Common practices fraught with risk

by Tim Twigg and Rebecca Crane

For more on this topic, go to www.dentaleconomics.com and search using the following key words: volunteering, internships, employee definition, working interviews, Tim Twigg, Rebecca Crane.

"Working interviews," volunteering, and/or unpaid internships are not uncommon in the industry, but they have become a source of increasing risk to dentists, both financially and emotionally. Getting caught doing any of these without considering compliance requirements can leave you vulnerable to a plethora of problems.

Working interviews, in particular, present complex issues that have serious ramifications for dentists who, knowingly or unknowingly, are not aware of or do not properly comply with the requirements. Here are two actual examples:

A dentist was interested in hiring an applicant as a dental assistant and had her come in for a "working interview." She filed successfully for workers' compensation as an employee, alleging that during the day she fell off a chair and hurt her back.
An applicant came in for a "working interview" and was not hired. She filed for unemployment. The doctor was ruled to be her last employer and liable for the unemployment claim.

While it is quite common in the industry to have applicants demonstrate their job-related skills by asking them to participate in a "working interview," you can see from these two cases that this extension of the verbal interview can become a costly problem for the employer if not handled correctly.

Recently, the Department of Labor issued statements that it is going to crack down on employers who don't follow wage and hour regulations correctly, which results in an employee losing out on compensation rightfully due to him or her. They are on the hunt, so to speak, for violators.

When and how can applicants engage in working interviews, internship programs, or otherwise volunteer their services for an employer? And what's the best way to use these strategies and still protect yourself from potential problems? This column will shed some light on this and provide some best practice guidelines.

Definition of employee

To start, we have to look at the government's definition of an "employee." Simply put, employment is defined very broadly and considers an individual an employee if he or she "suffers or is permitted to work" by an employer.

"Working interviews"

In some practices, the "working interview" is paid time for one or a few days. In terms of wage and hour rules, this is not a problem, provided the person is receiving compensation for his or her time, the rate in effect during that time is at least minimum wage, and the individual is paid for applicable overtime hours.

In many other practices, the working interview is conducted for one or a few days and is not paid. Clearly, based on the very broad definition stated above, this is simply not allowable. If you ask an applicant to perform work at your practice, whether officially hired or not – and no matter how short the time period – it is work time and must be paid.

Since the individuals in the examples are considered your employees, for good or bad, then your workers' compensation insurance comes into play if the person is hurt on the job. Further, you will likely be considered the person's most recent employer if he or she does not remain employed and seeks unemployment compensation. Unfortunately, there is no way to avoid this problem when conducting working interviews.

You may ask, is there a way to test an applicant's skill before hiring that keeps him or her from becoming an employee and risking all of the above? Yes, it's called a "skills assessment." In order to conduct a skills assessment legally, you must apply the following guidelines:

Never have applicants replace regular workers or fill in for workers who are off. This could appear as though the person is an employee, or temporary employee, because he or she is being treated as one in the capacity of replacing another employee.
Do not have the applicant perform a skills assessment for more than one to two hours.
Refrain from providing any form of compensation, even something as small as a gift certificate, for participating in the skills assessment. Recent interpretations state that an employment relationship does not exist if there was no contemplation of payment at the outset.
Be sure no productive work is performed, or "no productivity is derived," by the applicant's participation, such as would occur when an applicant provides services to clients who are billed for treatment (e.g., a hygienist cleaning a patient's teeth). In the case of a dental assistant or a hygienist, working on patients, potential colleagues, or anyone else who may benefit from the treatment or fulfill an employer's obligations is considered performing productive work and should not be done. Instead, assess the applicant's skills on a ceramic model, yourself, or an employee who does not receive dental treatment as part of a dental benefits program. For other employees, billing insurance companies, receiving payment from patients, scheduling patients, calling cancellations, etc., is also considered productive work and should be avoided.
Prior to conducting the skills assessment, each applicant should sign an agreement. (Call us for a sample copy of our "Skills Assessment Interview Agreement," Form No. 108). This agreement outlines that a) the skills assessment is an extension of the interview process and is voluntary, b) there is no promise of employment, c) no employment relationship exists, and d) no compensation will be provided. Be sure the applicant signs this form.

One final note, while following these recommendations will protect you from employment-related claims, if a person is hurt on your premises, then you may still have to deal with a personal liability claim through your general liability insurance.

Volunteering and unpaid internships

Whether it is staff volunteering to provide dental services to a charity group or having unpaid interns work for the summer, employers often erroneously believe they have greater flexibility than they really do in determining whether the employee will get paid.

Under the Fair Labor Standards Act (FLSA), employees may not volunteer services to for-profit private sector employers. An individual can be considered a volunteer under the FLSA if the individual:

Performs hours of service for a public agency for civic, charitable, or humanitarian reasons without promise, expectation, or receipt of compensation for services rendered, although a volunteer can be paid expenses, reasonable benefits, or a nominal fee to perform such services
Offers services freely and without pressure or coercion
Is not otherwise employed by the same public agency to perform the same type of services as those for which the individual proposes to volunteer

Employees may end up volunteering for their employer when they are encouraged to get involved with a charitable organization. The big trap for employers is crossing the line from encouraging staff to coercing or pressuring them to volunteer. These factors could mean compensation is due:

The employer requests volunteers to participate.
The employee is under the employer's control while volunteering.
The employee is required to be on the premises.
The volunteer work occurs during normal work hours.
Nonparticipation adversely affects employees' working conditions or employment status.
There is a significant connection between the employer and the charity, and they are considered a single enterprise.

Volunteering for an employee's own employer will not pass the test with the FLSA when the work is performed during normal work hours, the work is similar to the employee's regular job (regardless of when the volunteer hours occur), and the employee's participation is not truly voluntary.

Regarding internships, in order to have an intern who is not compensated, the FLSA states that all of the following criteria must be met:

The training, though it may include actual operation of the employer's facilities, is similar to training that would be given in a vocational school.
The training is for the benefit of the student.
The student does not displace regular employees, but works under close observation.
The employer who provides the training receives no immediate advantage from the activities of the trainees or students and, on occasion, his or her operations may even be impeded.
The student is not necessarily entitled to a job at the conclusion of the training period.
The employer and student understand that the student is not entitled to wages for the time spent in training.

Note: The California Division of Labor Standard Enforcement (DLSE) adds four additional points for criteria. Just know that if it doesn't pass the federal test, it definitely won't pass California's.

Not paying individuals when they meet the government definition of "working" is very risky. Without carefully considering all of the various components related to working interviews, skills assessments, volunteering, or unpaid internships, the employer could wind up with messy claims that are sure to be more costly than they otherwise needed to be. The safest course of action is to pay people for their time spent providing a service to the employer – whether "officially hired" by you or not.

Tim Twigg is the president of Bent Ericksen & Associates, and Rebecca Crane is a human resource compliance consultant with Bent Ericksen & Associates. For 30 years, the company has been a leading authority in human resource and personnel issues, helping dentists successfully deal with the ever-changing and complex labor laws. To receive a complimentary copy of the company's quarterly newsletter or to learn more about its services, call (800) 679-2760 or visit the Web site at www.bentericksen.com.