Dive Brief:
- Fenox Venture Capital, a Silicon Valley firm, has been tagged with a $331,269 fine for back wages and damges by the U.S. Department of Labor for not paying 56 workers the company had designated as interns, according to the Wall Street Journal.
- DOL Wage and Hour Division investigators found the San Jose-based company had used the "interns" to do high-level jobs, including screening start-up companies for potential investment, sending reports to investors in Japan, and networking and recruiting potential staff for the company.
- Even worse, these "interns" displaced regular employees at the firm, which violated the minimum wage provisions of the Fair Labor Standards Act.
Dive Insight:
Susan Blanco, the district director for the Wage and Hour Division in San Francisco, said in a DOL press release that Federal labor law establishes clear standards for differentiating unpaid interns from employees, and if, in fact, the person is an employee, they must be paid properly.
"Employers cannot simply label an employee an ‘intern’ and not pay them anything,” she said “Ensuring these workers receive the wages that they rightfully earned will help them and their families, and will also help to level the playing field for law-abiding companies.”
Michael Eastwood, an assistant district director at the U.S. Department of Labor, told the Journal that Fenox's actions were "deplorable," especially in light of the fact that Silicon Valley is one of the nation's wealthiest regions.
It is possible that many of these smaller firms like Fenox have no HR leader in place (no one is identified as such on the company's "Team" splash page), which may be one reason they stepped outside the law.