2015 Elections — Roundup of Employment-Related Ballot Initiatives

By Dennis Mulgrew

Local governments or voters often pass statutes or ordinances on employment-related subjects that require employers to ensure that their policies are compliant not just on a state-by-state basis, but even on a city-by-city or county-by-county basis within the same state. During this past week’s election, voters around the country considered a number of local employment-related ballot initiatives, some noteworthy examples of which are below:

Voters in Elizabethtown, New Jersey Approve Paid Sick Leave

Elizabethtown, New Jersey joins a number of other cities (including several in New Jersey) in enacting a paid sick leave ordinance. Voters approved a measure that requires employers to offer one hour of paid sick time to employees for each 30 hours worked.

Voters in Houston, Texas Reject Anti-Discrimination Ordinance

Many cities have enacted local anti-discrimination ordinances which complement or mirror anti-discrimination statutes under state and federal law. In May 2014, the Houston city council passed an ordinance that would have banned discrimination based on characteristics already protected by federal law (such as age, sex and race), as well as sexual orientation and gender identity, which are not characteristics protected by federal law. In last week’s election, Houston voters rejected the ordinance.  Opponents of the ordinance had labelled it the “bathroom ordinance” and claimed that its provisions concerning transgender people would enable men who wear women’s clothes – and sexual predators – to access public women’s restrooms.

Minimum Wage Measures in Portland, Maine and Tacoma, Washington

Voters in Tacoma, Washington supported a phased-in increase to the city’s minimum wage to $12 by 2018, but rejected a more ambitious increase that would have immediately raised it to $15. Similarly, voters in Portland, Maine rejected a measure that would have increased the city’s minimum wage from $7.50 to $15 in just four years, instead sticking with a hike recently enacted by the city council that would raise it to $10.10 in 2016, $10.68 in 2017, and tie increases from 2018 forward to the Consumer Price Index.

Marijuana Initiatives in Ohio, Colorado and Michigan

The increasing trend toward marijuana decriminalization (and outright legalization) presents multiple issues for employers, including reconciling their drug-free workplace policies with medical marijuana patients’ rights, and whether or not they can punish employees for engaging in what is now deemed to be a legal activity. In Ohio, voters rejected a marijuana legalization measure that would have ended marijuana prohibition in the state. Nonetheless, most analysts believe that the rejection is not reflective of voters’ opposition to marijuana legalization per se, but rather opposition to the specifics of the ballot initiative, which would have granted an effective oligopoly on marijuana production within the state to a small handful of the initiative’s wealthy backers.   In Colorado, voters approved a ballot measure that gives state lawmakers permission to spend (rather than return to state residents, marijuana growers, and recreational users) $66.1 million in taxes collected from the sale of recreational marijuana, further legitimizing the state’s prior legalization of recreational use. And voters in the Michigan municipalities of Keego Harbor and Portage approved initiatives that effectively repealed the city’s prohibition on the possession, use and transfer of up to an ounce of recreational marijuana.

Employers can expect employment-related ballot initiatives similar to those listed above in upcoming elections. For example, building upon the passing of minimum wage increases in San Francisco and Los Angeles, it is likely that in 2016 California voters will consider a measure to increase the minimum wage to $15 statewide by 2021. Multi-jurisdictional employers should keep in mind that their policies may need to be re-evaluated, sometimes on a city-by-city basis, to ensure compliance with voter or legislatively enacted local ordinances and statutes.

Unpaid Internships – Training Programs or a Lesson in Class Actions?

By: Kate S. Gold and Elena S. Min

Summer is quickly approaching, and eager students are lining up for internship opportunities, some of which may be unpaid.  The whole topic has caused a firestorm of news stories lately – including an NYU students’ petition to remove unpaid internship postings from the campus career center, and an auction by an on-line charity website for a six week unpaid internship at the UN NGO Committee on Human Rights (the current bid is $26,000).  Do unpaid internships run afoul of federal and state minimum wage laws?  The answer potentially is yes, but given recent successful challenges to class certification, employers now have useful guidance in developing defense strategies against such claims.

Last week, in Wang v. The Hearst Corporation, U.S.D.C. S.D.N.Y. Case No. 12-CV-00793, the court denied class certification in a case brought by interns at various Hearst-owned magazines.  The interns challenged Hearst’s practice of classifying them as unpaid interns, allegedly to avoid minimum wage and overtime laws under the Fair Labor Standards Act (“FLSA”) and New York state law.  The court found that the plaintiffs could not satisfy the commonality requirement for class certification.  While plaintiffs could demonstrate a corporate-wide policy of classifying proposed class members as unpaid interns, the nature of the internships varied greatly from magazine to magazine.  The court noted there was no evidence of a uniform policy among the magazines regarding the interns’ specific duties, training, or supervision.

Days later, attorneys for the defendant in Glatt v. Fox Searchlight Pictures Inc., U.S.D.C. S.D.N.Y. Case No. 11-CV-06784, made a similar argument to defeat class certification in a case in which Fox interns challenged their unpaid status under federal and New York state minimum wage and overtime laws.  In that case, the interns worked on the sets of different films or were based out of corporate offices, and weren’t governed by a centralized policy or procedure.  The defendant in Glatt argued that class certification should be denied because of the lack of a uniform policy.  While the court in Glatt has not yet ruled, these two cases suggest that, although claims by unpaid interns may persist, plaintiffs may find it increasingly difficult to sustain them as class actions.

In light of these cases, now is a good time to review the rules for internships.  According to the Department of Labor, internships in the for-profit private sector will be viewed as employment relationships for which the FLSA minimum wage and overtime rules will apply, unless the intern is truly receiving training which meets six criteria:  (1) the internship is similar to training that would be given in an educational environment; (2) the internship experience is for the benefit of the intern; (3) the intern is not replacing employees and works under close supervision; (4) the sponsor of the intern does not derive immediate benefit from intern’s activities and at times, its operations may actually be impeded; (5) the intern is not entitled to a job at the conclusion of the internship; and (6) the sponsor and the intern understand the intern is not entitled to wages for the time spent in the internship.  As of 2010, the California Division of Labor Standards Enforcement (“DLSE”) relaxed the multi-factor test it previously applied and now uses the same criteria as the DOL.

While the Hearst ruling is good news for employers, the case did not address the merits of the interns’ claims and does not mean employers can relax their compliance efforts.  If an employer improperly classifies an internship as “unpaid,” the employer could be liable for failure to pay minimum wage and overtime, penalties for failure to provide meal and rest breaks, as well as potential liability for violations of anti-discrimination and anti-harassment laws that apply to employees.  The bottom line is that employers should apply the DOL/DLSE six-factor test and if their internships do not meet the criteria, the interns should be paid at least minimum wage.

Editors note: Be sure to check out Kate’s guest blog post for thewrap.com on the use of interns by entertainment and media companies.