Some business law clients have asked recently about wage payments to interns and externs. Unpaid internships are not only valuable to students trying to pad their resumes, but also to business owners requiring help. However, small businesses are still subject to the North Carolina Wage and Hour Act as well as the federal Fair Labor Standards Act. Under these statutes, employers have to provide minimum wage and overtime restrictions for employees. But how do you determine whether someone is an employee?
Intern or Employee?
An employer owes wage payments to individuals unless:
1. The training is similar to a vocational school or academic educational instruction.
2. The training benefits trainees or students
3. The trainees or students do not displace regular employees, but work under their close observation.
4. The employer that provides the training derives no immediate advantage from the activities of the trainees or students, and on occasion the employer’s operations may actually be impeded.
5. The trainees or students are not necessarily entitled to a job at the conclusion of the training period.
6. The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.
Employers must satisfy all of the above regulations. If all of the above are true, then you can be secure in the legality of your actions. Conversely, violating even one of these regulations could put your business at risk.
We can help.
In essence, if you are contemplating using unpaid interns or externs, make sure that you set up your program to ensure compliance with the law. Otherwise, you’ll be liable for unpaid wages to employees. Maginnis Law, PLLC can represent you in business litigation. The firm takes cases in Raleigh, Cary, Morrisville, Apex, Clayton and the surrounding areas. For more information, contact our attorneys at (919) 526-0450 or send us a message through our contact page.