With Memorial Day weekend, the unofficial start of summer, fast approaching, it’s a good time to go over the rules regarding the use of interns. Nothing of significance has changed since my post on this subject last year, but it never hurts to refresh one’s memory, as a business that violates these rules can find itself in trouble with the U.S. Department of Labor (the “USDOL”) and potentially, the IRS.
The issue that poses the biggest risk of trouble for an agency is whether an intern will be compensated and if so, how much compensation they will be paid.
If an agency does not want to pay an intern for their services, the burden is on the agency to prove that the intern is 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. The same burden must be met if the agency wants to pay an intern less than the minimum wage for the hours worked by the intern. That burden is higher for an agency or other 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 agency 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.
It does not matter that the intern willingly agreed to perform the services in question without pay or for less than the minimum hourly wage, 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 the agency. A successful claim could result in the intern receiving up to twice the amount of compensation they should have been paid and will result in the agency paying the intern’s attorney fees and other expenses of litigation.
For an agency 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.) For agency owners who want to give their children a taste of what it’s like to work in the agency, only the restrictions on prohibited occupations will apply.
A summer internship can be beneficial for both the intern and the agency, but to avoid trouble, the agency needs to know and follow the above rules.
BEST WISHES FOR A SAFE AND ENJOYABLE MEMORIAL DAY WEEKEND.