Legislation Proposal by Brian Frydenborg in early 2013, now a Democratic Party candidate for U.S. Senate For Maryland
Title I- Title and Purpose
Sec. 101- This Act Will Be Referred to as The Recent Higher Education Graduate Employment Protection Act
Sec. 102- Pursuant to the guidance and spirit of the U.S. Department of Labor’s Wage and Hour Division’s Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act’s guidance on the definition of unpaid interns at all “for-profit” private sector entities, the following legislation will facilitate enforcement of criteria 3 and 4 for meeting the status of an unpaid internship and protect paid workers, especially recent higher education graduates, from “for-profit” private sector abuse of the use of interns. Criterion 3 indicates that “The intern does not displace regular employees, but works under close supervision of existing staff” and criterion 4 that “The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded.”
Title II- Definitions
Sec. 201- “Intern” and “Internship”
In addition to the definition provided by the U.S. Department of Labor’s Wage and Hour Division an intern must also be a minor or a student.
(1) In the case of a minor hired, a parent or acting legal guardian must consent to the hiring.
(2) In the case of a student hired, a student may be hired as an unpaid intern
(A) if that student is currently enrolled in school or is being homeschooled as allowed under any appropriate laws
(B) with a start date up to 1 year after graduating any higher education institution. Any individual who has successfully completed a higher education program more than 365 days before the start date of an unpaid internship may not be hired as an unpaid intern.
(1) However, individual students who choose to take “time off” after graduation may extend their eligibility to be hired as an intern for a period of time equivalent to that “time off” for up to an additional year provided that they were not a paid employee or an intern during that “time-off”
(C) with a start date up to 2 years after graduating high school if not enrolled in a higher education institution or if that individual has not previously started attending a higher education institution.
(D) with a start date up to 1.5 years (548 days) after that student stopped attending school if that student is not attending school and has not yet successfully completed high school or a homeschooling program following any appropriate laws
(E) with a start date up to 2 years after that student stopped attending a higher education institution if that student is not currently attending a higher education institution and has not yet successfully completed a higher education program
(F) with a start date up to 2 years after that student has failed or been dismissed from of a higher education program and has not started attending another higher education institution
Sec. 202- “Entry-Level”
An entry-level position (for the purposes only of the provisions in Title V of this Act) will be defined as:
(1) one which requires no more than two years of relevant experience
(2) one which does not require an advanced degree (e.g. a master’s, doctorate, law, or medical degree)
Title III- Compensation
Sec. 301
In addition to being unpaid, interns may also be paid by the hiring entity. However:
(1) any paid position in which the individual does not fit within the definition in Sec. 201 of this Act may not be titled an “internship” and the paid worker may not hold a position titled “intern.”
(2) a person hired for a paid position who does not fit said definition of an intern must be hired for a position like any and all other hired paid position within the entity, subject to the same wage and labor laws as all other paid employees and positions.
Title IV- Duration
Sec. 401
An internship may not last more than a year (365 days) but may be extended by the equivalent duration of any leaves of absence, vacation, or time off during which the individual is not working as a paid employee or interning elsewhere and if the time period(s) in question is (are) at least 3 consecutive weeks (21 days
Title V- Ratios
Sec. 501
The following ratios will apply:
(1) The number of interns at the entity shall be targeted to be no higher than a ratio of 1 intern for every 2 entry-level employees working at the entity
(A) Allowing for fluctuations in employment, an entity will not be considered in violation of this ratio if there are up to 6 interns for every 10 entry-level employees.
(2) Every quarter, the number of interns hired shall be targeted to be no higher than the ratio of 1 intern hired for every 2 entry-level employees hired.
(A) Allowing for fluctuations in employment, an entity will not be considered in violation of this ratio if there are up to 6 interns hired for every 10 entry-level employees hired.
(3) If downsizing/layoffs occur, for every 2 entry-level positions eliminated, 1 internship shall be eliminated
Title VI- Military Service Exemption
Sec. 601
The following exceptions are allowed for those with military service in their background:
(1) Any former member of the U.S. Armed Forces who has left the military may be hired as an intern up to 2 years after their military service has ended
(A) This 2 year limit may be extended to cover the duration of any medical recovery period resulting from any illnesses, disabilities, or other heath issues related to an individual’s military service and in addition to cover any “time off” as stipulated in the manner of Sec. 201 (2)(B)(1).
(2) Any current member of the U.S. Armed Forces not on active duty may be hired as an intern up to three times while still a member of the U.S. Armed Forces.
Title VII- Documentation
Sec. 701
Proper documentation will be kept regarding interns and internships.
(1) All intern hires must be documented by the hiring entity.
(2) It will be the responsibility of the hiring entity to keep these relevant documents and submit them to the U.S. Department Labor at the end of every quarter at the end of March, June, September, and December for review to ensure compliance with this Act.
(3) Interns must fill out and complete a federal I-9 Employment Eligibility Verification Form and these must be submitted as all I-9s are submitted.
(4) All these documents shall be maintained for 5 years after the individual’s internship has ended.
(A) However, if matters of national security arise, certain records may be mandated to be held longer.
Title VIII- Applicability and Exemptions/Waivers
Sec. 801
This Act applies to:
(1) “for-profit” private sector entities with 80 or more paid non-intern employees
(2) “for-profit” private sector entities with 40 or more paid non-intern employees which are not awarded waivers as outlined in Sec. 802
Sec. 802
Exemptions and Waivers
(1) All “for-profit” private sector entities with fewer than 40 paid non-intern employees are exempt from this Act.
(2) “For-profit” private sector entities with 40 to 79 paid non-intern employees may apply for waivers from the Department of Labor on a case-by-case basis
Title IX- Taxes and Tax Benefits
Sec. 901
For every entry-level (as specified in Sec. 202) hire, the entire base salary of that employee shall be tax-deductible for the entity for the year the hire occurs. Any part of heath care benefits that the company pays shall also be tax-deductible for that year.
Sec. 902
For every intern at the entity beyond the number equivalent to 25% of the number of entry-level employees at the entity, a tax equivalent to 20% of an entry-level employee’s salary shall be assessed.
Title X- Penalties for Violation
Sec. 1001
The following penalties will apply for violations:
(1) A written warning for a first offense
(2) The next 4 offenses will result in a fine per offense that is the equivalent of one-half the starting base salary of an entry-level employee.
(3) The next offenses up until the 20th will result in a fine equal to the full starting base salary of an entry-level employee as defined in Sec. 201.
(A) Every three years, if no more than 19 offenses occur during the past three years the entity’s record of offenses is reset to none and the process would begin again with a written warning.
(4) The 20th offense will lose that entity good standing and result in the launch of an investigation by the U.S. Department of Justice, and fines will be imposed that are no less than 2% of the entity’s profit for the last fiscal year.
(A) Entities that are the subject of such an investigation can be recategorized as being in good standing by the U.S. Department of Justice on a case-by-case basis.
Sec. 1002
The Internal Revenue Service will be in charge of assessing fines through the taxation process up until the 20th offense, when the U.S. Department of Justice takes over.
Title XI- Supremacy of this Act
Sec. 1101- This Act supersedes any prior or contradicting law regarding these matters