Memorial Day weekend is right around the corner. Since it is traditionally considered the unofficial start of summer and most schools have begun their summer break, I thought it would be a good idea to remind my readers of the rules that apply to the hiring of interns. If those rules are not followed, a business can find itself in trouble with the U.S. Department of Labor (the “USDOL”) and potentially, the IRS.
My last post on this subject was two years ago and the rules governing the hiring and compensation of interns remain essentially the same. The issue that poses the biggest risk of trouble for an employer is whether an intern will be compensated and if so, how much compensation they will be paid.
If the intern is not paid anything or less than the current minimum wage for the time they spend working for a business, the burden is on the business to prove that the intern was in fact a “trainee”, who does not have to be paid anything for their services, and not an “employee”, who must be paid at least the minimum wage for their services. That burden is higher for a profit-making business because the USDOL, which is responsible for enforcing the minimum wage law, will presume that such an intern is an “employee”. The USDOL has issued a Fact Sheet in which it establishes six criteria that must be met to prove an intern is a “trainee.” (Click here for an article I have written that discusses those criteria.) The bottom line is that if the business owner derives any significant benefit from the services of an intern, that intern will most likely be considered an “employee” by the USDOL for purposes of the minimum wage law.
The fact that the intern willingly agreed to perform the services in question without being paid any compensation or in exchange for small stipend, the amount of which is not tied to how many hours they may work is irrelevant, as the United States Supreme Court has held that an individual can not waive their rights under the minimum wage law. Thus, an intern could decide, up to three years later, that maybe they should have been paid the full minimum wage for all the services they performed for a business, if for whatever reason they now need the money or have a grievance of any kind against the business.
For a business that is considering hiring someone who is under 18 years of age, both the federal and state governments impose restrictions on the types of activities in which such a person can engage and for how long each day, regardless of whether they are a “trainee” or an “employee.” The main difference between the two sets of restrictions is that Georgia law requires a person under 18 to get an employment certificate, or work permit, from the school they last attended or the local county school superintendent. (Click here for a fact sheet from the USDOL on this subject and here for a summary of the restrictions imposed by federal and state law from the Georgia Department of Labor.) As noted at the bottom of the Georgia Department of Labor’s summary sheet, if the child is working in a business owned by his or her parent or guardian, only the restrictions on prohibited occupations will apply.
A summer internship can be beneficial for both the intern and the employer, but to avoid trouble, the employer needs to know and follow the above rules.