Training & Development

Managing Unpaid Interns (Click here to open/close)

A college student or recent graduate is eager to make an impression. So is the early-in-career professional who's been laid off by another company. You placed them both in an unpaid internship program because you want to give your company a chance to evaluate them as future employees. What could be wrong?

At job sites across the United States, interns not paid or earning less than minimum wage are given all sorts of jobs: answering phones, loading paper in the copiers, managing company social media campaigns.

But, federal guidelines released by the U.S. Department of Labor (DOL) in April 2010 are raising concerns that employers might decide to provide fewer internship opportunities. The guidelines, which apply to "for-profit" private-sector employers, define what makes an intern an "employee" as opposed to a "trainee." If a court or government agency decides that interns' work qualifies them as employees, the company could face penalties that include owing back pay; taxes not withheld; Social Security; unemployment benefits; interest; attorneys' fees; plus liquidated damages, defined by federal law as double the unpaid wages.

Six Standards

The DOL's Wage and Hour Division lists six factors to use in determining whether an intern is a trainee or an employee under the Fair Labor Standards Act (FLSA).

1. The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or other educational institution.

2. The training is for the benefit of the trainees.

3. The trainees do not displace regular employees, but instead work under their close observation.

4. The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer's operations may actually be impeded.

5. The trainees are not necessarily entitled to a job at the conclusion of the training period.

6. The employer and the trainees understand that the trainees are not entitled to wages for

the time spent in training.

If all of the factors listed above are met, then the worker is a "trainee," an employment relationship does not exist under the FLSA, and the act's minimum wage and overtime provisions do not apply to the worker.

Federal and state labor departments are cracking down on unpaid internships "due to a concern that paid jobs are being displaced and to increase payroll tax revenues," says employment lawyer Terence P. McCourt of Greenberg Traurig in Boston.

With so much at stake, it's a good time for HR professionals to review their companies' internship policies to ensure that they are in compliance with government requirements.

Legal Exposure

The DOL standards state that most nonexempt individuals "suffered or permitted" to work must be compensated for the services they perform for an employer unless certain conditions are met. In general:

• The internship program must be similar to training that would be given in an educational environment, such as a college, university or trade school.
• The intern and the employer must both understand that the intern is not entitled to wages.
• The company must receive no immediate advantage from the internship and in fact may find its operations disrupted by the training effort.
• The intern must not take the job of regular employees.

Unpaid Programs on the Rise

Despite the risks, unpaid internships appear to be on the rise. In a May 2010 survey by Internships.com, an online clearinghouse for companies and would-be interns, two-thirds of the more than 300 college and university career center professionals who responded said that overall internship postings on their campuses increased from 2009 to 2010. However, more campuses reported lower numbers of paid internships than those reporting increases.

"Unpaid internships do appear to be on the rise," says attorney James M. Coleman of the labor and employment law firm Constangy, Brooks & Smith LLP in Fairfax, Va. Whether the rise is in "reaction to the difficult economy and an effort to save on labor costs is not completely clear."

Companies can protect themselves by having the college intern ask his professor for academic credit for the internship. Employers should coordinate with an intern's school to determine requirements mandated by the educational institution, experts say.

An internship is more likely to be viewed as training if it provides interns with skills that can be used in multiple settings, as opposed to skills that are specific to one employer's work environment.

Interns should be "allowed to observe aspects of the employer's operations, such as job shadowing, without needing to perform services at all times," McCourt says. He adds that an intern should not supervise regular employees or other interns, and the company should define the arrangement clearly and in writing, specifying that there is no expectation of a job offer at the conclusion of the internship.

HR professionals and lawyers say it may be useful for companies to keep written records of what an intern expects to gain from an unpaid program. Attorney Oscar Michelen of Sandback & Michelen in New York City suggests preserving memos, e-mails and other documentation covering what each intern does, such as attending scheduled training sessions and luncheon meetings with regular employees, and what type of training and supervision will be provided.

Source: SHRM.org, Steve Taylor is a freelance writer in Arlington, Va.

Millennials Are 'Smartest Generation Ever' (Click here to open/close)

Best-selling author Don Tapscott says Millennials—people born between 1978 and 1997 whom he calls the "Net Generation"—are influencing the world of work through the ways in which they use the Internet.

In his latest book, Grown Up Digital: How the Net Generation Is Changing Your World (McGraw-Hill, 2009), Tapscott, a speaker, writer and consultant on business strategy and information technology, says "Net Geners" are intelligent and place a high value on collaboration and freedom. Although their ways of thinking and working may make them harder to manage than workers of earlier generations, he says, they have promise.

What characteristics do Net Geners possess?

Today's youth are the first generation to grow up "bathed in bits"—surrounded by digital technologies, particularly the Internet. This influences how youth respond to all facets of life—the workplace, school and family. They prize freedom and freedom of choice. They want to customize things, make them their own. They're natural collaborators who enjoy a conversation, not a lecture. They'll scrutinize you and your organization. They insist on integrity. They want to have fun, even at work and at school. Speed is normal; innovation is part of life.

You cite critics who say Net Geners lack social skills, values and time for sports or healthy activities, and are ignorant of social mores. They've been called spoiled slackers who don't want to pay their dues and have a sense of entitlement. Clearly, your research proves them wrong—right? How do you see them?

There are no data to support the negative view of young people. It is fiction. This is the smartest generation ever. Volunteering among high school and university students is at an all-time high. Civic action became political action, like in the Obama campaign. In the United States, the percentage of kids who are "clean" in high school—who don't do drugs or drink alcohol—is up year-over-year for 15 years. IQ is up year-over-year for many years, university entrance exam scores are at an all-time high, and it has never been tougher to get into the best universities.

This is a generation we can be enormously hopeful about. From my research on this demographic and their norms, Net Geners are savvy, confident, upbeat, open-minded, creative and independent, but they can be challenging to manage.

To meet their demands for learning opportunities, frequent feedback, greater work/life balance and stronger workplace relationships, business leaders must alter their organizations' cultures and management approaches while continuing to respect the needs of older employees.

Why is it important for workers to be able to access Facebook, YouTube, Twitter and other social networking sites?

Net Geners use the Internet at work to do their jobs and to recharge or eliminate boredom. Most visit social networking sites, catch up on news headlines, Google, IM with friends or watch videos on YouTube several times a day. Many perceive that taking a "virtual coffee break" for 10 minutes allows them to return to their work even more focused. They don't view such activities as abusing the system.

Far too many executives make no effort to learn from young employees. Too often, young people go to work and hit a wall of corporate procedure and a deeply entrenched hierarchy. The widespread banning of Facebook at work is a classic example of misguided supervision. The Net Generation wants to take a digital break; Boomer employers shut them down. Get ready for the generational clash at work as a generational firewall builds up frustration.

Why should employers abandon the traditional model of work? What's the alternative?

The old model—recruit, train, supervise and retain—should be shelved. Instead, companies should adopt a new model—initiate, engage, collaborate and evolve. Employers have many ways to make themselves attractive to a potential Net Gen employee: They can customize job descriptions, use game-based training to train employees for short-term projects, and keep in touch with former employees to find new people and get new ideas. Old-style job interviews are out. Two-way dialogues are the way to hire. And the first three months is a time when the employee is evaluating the company, not the other way around.

My research shows that companies that selectively and effectively embrace Net Gen norms perform better than those that don't. In fact, I'm convinced that the Net Gen culture is the new culture of work. The Net Gen norms I describe in Grown Up Digital turn out to be the key indicators of high-performing organizations in the 21st century.

But teenagers and young adults entering the workplace are frequently met with hostility. Older workers begrudge the younger generation's sense of entitlement and what they misinterpret as arrogance. Employers that don't create the proper climate for this new generation are going to suffer a backlash.

Source: SHRM.org, Aliah D. Wright is an online editor/manager for SHRM.

Congress Approves Tax Cut Package with Tuition Tax Break (Click here to open/close)

The House of Representatives voted on Dec. 17, 2010, to pass an $858 billion tax package that includes a two-year extension of a popular tax break for employer-provided tuition assistance. The legislation (H.R. 4853) was approved by a bipartisan margin of 277-148, with the vote in favor of passage split evenly among Democrats and Republicans.

President Barack Obama signed it later on Dec. 17. He had worked with GOP leaders in Congress to develop the massive tax deal and had urged legislators in both parties to approve the legislation.

Less than 48 hours before the House vote, the Senate cleared it. It extends for two years tax breaks enacted during the presidency of George W. Bush, including Section 127 or the tuition assistance tax exclusion. The Bush tax cuts were set to expire on Dec. 31, 2010. In addition, the legislation extends unemployment benefits for many Americans through 2011.

Section 127, which allows employees to exclude up to $5,250 a year in employer-provided tuition assistance for undergraduate and graduate-level courses, has been a popular tax provision among employers and employees. The two-year extension of the tuition tax break was welcome news for business and employee advocacy groups such as the Society for Human Resource Management (SHRM) and the Coalition to Preserve Employer-Provided Education Assistance, which support a permanent extension of Section 127. Even though the legislation passed by Congress will extend Section 127 for two years, members of the coalition have pledged to keep pushing for a permanent extension of the popular tax provision.

"Every human resource professional knows that getting the most out of your organization means bringing out the best in your people. We can't be a nation of high wages and low skills," said Robb E. Van Cleave, SPHR, IPMA-CP, chair of the SHRM Board of Directors, in a commentary published in The Huffington Post. "Our choice is clear and it must be made. It's time to make Section 127 permanent and get on with the task of helping every American worker reach his or her full potential."

Extending the Bush tax cuts had been a hotly debated topic on Capitol Hill during the summer and fall of 2010. Obama and Democratic leaders favored extending the tax cuts to middle-class families and ending the cuts for individuals and families who earned more than $250,000 per year. Republican leaders strongly supported extending the tax cuts for everyone.

Following the 2010 congressional elections, Obama agreed to compromise with GOP leaders and proposed a two-year extension of the Bush tax cuts to all U.S. taxpayers. The deal included a provision to reduce federal payroll taxes for most U.S. workers for one year by 2 percentage points, to 4.2 percent from 6.2 percent.

The unemployment benefit extension won't apply to unemployed workers who have exhausted the maximum combined state and federal assistance of 99 weeks. The provision will ensure that long-term unemployed people in the states hardest hit by the recession will receive up to 99 weeks of unemployment benefits, rather than the 26 weeks normally available.

Source: SHRM.org, Bill Leonard is a senior writer for SHRM.

Narrative Feedback Doesn't Have to Sting  (Click here to open/close)

Like most people who receive written feedback, Stephane Brutus, Ph.D., is not immune to hurtful comments.

But unlike most people, Brutus, an associate professor of management and chair of the department of management at the John Molson School of Business at Concordia University in Montreal, has studied how giving and receiving narrative comments in performance appraisals can impact individual performance.

"When I get evaluated [by peers] the feedback that I get is mostly numbers and is heavily quantitative in nature. Lots of data is provided," he said, speaking to a group of HR practitioners at the World Human Resources Congress in Montreal in late September 2010.

Narrative feedback from students, however, can often sting. "Some said I didn't do too much teaching. Some were very vague; some detailed," he recalled. One person wrote, "I was a very good teacher; a little lazy, though, but good."

Not only was it hurtful, he said, it wasn't constructive in that he couldn't act on it.

Brutus said that HR practitioners can insist managers and supervisors use detailed, constructive words instead of numbered rankings when doing performance evaluations. And learn how to encourage managers to use narrative feedback positively to impact employee performance.

Write It Out

"Numbers and words have a different flavor in performance evaluations," said Brutus, who in addition to being an instructor is an industrial and organizational psychologist.

"The difference is significant and has implications for evaluators, evaluatees and other 'users' of evaluation systems."

In his research, Brutus asserts that narrative comments convey more personal focus than ratings and, as a result, lead to stronger reactions from recipients. "There is something powerful about reading text that has been written about you."

The richer and more nuanced the better. However, "this richness" can often be subjective and unclear and unrelated to performance, offering opportunities for abuse. Feedback, he said, can be a double-edged sword.

"Feedback if not done well can have a detrimental impact on performance," he said. "If you're going to do it, do it well."

In studying the topic, Brutus said, "supervisors give the most clear comments; not so with subordinates"—likely because subordinates may fear retaliation from being more direct.

Citing several studies, including a white paper he wrote for Human Resource Management Review in 2009, Brutus added that training managers on how to write and evaluate comments has been shown to lead to an increase in the amount and specificity of comments.

Look at it this way: "Putting it on paper helps me validate the soundness of my thinking," he said. Those evaluating employees should be forced to write out their assessments rather than grade them numerically because it will "make them better evaluators. It makes them better at how to define competencies and communicate" them, he said.

While many in the audience disagreed with him, Brutus said, "I believe there's a spillover effect to informal feedback behavior. I think managers who do this will be better able to give feedback to their subordinates. By forcing them to write, they'll be more comfortable with other informal feedback behaviors."

Many evaluators in the audience said they agreed that evaluations done in a way in which the manager gives feedback after the employee has had a chance to look at the evaluation before sitting down for their annual performance review works well—even though it may be uncomfortable. But another participant said there should be no surprises or nervousness when sitting down to talk to an employee "you see every day."

Brutus suggested, too, that managers be made to write a page about their employees' performance each year. "I think they'll pay [more] attention" to said employees "and get more details" about their performance.

Giving and receiving feedback is hard for anyone, Brutus said, noting that "the younger generation is more comfortable giving and receiving feedback.

"If you look at 'American Idol,' 'The Apprentice,' 'Survivor,' [the feedback given on those shows] is all done in a relatively brutal way." Not that he's in favor of the delivery, he quickly added.

The future of feedback will be fascinating because of this and other factors, he said.

"A lot of the younger generation—they write differently; the language they use is different. How will that translate into how they write comments? It'll be interesting to see how that gets carried through in coming years."

Source: SHRM.org, Aliah D. Wright is an online manager/editor for SHRM.