In the financial industry, unpaid interns and “trainees” are used to solicit business through cold calls. Here, a common pattern emerges: trainees are expected to work five days a week for up to as much as sixty hours a week without being paid for months at a time. Often, brokerage firms and companies do not record or track the hours trainees work – there are no sign-in sheets, punch cards, or invoices filled out. Even so, trainees are expected to attend daily meetings as part of their preparation for selling certain kinds of financial products over the phone.

The promise often made here – but seldom fulfilled – is that, if a trainee earns a certain quota of sales during his or her training period, he or she will be hired as a paid broker sometime in the future.

Unpaid Trainees and Violation of the Fair Labor Standards Act

Companies that use trainees in this way, however, are potentially in violation of the Fair Labor Standards Act (FLSA) since trainees are required to work without being properly paid. What is at issue here is FLSA Section 16(b), 29 U.S.C. § 216(b), as it pertains to minimum wage requirements and the withholding of wages by an employer. Under the FLSA, there are certain requirements that classify employers as non-exempt and exempt from the minimum wage requirements of the FLSA. Companies in the financial industry that use unpaid trainees in this way risk violating the FLSA.

Contracts and Skirting the FLSA

In order to sell certain financial products, a broker must be licensed and registered with the Financial Industry Regulatory Authority. Brokerage firms and companies typically try to avoid the requirements of the FLSA by arguing that, since trainees are not licensed or registered, they cannot sell certain financial products to customers. As a result, they are not paid a commission. If during a cold call a customer chooses to purchase a product, trainees must transfer the call to a licensed broker and typically do not receive any portion of the commission earned as a result.

Contact Leeds Brown New York Brokers’ Rights Attorneys

If you have worked as an unpaid trainee for a brokerage firm or company, contact brokerage rights attorneys at Leeds Brown today to learn how we can help you. Depending on the circumstances of your situation, you may be eligible for unpaid wages and compensatory damages. Call Leeds Brown today to discuss your case with one of our brokers’ rights attorneys so we can begin the process of helping you recover financially what is owed you under the law.