A Minimum Wage of Zero

Posted in: Election Law

In the November 16 Presidential Debate, the Democratic candidates argued about the minimum wage. They all favored raising it, with Hillary Clinton arguing for $12 per hour.

What she preaches is not what she practices, when running her own campaign. Recently, her lawyers asked the Federal Election Commission (FEC) for permission to use unpaid interns during “the spring, summer, or fall at the Campaign’s headquarters office in Brooklyn.” The lucky students would receive nothing from the Clinton campaign. However, Clinton wants the college to give the interns college credit. She also wants the college to pay the student $3,000. The Hillary Campaign (“Hillary for America”) would pay a minimum wage of zero. The Campaign asks the FEC to approve this startling request because its refusal “will have the practical impact of preventing students from less affluent backgrounds from gaining these valuable experiences.”

This proposal answers two burning questions that parents now ask. First, why is college tuition so high? Perhaps is it because colleges need money so they can contribute to political campaigns. Granted, the $3,000 college payment is not huge, but we have to add up all these payments. The Hillary Campaign will not stop at just one intern. It has created the “The Hillary for America Internship Program.”

The second questions that is, why do the college students learn so little? Do you really have to go to college to learn what unpaid campaign volunteers learn? The internship proposal vaguely says that the student’s work will provide “broad based education in the federal electoral process.” Stuffing envelopes at campaign headquarters is not something we would think deserves college credit.

It also prompts a third question. Why should entities like nonprofit colleges be giving political contributions to Hillary Clinton? Under the existing campaign laws, as reaffirmed by Citizens United v. FEC (2010), corporate entities (like colleges) cannot give a dime to political candidates. Citizens United allowed entities to spend money to promote their own independent views (e.g., support free trade; raise steel tariffs), but it reaffirmed the federal ban on direct contributions to the campaign of candidates. By the way, Hillary Clinton also wants a constitutional amendment to overturn Citizens United. Her actions suggest that it is fine for entities (or, at least, nonprofits) to contribute money or manpower directly to political campaigns (or, at least, to her campaign).

If her intern works 40 hours per week for 16 weeks (the fall semester of September through December), and the college pays that intern $3,000 (her proposal), the intern will be earning $4.69 per hour from the college! That’s a far cry from the $12 per hour minimum wage that Hillary Clinton supports. It’s even further from the zero dollars per hour the campaign actually will pay the intern.

Notice that Clinton’s lawyers asked the Federal Election Commission to approve her plan to allow her to hire unpaid interns. It is likely that her lawyers also need to contact the Department of Labor. It has strict rules regarding unpaid interns. The “internship” must be designed for the educational benefit of the student, and not for benefit the institution (Mrs. Clinton’s political campaign) offering the internship. The work of the volunteers for the Hillary Clinton campaign will benefit the Clinton campaign. If it didn’t, the Campaign would not hire them.

Mrs. Clinton is not the first prominent person who has tried to employ people for substantially less than the minimum wage. Another one is Justice Sonia Sotomayor. Since 2010, she has offered to hire and hired unpaid interns, but these interns are not her judicial law clerks. They are her servants. The position does not purport to have any educational component.

Justice Sotomayor posted the job description, posted on a Latino Facebook page but took it down after Tony Mauro of the National Law Journal wrote about this issue. However, this job posting remains available on another site.

The job posing explained that applicants do not need a law degree, but “a driver’s license is a must” because the intern’s duties will include running “errands outside of the Courthouse.” In addition, the intern will prepare “lunch and snacks for the Justice.” If she has friends who visit, the intern will escort the “Justice’s guests around the Court and Chambers.” In addition, she expects the intern to photocopy, answer the phone, and take messages. (Political campaign volunteers do the same kinds of things.)

Sotomayor’s notice explains that intern is responsible for his or her own living arrangements and transportation to and from the Court. Sotomayor pays them nothing in cash or in kind. She began this program in 2010 and she continues it at least through this fall. No other Justice attempts to leverage their Supreme Court position to acquire free servants.

Whether Justice Sotomayor is abusing her position as a Supreme Court Justice by leveraging that appointment to secure free butlers is an important question of judicial ethics. A more prosaic and immediate question is whether she is violating U.S. labor laws, including the requirements of a minimum wage. It turns out that the answer is yes.

First, her maid, butler, and chauffeur are not employees of the Supreme Court; they are the personal employees of Justice Sotomayor. No federal statute authorizes Justice Sotomayor to hire personal aides. Yet, even if one would consider her maid or butler to be an employee of the Supreme Court, the Fair Labor Standards Act certainly appears to apply. One section expressly includes all U.S. Government employees while another section excludes “volunteers” of state agencies. There is no exemption for federal agencies or federal courts.

Perhaps Justice Sotomayor thinks that “state” means “federal,” a position she took in the recent decision under the Affordable Care Act. Still, the peculiarities and uniqueness of that case do not apply here. “State” does not mean “Supreme Court Justice.”

The Labor Department does have special rules that apply when an employer employs interns but pays them zero. Under any of these rules, Sotomayor must pay her interns the minimum wage. First, it is irrelevant under the labor laws that the interns agreed to work for nothing.

The recent decision involving unpaid interns who worked on the film, Black Swan, the leading case, is a useful starting point. Glatt v. Fox Searchlight Pictures, Inc., 791 F.3d 376 (2d Cir. 2015). The federal appellate court recognized that unpaid interns could learn valuable job skills. Internships “are widely supported by educators and by employers looking to hire well-trained recent graduates.” On the other hand, “employers can also exploit unpaid interns by using their free labor without providing them with an appreciable benefit in education or experience.”

Glatt offered no sharp line litmus test. Instead, courts should look at various factors when the internship is unpaid. The court should consider the extent to which the internship provides training “similar to that which would be given in an educational environment,” including “hands-on training provided by educational institutions.” Running errands, opening Justice Sotomayor’s mail, and photocopying do not constitute educational training. It is also relevant whether the Justice’s internship “is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.” It’s going to be hard to integrate coursework with serving “lunch and snacks for the Justice.” Another relevant factor is whether the internship offers “significant educational benefits to the intern.” Perhaps, if the intern wanted to be a butler, the experience would be useful, but it would be jaw dropping to call that a “significant educational benefit.”

Glatt involved a for-profit company. The DOL has somewhat looser rules for not-for-profit organizations, but by no stretch of the imagination is Justice Sotomayor (or the Clinton campaign) a “charitable organization” under §503(c)(3) of the Internal Revenue Code. The Labor Department says that not-for-profit status generally means the employer qualifies under IRS Code § 501(c)(3) as nonprofit. Hillary Clinton’s campaign is not a 501(c)(3) organization. Justice Sotomayor is even further afield. Not only is Sotomayor not a charitable, religious, educational, scientific, literary, organization, she is not even an organization; she’s human being. Second, the charity must not be organized or operated for the benefit of private interests. When Sotomayor’s intern is preparing her snacks, (or when Clinton’s intern is helping her political campaign) the intern is doing that for the benefit of private interests, not for any “charity.”

The Department of Labor also requires that even for non-profits, the employer must derive no immediate benefit from the intern. Justice Sotomayor is deriving immediate benefit from her interns preparing her meals and running her errands. The Supreme Court has held that these “volunteers” do not meet the statutory definition of an employee. Tony & Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290 (1985). The intern should not be engaged in “routine operations,” but Sotomayor’s job description (“assisting with basic secretarial duties, including filing, photocopying”) fails that test too.

As one well-known judge has ruled, in finding that a nonprofit had to pay the minimum wage, “despite the defendants’ intent, they did not structure a training program as that concept is understood in case law and regulatory interpretations but instead structured a program that required the plaintiffs to do work that had a direct economic benefit for the defendants. Therefore, the plaintiffs were employees, not trainees, and should have been paid minimum wages for their work.”

That judge was Sotomayor, when she was a district judge in Archie v. Grand Cent. Partnership, Inc.. In Archie, she required the nonprofits to pay a higher wage to formerly homeless who performed clerical and food service.

How to explain the different results. Perhaps, where you sit depends on where you stand. As a mere trial judge, she could not get a free butler to make her meals, but as a Justice she can. As for Clinton, recall what she said in her 2014 lecture at UCLA: “Businesses have taken advantage of unpaid internships to an extent that it is blocking the opportunities for young people to move on into paid employment. More businesses need to move their so-called interns to employees.” She is talking the talk but not walking the walk.

Posted in: Election Law, Employment Law

Tags: Legal

  • Concerned Mom

    Typical of the far left.

  • LRob

    My rules apply to thee, but not to me.