Act Now Advisory: New York State Department of Labor Issues Opinion Letter on InternshipsJanuary 14, 2011
The new year has only just begun, but many employers have started to think about their 2011 summer internship programs. New York employers should be aware that on December 21, 2010, the New York State Department of Labor ("NYSDOL") published a detailed opinion letter on whether an internship (including, but not limited to, a summer internship) may qualify for an exception to New York State's minimum wage law.
The New York State Minimum Wage Act, New York State Labor Law §§ 650-665 (the "Minimum Wage Act" or the "Act"), applies to all individuals who meet the statutory definition of "employee" codified at Section 651(5) of the Act. The Act carves out 15 categories where individuals are excluded from coverage and, therefore, are not considered "employees." A worker or individual who is not in an employment relationship is excluded from coverage under the Act. To determine the existence of an employment relationship with respect to interns or trainees, the NYSDOL reviews the totality of the circumstances, primarily using the six criteria relied upon by the U.S. Department of Labor, as well as five additional factors. In order to be exempt from the protections of the Minimum Wage Act, an internship must satisfy all 11 criteria. The rigorous test is designed to ensure that interns are protected from minimum wage law violations.
Intern/Trainee Exception Test
The following 11 factors make up the NYSDOL's test:
1. The training, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in an educational environment.
For example, an internship program that would require participants to attend weekly classroom sessions with extensive job shadowing and a great deal of supervision will likely satisfy this requirement. The more the internship provides participants with skills that can be used in multiple employment settings (rather than specifically for one company), the more likely the internship will satisfy this criterion.
2. The training is for the benefit of the intern.
Any benefit conferred upon the company providing the internship must be merely incidental to the benefits provided to the intern. The receipt of academic credit for participating in the training program, for example, demonstrates evidence of the beneficial nature of the program to the intern.
3. The interns do not displace regular employees and any work they may do is under close supervision.
Interns must not be used in lieu of hiring new employees. This criterion may be satisfied through an internship program that maintains close and constant supervision by regular employees, where the intern performs minimal or no productive work, emphasizing the educational nature of such a program.
4. The employer who provides the training derives no immediate advantage from the activities of the trainees or students and, on occasion, operations may actually be impeded.
5. The trainees or students are not necessarily entitled to a job at the conclusion of the training period and are free to take employment elsewhere in the same field.
6. The trainees or students have been notified, in writing, that they will not receive any wages for such training and are not considered employees for minimum wage purposes.
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7. Any clinical training is performed under the supervision and direction of individuals knowledgeable and experienced in the activities being performed.
8. The trainees or students do not receive employee benefits.
9. The training is general, so as to qualify the trainees or students to work in any similar business, rather than designed specifically for a job with the employer offering the program.
10. The screening process for the internship is not the same as for employment, and does not appear to be for that purpose, but involves only criteria relevant for admission to an independent educational program.
11. Advertisements for the program are couched clearly in terms of education or training, rather than employment, although employers may indicate that qualified graduates may be considered for employment.
What Employers Should Do Now
Since both the U.S. Department of Labor and the NYSDOL have ramped up their efforts in the investigation and enforcement of minimum wage laws, including the intern/trainee exception, employers must determine whether their internship programs meet the preceding 11 criteria. Otherwise, interns will need to be paid at least the minimum wage.
- benefits the intern, not the employer;
- is general to the industry, not particular to the employer;
- is similar to what would be provided in an educational environment;
- does not have requirements or a screening process similar to those of employees at the company; and
- is advertised as an educational experience, not as employment.
- The intern:
- does not displace any employees; and
- works under the close supervision of individuals who are knowledgeable and experienced in the activities being performed.
- The employer:
- does not gain a benefit from the internship;
- does not guarantee employment at the conclusion of the internship;
- does not provide an intern with employee benefits; and
- informs the intern, in writing, that he or she is not an employee and will not receive compensation due to the internship.
For more information about this Advisory, please contact:
Jennifer A. Goldman, a Law Clerk — Admission Pending (not admitted to the practice of law) — in the Firm's New York office, contributed significantly to the preparation of this Advisory.