As summer approaches, many employers are being asked to consider using summer interns and high school age students. We are sending you this reminder that both categories present issues and potential problems that employers should be careful to avoid.
Students and others who are unable to obtain jobs are nonetheless interested in holding internships as a means to gain valuable experience and perhaps an eventual job. Many of these prospective interns are willing to serve without pay. This option has some appeal to many businesses. Notwithstanding these mutual interests, last year when the summer season was just getting underway, the Department of Labor published a Fact Sheet which has virtually barred the use of unpaid interns in the for-profit private sector.
Significantly, the legal standard being applied is no different than that which has existed, but in the past the DOL (through practice and formal opinions) analyzed the appropriateness of unpaid internships on a fairly flexible basis. Now, however, the DOL is abandoning its past tolerances and has announced that unpaid internships will be subject to more scrutiny than in the past. In this regard, the acting director of the DOL’s Wage and Hour Division said: “If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law.”
As explained by the DOL, individuals who are suffered or permitted to work are generally regarded as employees, and therefore they must be paid the minimum wage and overtime pay as otherwise required by the Fair Labor Standards Act (“FLSA”). Contrary to prior constructions of the law, the DOL is now stating that internships in the for-profit private sector will almost always been deemed employment under the law. The only exception to this rule is if the interns are truly “trainees” as defined in the FLSA’s regulations, and this exception is to be narrowly construed.
For a trainee or intern to be excluded from coverage under the FLSA’s pay requirements, all of the following criteria must be met:
- 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.
The first factor is likely the most difficult to overcome. As explained by the DOL:
“In general, the more an internship program is structured around a classroom or academic experience as opposed to the employer’s actual operations, the more likely the internship will be viewed as an extension of the individual’s educational experience (this often occurs where a college or university exercises oversight over the internship program and provides educational credit). The more the internship provides the individual with skills that can be used in multiple employment settings, as opposed to skills particular to one employer’s operation, the more likely the intern would be viewed as receiving training. Under these circumstances the intern does not perform the routine work of the business on a regular and recurring basis, and the business is not dependent upon the work of the intern. On the other hand, if the interns are engaged i n the operations of the employer or are performing productive work (for example, filing, performing other clerical work, or assisting customers), then the fact that they may be receiving some benefits in the form of a new skill or improved work habits will not exclude them from the FLSA’s minimum wage and overtime requirements because the employer benefits from the interns’ work.”
In these hard times, many people who want internships are done with school. Unless the internship program is somehow attached to an educational program or mirrors one, it will likely not pass the DOL’s scrutiny. Interestingly, many colleges are endeavoring to help employers document a sufficient connection to their programs to help their students obtain these internships.
In addition to the above, the more the work done is similar to that performed by regular employees, the less likely the individual will be deemed a trainee. A trainee, according to the DOL, is often more of a burden to supervise than a regular employee. If, on the other hand, as the DOL explained, “the employer is providing job shadowing opportunities that allow an intern to learn certain functions under the close and constant supervision of regular employees, but the intern performs no or minimal work, the activity is more likely to be viewed as a bona fide education experience.” In this instance, and if the other criteria are satisfied, then the intern may be a non-employee/trainee. Internships should also normally be short-term for fixed periods, without any expectation of employment.
The DOL’s lack of tolerance for unpaid internship programs is largely limited to for-profit private sector employers. Other employers may be allowed more latitude in using unpaid interns, but the DOL is also specifically reserving the right to review this apparent double-standard further. These employers, though, may be able to classify such individuals as volunteers, though.
HIGH SCHOOL STUDENTS
Also during this time of year, high school students are eagerly searching for summer jobs. Many employers wish to employ them, but there are special rules applicable to these employees, as well. These rules lie under both federal and state law.
Federal Rules – For instance, federal child labor law restricts the employment of workers under age 18. Highlights include:
- Employees must be at least age 14 (other than for a parent, but never in mining, manufacturing or other hazardous jobs), though under age 14 is permissible for babysitting, delivering newspapers and acting or other performing arts;
- Employees under age 16 may not – a) work before 7:00 a.m., nor after 7:00 p.m., except from June 1 through Labor Day, when their permissible hours are extended to 9:00 p.m.; b) work more than 3 hours a day on school days, including Fridays; c) work more than 18 hours per week in school weeks; d) work more than 8 hours a day on non-school days; and e) work more than 40 hours per week when school is not in session.
- Employees under age 16 are extremely limited in the types of work they may perform. They may never perform hazardous work, and they may only perform – a) office and clerical work; b) work of an intellectual or artistically creative nature ; c) bagging and carrying out customer’s orders; d) cashiering, selling, modeling, art work, advertising, window trimming, or comparative shopping; e) pricing and tagging goods, assembling orders, packing, or shelving; f) clean-up work and grounds maintenance—the young worker may use vacuums and floor waxers, but he or she may not use power-driven mowers, cutters, and trimmers; g) work as a lifeguard at a traditional swimming pool or water amusement park if at least 15 years of age and properly certified; h) kitchen and other work in preparing and serving food and drinks, but only limited cooking duties and no baking; i) cleaning fruits and vegetables; j) cooking with gas or electric grills that do not involve cooking over an open flame and with deep fat fryers that are equipped with and utilize devices that automatically lower and raise the baskets in and out of the hot grease or oil; k) clean cooking equipment, including the filtering, transporting and dispensing of oil and grease, but only when the surfaces of the equipment and liquids do not exceed 100° F; l) pumping gas, cleaning and hand washing and polishing of cars and trucks (but the young worker may not repair cars, use garage lifting rack, or work in pits); m) wrapping, weighing, pricing, stocking any goods as long as he or she doesn’t work where meat is being prepared and doesn’t work in freezers or meat coolers; n) delivery work by foot, bicycle, or public transportation; o) riding in the passenger compartment of a motor vehicle (except when a significant reason for the minor being a passenger in the vehicle is for the purpose of performing work in connection with the transporting—or assisting in the transporting of—other persons or property); and p) loading and unloading onto and from motor vehicles, the hand tools and personal protective equipment that the youth will use on the job site.
- Employees age 16 and 17 have no hours limits under federal law, but may not work in such hazardous jobs involving – a) manufacturing and storing of explosives; b) driving a motor vehicle and being an outside helper on a motor vehicle; c) coal mining; d) forest fire fighting and fire prevention, timber tract management, forestry services, logging, and saw mill occupations; e) power-driven woodworking machines; f) exposure to radioactive substances; g) power-driven hoisting apparatus; h) power-driven metal-forming, punching, and shearing machines; i) mining, other than coal mining; j) meat and poultry packing or processing (including the use of power-driven meat slicing machines); k) power-driven bakery machines; l) balers, compactors, and paper-products machines; m) manufacturing brick, tile, and related products; n) power-driven circular saws, band saws, guillotine shears, chain saws, reciprocating saws, wood chippers, and abrasive cutting discs; o) wrecking, demolition, and shipbreaking operations; p) roofing operations and all work on or about a roof; and q) excavation operations State Rules.
Every state also has its own rules applicable to the employment of minors. The more restrictive rule, federal or state, must be followed. For instance, in Michigan, virtually all minors must have work permits issued by their schools. Michigan’s rules are more restrictive than the federal rules in that –
- Minors cannot work more than 6 days in a workweek;
- Minors cannot average more than 8 hours per workday, nor can they work more than 48 hours in a workweek (school and work combined);
- Minors cannot work more than 5 hours continuously without a documented 30 minute uninterrupted meal or rest period; and
- Minors must be supervised by someone who is at least age 18.
Some of the rules are straightforward, but some have nuances which may require closer scrutiny and perhaps a review by counsel. This is particularly warranted whenever interns are being used in the for-profit private sector. Compliance is essential, and the DOL is being quite proactive in enforcing these laws – perhaps more than ever. For instance, the DOL is actively inviting students and others to bring claims on these issues. Indeed, this initiative is only a part of the many other new enforcement initiatives underway by the government, including but not limited to close scrutiny about individuals who may be misclassified as independent contractors.
In other words, and perhaps more so than ever before, employers should closely scrutinize their payroll practices under the FLSA and applicable state law. The DOL is now, more than ever before, eager to prosecute these matters and appears to be less eager to work with employers who are trying to navigate through the maze of complex wage and hour rules.