When is a Volunteer or Intern Really an Employee?

by Michael C. Petersen

Fall 2000

Employers must pay all employees in accordance with state and federal wage and hour laws. Unfortunately, employees are not always easy to identify. Employers sometimes use volunteers and interns who have no expectation of payment. Under limited circumstances, employers are not required by law to pay volunteers and interns. However, those circumstances are narrow, and employers can suffer severe consequences for failing to pay wages. This article explains when employers may properly accept the services of volunteers and interns without pay.

Volunteers

Volunteer status is defined very narrowly to include individuals who: (1) donate their services for no compensation and with no expectation of compensation (2) to public employers, or religious, charitable, educational, public service, or similar non-profit institutions (3) for community service, religious, or humanitarian reasons.

Accordingly, private sector, for-profit businesses cannot properly accept free services from volunteers. If private employers allow individuals to perform work, they must pay them as required by the wage and hour laws. Volunteers can donate their services only to public or non-profit employers. Even then, public and non-profit employers must be extremely careful in accepting volunteer work from current employees. Such work will be exempt from wage and hour laws only when it is wholly different in nature from the work that is normally compensated.

Interns

All employers (including private sector, for-profit employers) may use interns, trainees, and student workers without pay only if the following conditions are met:

1. The employment-related training is similar to training that would be given in a vocational school.

2. The intern or trainee receives ongoing instruction on the work site and receives close supervision to the extent that any productive work performed by the student is offset by the employer's burden of supplying training and supervision.

3. The intern or trainee does not take the place of any regular employees or result in the employer refraining from hiring regular employees.

4. The intern or trainee is not entitled to a job at the completion of the learning experience.

5. The employer and the intern or trainee (or guardian) understand that there is no entitlement to wages.

It is important for employers to remember that a worker will not qualify as a true intern or trainee unless all of the above elements exist. Moreover, the parties' characterization of the relationship, by itself, has no impact on whether an employment relationship exists.

Penalties

Employers who fail to pay required minimum wages or overtime are subject to federal and state administrative investigations. Employees may also bring private actions against such employers for up to three years after the date of a wage violation. Employees may recover double their unpaid wages, pre-judgment interest, and attorney fees. Some employers may even find themselves in the unenviable position of defending class action lawsuits for wage claims.

Conclusion

As set forth above, the exemptions from the wage and hour laws for volunteers and interns are quite narrow. Most significantly, private for-profit employers may not properly accept the free services of volunteers. They may accept the services of interns, but only if every element of an internship exists. Given the limited scope of those exemptions from the wage and hour laws, and the severity of the penalties for failing to properly pay wages, employers must think carefully before accepting free services from volunteers and interns.