Meal company Woop has been ordered to pay $43,000 after underpaying six "interns". Photo: 123RF
A food delivery company has been ordered to pay $43,000 for paying student interns for only half of the time they worked.
Woop, an Auckland-based food delivery service, offers its meal plans in 10 cities nationwide. The business is considered one of the four major meal kit companies in the New Zealand market.
Between 2016 and 2018, the business entered into agreements with three French tertiary institutions, engaging seven 'interns' that the Employment Relations Authority ruled were employees.
The company's director and majority shareholder, French national Thomas Dietz, said he set up the internship arrangement after having begun his own career in a similar fashion.
While the internship arrangements were compliant with the requirements of the French institutions, the authority ruled that six of the seven agreements were not consistent with one of the most fundamental tenets of employment law - the minimum wage.
According to the authority, the agreements required the six interns to "be present in [the workplace]" for 40 hours a week, but they were only paid for 20.
Woop claimed the six workers only did 20 hours of work each week - the other 20 hours present in the workplace did not involve them doing work, the company submitted.
Instead, the half-dozen interns undertook "self-directed on-the-job learning".
After initially denying the claim, Woop eventually conceded the workers should have been paid for 40 hours per week, and to have their holiday entitlements amended.
It owed the six affected employees just over $61,000, which it repaid with interest.
That admission by the company then saw the Labour Inspectorate pursuing penalties on behalf of the six employees.
Penalties were also sought for record-keeping breaches and a failure to keep legally compliant employment agreements for all seven internship agreements.
During the hearing, Woop submitted that the inspectorate's investigation was "inadequate and incomplete" and "so unfair".
They said many other previous interns had been happy with the arrangement, and had posted as such on LinkedIn. They claimed the decision of the inspectorate to seek penalties was pre-determined.
The criticisms were denied by the inspectorate.
Woop further claimed the breaches were inadvertent because the agreements were provided by the French institutions, and provided for both tasks and learning to be performed.
While accepting that Dietz had initiated internship opportunities with good intentions, the authority ruled that with the employees being in New Zealand for a short time away from their families and being unfamiliar with local employment laws, there was a "distinct power imbalance".
The authority did not accept Woop's submission it had engaged in good faith with the employees, saying it was unreasonable to suggest the employees only worked 20 hours per week.
"There was more than enough evidence to alert Woop that six of the affected employees were in fact working in excess of 20 hours per week," the authority ruled.
The company should have sought legal advice, and the fact it has other existing staff with compliant agreements shows the business did understand how the law worked, the authority said.
An email sent by Dietz to one of the interns referred to her working "on a 40-hour basis" the authority pointed out.
It was ruled the company was negligent, but that the evidence did not establish Woop deliberately set out to exploit the interns.
Evidence was heard that the company provided the interns with meals, mobile phone subscriptions, and a week-long ski trip.
Dietz later expressed regret for the breaches and contrition in his evidence to the authority.
The authority ordered Woop to pay a $39,000 penalty for the 26 admitted breaches, $13,000 of which was to be distributed among the affected employees.
The company was also ordered to pay $4071 toward the inspectorate's legal costs.
In a statement, the company said it accepted the ruling and had discontinued the programme, and repaid the students with interest.
This story originally appeared on the NZ Herald.