12 Employee Company hit with $550,000 in penalties for misclassifying interns!

Private equity firm to pay over $550,000 in back wages and penalties over misclassifying employees as interns — MASSACHUSETTS — Employee misclassification A Boston private equity firm will pay more than half a million dollars in penalties and wages to 174 current and former employees in a settlement with the AG’s Office over the employer’s improper classification of employees as interns and its failure to pay those employees minimum wage and to keep proper employment records, according to Attorney General Maura Healey in a recent announcement. Search Fund Accelerator (SFA), its President Timothy Bovard and Treasurer Jeremy Silverman were issued two citations totaling $550,187 in restitution and penalties for violating the state’s wage and hour laws. “This private equity firm should have paid its employees, but instead treated them like unpaid interns,” said AG Healey. “I commend the employees at SFA for speaking up for themselves and their co-workers. We encourage all others who believe they are part of an illegal internship program to contact my office so we can ensure these workers know their rights.” The AG’s Fair Labor Division began an investigation after receiving an anonymous complaint from a current SFA employee alleging he and other employees were in an improper, unpaid internship program. A review of SFA’s payroll records over the 22-month period of July 2015 to May 2017 showed SFA hired a disproportionate number of employees as unpaid interns—more than 180, compared to 12 known paid employees—and many “interns” worked more than 30 hours per week, regularly performed duties similar to those performed by paid employees, and did not receive school credit for their work. Under Massachusetts’ Minimum Wage Law, unpaid internship programs must align with the Massachusetts Department of Labor Standards’ six-part test and be sufficiently associated with an educational institution in order to be defined as a “training program” exempt from minimum wage. The six-part test requires the training interns receive through an internship: 1. Is similar to that which would be given in an educational environment, even though it includes actual operation of the employer’s facilities; 2. Is for the benefit of the intern; 3. Does not displace regular employees, but the intern works under close supervision of existing staff; 4. Provides the employer with no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded; 5. Does not entitle the intern to a job at the conclusion of the training period; and 6. Is based on a mutual understanding between the employer and the intern that the trainee is not entitled to wages for the time spent in training. The investigation found that SFA’s “interns” worked as employees and should have been paid a minimum wage of $9 per hour in 2015, $10 per hour in 2016, and $11 per hour in 2017...