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Unpaid Intern Workplace Rights Could Get Labor Board Review

April 30, 2019, 10:08 AM

A case recently appealed to the federal labor board could give it an opportunity to decide whether unpaid interns can organize for pay and other changes to their working conditions, especially in workplaces that already have a union.

Amnesty International USA asked the National Labor Relations Board April 15 to overturn an agency judge’s ruling that its executive director made unlawful threats against employees in response to a petition by unpaid interns seeking to be paid. The human rights organization also appealed the judge’s finding that the interns should be considered “employees” under federal labor laws and therefore entitled to certain rights.

The appeal gives the Republican-majority NLRB a chance to issue policy that could have broad implications for the nonprofit sector, which relies heavily on unpaid interns, and business.

A 2017 student survey by the National Association of College and Employers found that 61 percent of graduating seniors took part in an internship or full-time employment related to their majors during college, virtually the same rates as the organization’s 2014 survey. One research firm estimated that undergraduates were working in more than half a million unpaid internships annually, according to a 2012 New York Times report.

The government’s Bureau of Labor Statistics doesn’t track or define internships.

Although they’re not unusual, unpaid internships remain in a sort of legal void because most legal employment protections are extended based on the formal, “employee” status that the interns lack—giving added significance to any potential NLRB ruling, should the board decide to weigh in.

The NLRB’s leadership, which under President Donald Trump has generally taken a deregulatory approach to business and has been criticized by worker advocates, could go in a variety of directions in Amnesty’s appeal. It could decide that the judge’s ruling was correct—which would mean an extension of certain National Labor Relations Act rights to unpaid interns, including legal protection from retaliation if they seek pay or to organize for some other workplace goal.

The NLRB also could establish a new and different policy that’s advantageous to employers.

“It looks like the state of the law would permit them to go either way, and to go either way without necessarily overruling any” current case law, one former NLRB member who spoke with Bloomberg Law on condition of anonymity said.

The former member cautioned that the board may not want to spend time on an issue that neither the members nor the business lobby has identified as a priority. Nonetheless, it would be unsurprising and “consistent with other things they’ve done” for this particular board to view the Amnesty case as an opportunity to establish broad policy about interns’ organizing rights, the ex-official said.

The agency and labor practitioners generally refrain from comment on ongoing proceedings.

Did Interns’ Petition Change the Equation?

Amnesty International established paid internships during the course of the dispute, although it cut the number of total interns from “dozens” to three paid positions, according to the NLRB judge’s ruling. The judge also noted that AIUSA had at least considered moving to paid internships before the petition was submitted.

In their arguments to the judge, NLRB lawyers said the interns gained legal protections and rights to organize under the NLRA the moment they filed the petition. In its appeal, AIUSA counters that the federal labor laws shouldn’t have applied to the unpaid interns because there was no “economic component” to the working relationship.

The advocacy group didn’t directly address government attorneys’ conclusion that the interns gained rights via the act of seeking pay for their work and added that the legal analysis should be different for nonprofits.

“AIUSA is deeply supportive of our union, and as our appeal lays out, we don’t believe there was any attempt to discourage our staff from engaging in legally protected petitioning,” Amanda Simon, an interim spokesperson for the organization said in an e-mail. “What our brief shows is an Executive Team with an open door that encouraged dialogue and communication, working through a complex situation with our employees and the AIUSA union—nothing more.”

The organization noted that the claims were filed by one former employee, Raed Jarrar, as opposed to a group of workers or union. Jarrar was fired by AIUSA subsequent to the petition drive, after being accused of sexual misconduct by a female colleague. He alleges in a pending civil-rights complaint that the termination completed a pattern of retaliation after he participated in the interns’ petition.

Amnesty International is “appealing to Trump appointees to weaken workers’ protection so that management is let off the hook” in his case, Jarrar said in an interview.

DOL Loosened Internship Rules for Employers

The Department of Labor in 2018 loosened the standards for employers to legally use unpaid interns.

The DOL has authority to adjudicate disputes about minimum wages and overtime pay under the Fair Labor Standards Act, while the NLRB’s authority primary concerns employees’ union and organizing rights.

The Labor Department’s 2018 policy scrapped a previous standard for determining whether interns are misclassified employees and enacted a new test that looks at various factors to answer whether the intern or employer is the “primary beneficiary” of the relationship. Under that scheme, a position can be properly classified as an unpaid internship if the intern is truly the primary beneficiary of the working relationship.

The DOL noted that it’s “generally permissible” for nonprofit charitable organizations to have unpaid internships “where the intern volunteers without expectation of compensation,” and said it would update the guidance over time.

Conservative NLRB Could Weigh In

Board attorneys and the administrative law judge who decided the case agreed that the NLRB should be taking into account the FLSA and Labor Department’s rules and guidance because NLRA coverage “intersects with employee status under minimum-wage statutes.” Both the agency’s and AIUSA’s attorneys cited the “primary beneficiary” test in making their arguments in the case.

Each side also relied in part on a 1999 NLRB decision about unpaid staff known as WBAI Pacifica Foundation.

In that case, a nonprofit radio station asked the board to clarify whether its unpaid staff were eligible to become part of its paid-employees’ union. A bipartisan group of board members decided those unpaid workers were excluded from the bargaining unit because they had “no economic aspect to their relationship with the Employer, either actual or anticipated.”

NLRB attorneys have argued in Jarrar’s case that the Pacifica decision means AIUSA’s interns gained protection under the act through their petition itself.

The board members who decided Pacifica “noted that the Supreme Court has held that applicants for paid positions are employees within the meaning” of the NLRA, board attorneys wrote.

“The interns here likewise sought to gain paid employment when they submitted their petition. Consequently, they became statutory employees under the Act no later than April 3 even if they were not previously due to lawful lack of compensation under minimum-wage laws.”

The administrative law judge’s opinion ultimately credited those arguments—although it seemed to focus more on the fact that the interns were supported in their petition by full-time employees.

The NLRB now has the opportunity to decide whether the lower official’s analysis was correct or should be modified.

To contact the reporter on this story: Hassan A. Kanu in Washington at hkanu@bloomberglaw.com

To contact the editors responsible for this story: Phil Kushin at pkushin@bloomberglaw.com; Chris Opfer at copfer@bloomberglaw.com