HR MATTERS E-TIPS
THIS WEEK'S E-TIP: FLSA Issues & Summer Interns Q&A
Published by Personnel Policy Service, Inc.
"Your Policy and Compliance Experts Since 1972"
 
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THIS WEEK'S E-TIP: FLSA Issues & Summer Interns Q&A

Do you have student interns working for you this summer? Find out your
pay obligations under the FLSA.
 
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THIS WEEK'S E-TIP: FLSA Issues & Summer Interns Q&A

Q: We have several college students working for us this summer.
We call them interns and pay them a stipend for their work. Is this okay?

A: It depends on whether the students are "employees" of your
organization. Generally, under the Fair Labor Standards Act (FLSA), any
person who is "permitted" to work for the advantage of the employer is
considered an employee and must be paid. However, the fact that a
person performs some type of work for an employer does not necessarily
mean they must be treated as an employee.

The Department of Labor (DOL) has set out some guidance on this issue
in its regulations and Wage and Hour opinion letters interpreting the
FLSA. According to the DOL, a person may be considered a "trainee" or
a student and not an employee entitled to minimum wage and overtime
under the FLSA if all of the following six criteria are met:
  1. The training the person receives is similar to that which would be
    given in a vocational school.
  2. The training is for the benefit of the trainee or student.
  3. The trainee or student does not displace regular employees, but
    works under their close supervision.
  4. The employer that provides the training does not derive any
    immediate advantage from the activities of the trainee or student, and on
    occasion its operations may be impeded.
  5. The trainee or student is not necessarily entitled to a job at the
    conclusion of the training period.
  6. The employer and the trainee or student understand that the
    trainee or student is not entitled to wages for the time spent in training.

So, if the students are receiving training that benefits them, rather than
the employer, and the training furthers their educational goals, the DOL
typically will not consider them to be employees. Similarly, if the
students receive academic credit for their work, they likely will not be
considered employees. In addition, these students may be paid a
stipend and still not be considered employees as long as the stipend
does not exceed a reasonable estimate of the students' expenses.

On the other hand, if the students are doing work normally performed by
other employees and receive little supervision or training, and the
employer gains an immediate benefit from the students' work, they
probably should be treated as employees under the FLSA.

 
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Even if the students should be considered employees, you may be able
to obtain a special certificate to hire them at wages that are lower than
the minimum wage. Under the FLSA, "full-time students" employed in
retail and service establishments and in agriculture may be hired for a
wage that is at least 85% of the current minimum wage (now $5.15 an
hour). In addition, students over the age of 16 who are enrolled in an
accredited school, college, or university and who are employed in an
approved vocational training program may work in an occupation
requiring a substantial learning period at a wage that is at least 75% of
the minimum wage.

Because these requirements are complex, you may decide to pay these
interns as employees. If you want to treat them as nonemployees or pay
them using the subminimum wage exceptions, you should consult with
legal counsel to ensure you comply with all of the requirements.
 
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Subscribers to the Personnel Policy Manual and HR Policy Answers on
CD can find additional information on pay for students and trainees in
Employee Classifications, Chapter 209, note 21.

If you don't have the manual, but would like to order a trial review, go to:
http://www.ppspublishers.com/service2.htm

Or just give us a call toll-free at 1-800-437-3735.
 
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Information provided in HR Matters E-Tips is researched and reviewed
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