Employee, Intern, Trainee, Volunteer: Which Should You Choose?

Designating the term “Intern”, “Trainee”, or “Volunteer” to individuals does not automatically exempt the employer from federal and state minimum wage and overtime requirements. Unless the positions meet certain statutory and regulatory criteria, these individuals will be subject to the same wage-hour requirements as other employees. The liabilities for failing to compensate an employee properly include back wages, overtime, and liquidated and punitive damages, and attorney fees may also be available. Employers must therefore become familiar with the criteria set forth by the Federal Fair Labor Standards Act (“FLSA”) and applicable state laws then they pursue workers as unpaid interns, trainees, and volunteers.

Unpaid Interns: Whether an intern may properly be considered a “trainee” and not an “employee” under the FLSA (and a number of state laws) often requires a fact-specific analysis, and will depend on certain factors. The U.S. Department of Labor (“USDOL”) has established the six criteria listed below to guide courts and employers in determining whether trainees, students, interns and the like are considered employees under the FLSA:

1. The individual receives training similar to what would be given in a vocational school or academic educational instruction; 2. The training is for the benefit of the intern or trainee; 3. The interns or trainees do not displace regular employees, but work under close observation; 4. The employer that provides the training derives no immediate advantage from the activities of the individuals and on occasion the employer’s operations may actually be impeded; 5. The interns or trainees are not necessarily entitled to a job at the conclusion of the training period; and 6. The employer and the individual understand that no wages are paid for the time spent in the internship.

The USDOL requires that all six of these criteria must be satisfied for an individual to be deemed an “intern” under the FLSA.

Volunteers: Under the FLSA, “volunteers” are treated somewhat differently than interns or trainees. For public sector employees to volunteer with their employing public agency and maintain “volunteer” status for their “volunteer” activities, the individuals must:

1. Perform hours of service for a public agency for civic, charitable, or humanitarian reasons, without promise, expectation, or receipt of compensation for services rendered – although a volunteer can be paid expenses, reasonable benefits, or nominal fee to perform services;
2. Offer services freely and without pressure of coercion; and
3. Not otherwise be employed by the same public agency to perform the same type of services as those for which the individual proposes to volunteer. This volunteer exemption, however, is limited to public sector employers. Under no circumstance will an individual be deemed a “volunteer” when providing services private, for-profit employers. Any individual providing services for such an employer may do so only as an intern/trainee (provided the necessary criteria are met) or an employee.

The USDOL’s enforcement position has generally been that volunteer work for a private, not-for-profit employer is not considered compensable under the FLSA so long as certain criteria are met.

Averting “Intern” and “Volunteer” Mislabeling. The exclusion from the definition of employment by the FLSA is restrictive and individuals who are “suffered or permitted” to work, in most cases, must be compensated by the employer. However, there are practices that employers can initiate which could reduce the risk of FLSA and/or state mislabeling violations such as possessing an agreement detailing the parties’ mutual intent that: (1)their relationship will not be one of employment, (2)the intern/trainee does not expect employment or compensation, and (3)the relationship is to provide the intern/trainee with skills that can be used in various settings.

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