues, including employers’ potential good-faith reliance defenses to alleged FLSA violations. Many of the letters discuss the exempt status of certain job positions, including, for example, client service managers of an insurance company and consultants, clinical coordinators and business development managers of a health care placement company. Two of these letters address inquiries about the salary basis test for exempt employees, including inquiries about paying exempt employees when they are absent from work. Other notable topics include whether certain bonuses or other payments should be incorporated into employees’ regular rates of pay for purposes of overtime calculations, whether certain...