Fenox Venture Capital, a San Jose based investment firm, has been ordered to pay back-wages and damages of $331,269 to 56 mislabeled interns. The US Department of Labor has served the order on Monday after detection of the non-payment issue.
The 56 workers have rendered high level services to Fenox including screening startups for potential investment, sending reports to investors in Japan and recruiting potential staff. They have served the San Jose firm during the period from September, 2011 to September, 2014.
The workers have reportedly discharged duties of regular employees and staffed the majority of the firm's investment team. But they have been treated as interns and not paid for their works, reports Siliconbeat citing a release from the Department of Labor as the source.
The venture firm has violated minimum wage provisions of the Federal Fair Labor Standard Act. The provision instructs to pay the non-exempt workers at least the federal minimum wage of $7.25 per hour for all regular working hours. They will receive 1.5 times of the minimum wage rate for the working hours beyond 40 hours a week, reports NBC Bay Area quoting an unnamed labor department official. Businesses in the US are in a common practice to classify workers as interns in order to pay them well below minimum wage or nothing at all. Engagement of a venture capital firm in such practice has been detected for the first time, reports The Wall Street Journal quoting Michael Eastwood, an assistant district director at the U.S. Department of Labor. The Silicon Valley interns are usually entitled to the highest salaries and perks. This is because; tech companies compete with each other to hire the best young talent. 19 of the 25 highest paid internships are offered in the tech companies, suggests a report of 2014. The Department of Labor has a six part test to classify a worker as an unpaid intern. The worker must not displace any regular employee and the employer cannot gain any immediate advantage from him, appears to be the basic criterion for an intern. Fenox has used the internship program to find new talent. Some current employees have been hired from the program while most of the interns don't get the opportunity to be at principal level like fund raising. However, Fenox now offers a paid internship program, informs Vivek Ladsariya, head of investments at Fenox.
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