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July 2015

Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

  • Repetitive Children’s Programming Costs TV Licensee $90,000
  • It’s Nice to Be Asked: FCC Faults Red-Lighted Licensee’s Failure to Request STA
  • FCC Proposes $25,000 Fine for Hogging Shared Frequencies

“Repeat” Offender: Children’s Programming Reports Violations Cost Licensee $90,000

A licensee of several full power and Class A TV stations in Florida and South Carolina paid $90,000 to resolve an FCC investigation into violations of the Children’s Television Act (CTA) threatening to hold up its stations’ license renewal grants.

The CTA, as implemented by Section 73.671 of the FCC’s Rules, requires full power TV licensees to provide sufficient programming designed to serve the educational and informational needs of children, known as “Core programming”, and Section 73.6026 extends this requirement to Class A licensees. The FCC’s license renewal application processing guideline directs Media Bureau staff to approve the CTA portion of any license renewal application where the licensee shows that it has aired an average of 3 hours per week of Core programming. Staff can also approve the CTA portion of a license renewal application where the licensee demonstrates that it has aired a package of different types of educational and informational programming, that, even if less than 3 hours of Core programming per week, shows a level of commitment to educating and informing children equivalent to airing 3 hours per week of Core programming. Applications that do not satisfy the processing guidelines are referred to the full Commission, where the licensee will have a chance to prove its compliance with the CTA.

Among the seven criteria the FCC has established for evaluating whether a program qualifies as Core programming is the requirement that the program be a regularly scheduled program. The FCC has explained that regularly scheduled programming reinforces lessons from episode to episode and “can develop a theme which enhances the impact of the educational and informational message.” With this goal in mind, the FCC has stressed that the CTA intends for regularly scheduled programming to be comprised of different episodes of the same program, not repeats of a single-episode special.

Applying this criteria to each of the licensee’s 2012 and 2013 license renewal applications, the FCC staff questioned whether certain programming listed in the Children’s Television Programming Reports for the stations complied with the episodic program requirement. In particular, the staff looked at single-episode specials that the licensee counted repeatedly for the purpose of demonstrating the number of Core programs aired during each quarter—for example, the licensee listed one single-episode special as being aired 39 times in one quarter. After determining that it could not clear the renewal applications under the FCC’s processing guidelines, the staff referred the matter to the full Commission for review.

The FCC and the licensee subsequently negotiated the terms of a consent decree to resolve the CTA issues raised by the Media Bureau. Under the terms of the consent decree, the licensee agreed to make a $90,000 voluntary contribution to the U.S. Treasury. The licensee also agreed to enact a plan to ensure future compliance with the CTA, to be reflected in each station’s Quarterly Children’s Television Programming Reports. In light of the consent decree and after reviewing the record, the FCC concluded that the licensee had the basic qualifications to be an FCC licensee and ultimately granted each station’s license renewal application.

FCC Clarifies “Red Light” Policy Is a Barrier to Grants, Not a Road Block to Filing Requests

An Indiana radio licensee faces a $15,000 fine for failing to retain all required documentation in its station’s public inspection file and for suspending operation of the station without receiving special temporary authority (STA) to do so.

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We’ve all heard the warning: once you put something on the Internet, it will be there forever.  But an Oregon TV station learned the hard way that records in the FCC’s online public inspection file are easier to delete than you might like—and backdating restored files is not an option.

As detailed in our May Enforcement Monitor, the FCC hit the licensee with a proposed $9,000 fine for failing to timely upload Quarterly Issues/Programs Lists to the station’s online public inspection file—$3,000 for failing to post newly-created documents to the online file after the online file rule went into effect on August 2, 2012, $3,000 for failing to meet the February 4, 2013 deadline to populate the online public file with documents created before August 2012, and yet another $3,000 for failing to disclose these apparent violations in the station’s license renewal application.

But in its response to the FCC’s Notice of Apparent Violation (NAL), the licensee asserted that it had in fact timely posted its issues/programs lists to the online public file.  The licensee claimed that when it was notified that the license renewal of a co-owned LPTV station was granted, a station employee deleted all issues/programs lists for the preceding license term from the online public file of the licensee’s full power TV station, apparently confused about which station’s license renewal had been granted (both stations had the same four-letter call sign).  Recognizing the error, station employees promptly re-uploaded the lists to the public file less than 24 hours later.  The February 13, 2015 upload date, however, created the appearance that the licensee had missed the original due dates by more than two years.

As proof of the mishap, the licensee provided (i) a signed declaration under penalty of perjury from a station employee, and (ii) internal correspondence showing that the lists were inadvertently deleted following the LPTV station’s license renewal grant.  Satisfied with this evidence, the FCC rescinded the NAL and canceled the $9,000 fine.

So let this be a teachable moment—particularly as the FCC ponders expanding its online public file requirement to radio stations.

First, when intentionally deleting documents as no longer relevant, make sure you are in the right public file.  Second, where a public file document is accidentally deleted, repost it as soon as the error is spotted.  Third, when you do repost it, attach a brief explanation alerting the FCC (and any potential license renewal petitioners) of the original filing date and the reason for the subsequent “late” filing.  Finally, maintain contemporaneous records to document the mistake, providing evidence that will back up the station’s explanation when the FCC comes knocking.

Oh, and one last thing the FCC didn’t mention in its decision: don’t delete those public file documents until grant of the station’s license renewal becomes a final, unappealable order.  If the FCC rescinds a station’s license renewal as having been granted in error, the station will need to have those documents in its public file, and the FCC isn’t going to bother looking for them in the Google cache.

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Interns are a perennial part of the media landscape, and you have probably heard a lot over the last few years on the subject of unpaid interns. Specifically, that unless they qualify as genuine interns under a six-part Department of Labor (DOL) test, businesses are required to treat them (and therefore pay them) as employees.

The resurgence in interest in the subject came in early 2010 when the Department of Labor began stepping up enforcement against for-profit businesses illegally using unpaid interns. In April of 2010, the DOL’s Wage and Hour Division released a Fact Sheet providing guidance on when an individual can be classified as a trainee or intern exempt from the Fair Labor Standard Act’s requirement that employees be paid at least the federal minimum wage and receive overtime pay. The Fact Sheet dutifully laid out the six-part test that the DOL adopted in the 1960s, noting that “[i]nternships in the ‘for-profit’ private sector will most often be viewed as employment” unless all six of the criteria are met. The six criteria are:

  • the internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  • the internship experience is for the benefit of the intern;
  • the intern does not displace regular employees, but works under close supervision of existing staff;
  • the employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  • the intern is not necessarily entitled to a job at the conclusion of the internship; and
  • the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

From the DOL’s perspective, if an employer can’t demonstrate that all six factors are met, that intern is an employee, and the employer is liable for unpaid wages.

However, if you operate in New York, Connecticut, or Vermont, the rules have now changed, and if you operate in one of the other 47 states, change may be on the way. In a case launched by unpaid interns that worked on the film Black Swan, the influential U.S. Court of Appeals for the Second Circuit last week rejected the DOL’s test as too rigid. In doing so, the Second Circuit overturned a lower court’s certification of class actions on behalf of the unpaid interns, finding that the question of employment status is a “highly individualized inquiry” poorly suited to a class or collective action.

As discussed in much more detail in a Pillsbury Client Alert from our own Julia Judish and Osama Hamdy, the Second Circuit chose instead to adopt a “Primary Beneficiary” test, which “focuses on what the intern receives in exchange for his work” and “also accords courts the flexibility to examine the economic reality as it exists between the intern and the employer.” Simple, right?

Business owners might justifiably complain that the court replaced a complicated six-part subjective test with a simpler but even more subjective test. However, the Pillsbury Client Alert lays out a number of considerations suggested by the court for determining whether an intern is the primary beneficiary of the relationship with the employer, including an increased focus on the connection between the internship and the intern’s academic course of study.  The court wrote that

[b]y focusing on the educational aspects of the internship, our approach better reflects the role of internships in today’s economy than the DOL factors, which were derived from a 68‐year old Supreme Court decision that dealt with a single training course offered to prospective railroad brakemen.

While a number of the considerations suggested by the Second Circuit are similar to those in the DOL test, the difference is that the court’s test provides the flexibility to look at other factors that might be relevant to answering the question, and unlike the DOL test, does not consider the absence of any one factor to be determinative of an intern’s status under the Fair Labor Standards Act.

Rather than listing the court’s suggestions for factors that might (in addition to others) be considered, let me suggest you take a look at the Client Alert. It not only outlines those factors, but suggests a number of steps businesses can take to clarify their relationship with unpaid interns, whether they are subject to the DOL or the Second Circuit criteria.

The good news for employers is that the Second Circuit’s test (which for the moment only applies in the Second Circuit’s jurisdiction of NY, CT, and VT) allows a business to present any information relevant to demonstrating that the unpaid intern is not an employee. The bad news is that the unpaid intern has that same flexibility in seeking to prove he or she is really an employee that needs to be paid.  In addition, employers in these states face an increased risk of misclassification claims for internships not connected with an academic program.  Making sure your business has done all it can to end up on the right side of that analysis is your next challenge.