Small business owners, ourselves included, understand and appreciate the need for good quality workers at affordable costs. And you've probably heard that it's possible to have volunteers, interns, or temps, Oh My! Before you wind up costing your business more than you're saving, and end up moving to the Land of Oz to avoid hefty penalties and fines, take the time to ensure you're complying with all of your requirements.
The Department of Labor (DOL) has great resources to help you understand the world of volunteers and when unpaid work is allowable. We'll boil it down to the most basic concept, and that is:
VOLUNTEERS ARE ONLY ALLOWED IN NON-PROFIT BUSINESSES.
Which means that if you are operating a for-profit business, it is not allowable to have workers that are not paid. Straight from the mouth (or website) of the DOL and Fair Labor Standards Act (FLSA):
"The FLSA recognizes the generosity and public benefits of volunteering and allows individuals to freely volunteer in many circumstances for charitable and public purposes. Individuals may volunteer time to religious, charitable, civic, humanitarian, or similar nonprofit organizations as a public service and not be covered by the FLSA."
In addition to the requirement that the organization is a nonprofit, there are some other criteria that have emerged from opinion letters and court decisions. Those include that the volunteer should be providing services without promise, expectation, or receipt of compensation; they are offering their services freely and without coercion; and they are not employed by the same organization to do the same work as their paid job. Typically, the volunteer contributes on a part-time basis, and they do not displace regular employees.
For nonprofits opting to use volunteers, please see the fine print in the DOL publication located here.
With our HR HQ located in a college town, this is a topic we discuss often. Thankfully unpaid internships ARE a method of having individuals involved in your for-profit business without paying wages.
HOWEVER, there are six criteria to consider, and they ALL must be met before having unpaid interns:
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.
If you have a student who is performing work for you and not meeting all of the criteria listed above, they should be considered a paid employee or temporary employee, and all of the State & Federal Wage & Hour rules apply, as they are covered by the FLSA.
If you don't believe us, just ask the Olsen Twins. How rude!
The summer and the holidays are common times in which employers have workers on a temporary basis. Unless the worker is correctly classified as an Independent Contractors , they fall under the requirements of the Fair Labor Standards Act and must be paid accordingly.
If you're feeling confused about the difference between an employee and an independent contractor, head over here. "Casual Labor" is not a legally recognized classification, and anyone who is working under this title should be classified as an Independent Contractor or Employee.
So there you have it! If you only take away 2 things from this blog post, we hope that it is the understanding that volunteers are only allowed if you’re a non-profit business and unpaid internships have to meet six different criteria in order to be UNPAID. The Fair Labor Standards Act was created to ensure that workers are paid for the work they provide, so no wonder they have so much to say about it. When in doubt, pay the individual for their time and effort.
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simplyHR LLC is an HR consulting firm located in Fort Collins, CO providing partnerships to companies in all 50 states. Our goal at simplyHR LLC is to provide training, education, partnership, and resources to make Human Resources simple for small businesses.
The content of this website provides practical and HR best practice information and is not legal advice. simplyHR LLC does not provide legal advice or other professional services. While every effort is made to provide accurate and current information, laws change regularly and may vary depending on the state and/or the municipality your business operates in. The information provided from simplyHR LLC is provided for informational purposes and is not a substitute for legal advice or your professional judgement. You should review applicable federal, state and municipality laws in your jurisdiction and consult with legal counsel as you deem necessary.