Second Quarter 2010



In this issue:

Legislative Update

Jobs bill provides monetary incentives for hiring

Proposed initiative to investigate employee misclassification

Unpaid internships not a legal substitute for traditional employees

Health insurance changes that
may affect you

Pending State legislation of note

In the News

Recent verdicts and settlements

Prominent national law firm sued for age discrimination

Summer Jobs for Youth program may be offered again this year

LinkedIn linked to possible violation
of non-compete agreement

The Strangest Things We’ve Heard of Late

Published elsewhere:

The Focus on Misclassification

(SBDC Front Page)

Hiring in the New Economy

(SBDC Front Page)

Understanding and Bridging
the Generational Gap

(WORK Spring, 2009)

What is the Role of an Attorney
on the Board?

(Compasspoint Board Café - February 28, 2008)

Also published in - June 17, 2008

How Do I Handle an
Underperforming Staff Person?

(Wisconsin Lawyer - Vol. 81,
No. 2, February 2008)

Previous Issues

Legislative Update

Jobs bill provides monetary incentives for hiring

The new Federal jobs bill provides two types of monetary incentives for employers hiring anyone who has been out of work for at least 60 days: (1) an exemption (through December 2010) from the 6.2% Social Security payroll tax; and (2) a $1,000.00 credit for each new worker who remains on the job for a full year. See:,,id=220748,00.html and,,id=220745,00.html

Proposed initiative to investigate employee misclassification

A proposed $25 million has been earmarked for a “Misclassification Initiative,” a joint Department of Labor/Department of Treasury program that includes the hiring of as many as 100 new enforcement personnel to investigate employees mistakenly classified as exempt (from minimum wage and overtime requirements). The Federal government projects that as much as $8 billion is at stake in unpaid minimum wage and overtime. See:

Unpaid internships not a legal substitute for traditional employees

Employers are exploring a wide variety of low-cost alternatives to the garden-variety, full-time employee with benefits. Authorities warn, however, that unpaid internships are not necessarily an answer. “If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law,” said Nancy J. Leppink, the acting director of the Department of Labor’s Wage and Hour Division. See:

For an internship to qualify under the Federal rules, six criteria must be satisfied:

  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 academic educational instruction;
  2. The training is for the benefit of the trainees;
  3. The trainees do not displace regular employees but 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; and
  6. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.


Health insurance changes that may affect you

While the experts continue to sort out the details of the new Federal health care law and its ramifications for the business community, a few things seem clear: (1) there is no requirement that employers provide health insurance for their employees; (2) employers who do not provide insurance may not qualify for certain small business tax credits and may be subject to a penalty should a full-time employee require a public subsidy either because the company does not offer insurance or because the coverage offered is unaffordable.

It also bears reminding that in October 2009, Governor Doyle announced an emergency rule that allows young adults to continue coverage through their parents’ health care plan. The plan applies to 17-27 year olds who are unmarried and ineligible for coverage through their own employer or for whom said coverage would be more expensive than the corresponding increase in cost to the parents' health plan for adding them.

Pending State legislation of note

  • Wisconsin Assembly Bill 116 and Senate Bill 86 would provide up to 16 hours of leave per year for employees to attend school conferences or other activities. See:, and
  • Wisconsin Assembly Bill 367 proposes a prohibition on discrimination by employers (or potential employers) related to the employee’s (or prospective employee’s) poor credit history. This bill is consistent with a recent national trend, recognizing that poor credit often follows on the heels of, for example, job loss, foreclosure, or a bankruptcy prompted by a medical emergency. See:
  • Wisconsin Assembly Bill 22 proposes criminal penalties (a Class I Felony, actually) for discrimination in employment based on arrest or conviction record. While discrimination based on arrest or conviction record is already prohibited, there are some who feel that enforcement of this particular type of discrimination requires more teeth. See

In the News

Recent verdicts and settlements

  • The United States Department of Justice recently announced the settlement of a lawsuit filed on behalf of a City of Milwaukee Police Detective against the City of Milwaukee for violation of the Uniformed Services Employment and Reemployment Rights Act (USERRA). USERRA requires that employers permit their employees leave when called to active service and, upon return, that they be restored to the job and benefits they would have attained had they not been absent. The Department of Justice alleged that the City of Milwaukee denied the detective the right to make up an exam he missed while on active duty. The settlement includes a retroactive promotion, seniority and benefits, as well as $21,190 in back pay. See:
  • The Wisconsin Court of Appeals recently ruled that a local employer could recover from former employees the cost of their apprenticeship program when the employees left the company shortly after completing the program. The employer’s policy included a promise to pay for the five-year training program in exchange for the employee’s promise to maintain a passing grade, comply with school rules and reimburse the employer should he/she leave the company within four years after completing the program. See:

    Takeaway for employers: It is important that one’s policy speak to all potential circumstances (e.g., not passing a class, not completing the program or not staying with the company for a certain period thereafter) and that the policy is clear about reimbursement.

    Takeaway for employees: Leaving an employer immediately after completing a training program paid for by the company can be high-stakes poker.

  • Prominent national law firm sued for
    age discrimination

    The U.S. Equal Employment Opportunity Commission sued a prominent national law firm, Kelley Drye & Warren, for age discrimination. The suit relates to Kelley Drye’s policy of de-equitizing partners at age 70 (requiring partners, upon reaching the age of 70, to relinquish equity in the firm, resulting in a substantially reduced compensation). See: This suit follows on the heels of a 2007 settlement also related to age-based discrimination in the amount of $27.5 million between the EEOC and another prominent national law firm, Sidley & Austin. See:

    Summer Jobs for Youth program may be offered again this year

    For those of you located in Washington, Ozaukee or Waukesha counties, the W-O-W Workforce Development Board is hoping to offer its Summer Jobs for Youth program again this year. The program will cover 70% of minimum wage for youth (ages 16-24) working over the summer. This means you pay only $2.18/hr. For non-profits, the coverage is 100% of minimum wage. In either event, worker’s compensation costs are covered at 100%.

    The program is intended to give youth exposure to the workplace, develop core competencies and provide mentoring. For more information, contact Amanda Kelsey at the Workforce Development Center or see:The Summer Jobs for Youth Program.

    LinkedIn linked to possible violation of non-compete agreement

    A Minnesota-based employer is suing three former employees, claiming they used their LinkedIn pages to violate their non-compete agreements. The suit alleges that the employees utilized LinkedIn to reach out to company clients.

    Takeaway: Because LinkedIn allows individuals who are linked to one another to see each others’ links and activity, the employees’ LinkedIn pages and messages may constitute incriminating evidence of the non-compete violation. This case also raises the question about whether LinkedIn records will be subpoenaed, and if so, what position LinkedIn will take on the issue.

    The Strangest Things We’ve Heard of Late

    Ordinarily, a ruling by a Federal District Court Judge that an employee was subjected to discrimination by his immediate supervisor might receive modest news coverage. When the claimant is the local head of the Wisconsin Equal Rights Division, the department charged with investigating and prosecuting discrimination and retaliation claims, and the allegations are against his immediate supervisor, yes the ERD Administrator, just about everyone takes notice.

    In this case, the judge found that the claimant, a retiree after 33 years of service, was denied years of raises on the basis of his race and gender. The judge went further, stating:

    “In almost every major area of her testimony, [the ERD Administrator] contradicted herself and/or was contradicted by other witnesses. In addition, she was frequently evasive and sometimes defensive. And, the other evidence in the record does not support her testimony.”

    Damages have yet to be assessed, but one can presume some pretty serious settlement talks are ongoing. See:

    We'd love to hear your feedback. Send comments to Mark Goldstein.

Upcoming events


"Human Resources Challenges"

Tri City National Bank, South Milwaukee


"Human Resources Challenges”

Polish Center, Franklin

For more information on upcoming events, click here.