As colleges and universities begin new terms, not all students are returning to the classroom.  Some students are headed into the “real world,” to work alongside corporate titans, small-business owners, or moms and pops in their shops, while receiving academic credit—and not wages—for their efforts.  These students are applying the lessons learned in their prior studies to real-world scenarios to gain valuable experience, build their skills, and make connections to help them succeed upon graduating.  Or at least they should be.  If they are instead used merely as a source of labor, they must be paid.  But many employers mistakenly assume that because these students are getting school credit, they need not be paid.  That is a trap into which employers reading this blog will not fall.

The Fair Labor Standards Act (“FLSA”) and state laws require employers to pay all employees for work performed.  If students who participate in unpaid internships with private employers do not qualify as “employees,” they need not be paid.  Whether those students qualify as “employees” depends on several factors, but the general rule is that these programs are lawful as long as the student, not the employer, is the primary beneficiary of the internship program.Continue Reading It’s a Trap!  Students Receiving Credit Need Not Be Paid? 

In a 5-4 decision, the Washington Supreme Court has ruled in an employer’s favor and clarified what are, and are not, statutory “wages” and unlawful wage “rebates” under Washington State’s Wage Rebate Act (“WRA”), RCW 49.52 et seq.  The case is LaCoursiere v. CamWest Development, No. 88298-3 (Wash. Oct. 23, 2014) (slip op.).  Camwest Development (“CamWest”) was represented by Stoel Rives attorneys Jim Shore and Karin Jones.

CamWest, a real estate development company, created an optional bonus program via individual written contracts with its participating managers. The bonus program was intended to provide the potential for larger manager bonuses in profitable years, but it also carried a downside risk of smaller, or no, bonuses in leaner years.  Participating managers’ contracts made expressly clear that the decision whether or not to award an annual bonus, and the amount of any bonus, was in CamWest’s discretion.  Managers did not have to participate in this higher reward/higher risk bonus program and could instead choose to receive a safer, set bonus.  Managers who chose to participate in the optional bonus program were required by its terms to contribute a percentage of each annual bonus into a capital account in a separately formed managers LLC.  The LLC would in turn loan money to CamWest to be invested in real estate projects that CamWest would develop.  The hope and intention at the time was that this arrangement would yield higher profit and bonuses for participating managers. Manager contributions to the LLC vested at 20% per year.Continue Reading Washington Supreme Court Finds Employer’s Discretionary Bonus Not Unlawful “Rebate” Under Wage Rebate Act (“WRA”)