The Fair Labor Standards Act (“FLSA”) governs minimum wage and overtime requirements for workers. Nonprofit organizations are governed by the FLSA and must satisfy minimum wage and overtime requirements if the nonprofit organization is “engaged in commerce or the production of goods for commerce.” As a rule, the Department of Labor interprets the law very broadly when determining whether an activity constitutes a commercial enterprise thereby subjecting it to FLSA’s minimum wage and overtime requirements. According to the FLSA, “commerce” is defined as: “trade, commerce, transportation, transmission or communication among the several states or between any state and any place outside thereof.” Given the DOL’s propensity to broadly interpret the statute, most non-profit organizations will be subject to the FLSA.
Fair Labor Standards Act Exemption for Trainees and Student Interns
Are student interns “employee” or “trainees” within the meaning of the Act?
If interns qualify as trainees and not employees, then the minimum wage and overtime requirements will not apply. According to the Field Operations Manual, the Department of Labor has established six criteria to distinguish “trainees” from “employees.” If an intern satisfies all of the following six criteria, then they will qualify as “trainees” and no employment relationship will exist and, as such, the relationship will be exempt from FLSA coverage.
To be exempt from minimum wage and overtime requirements, interns must meet all of the following criteria:
- The internship, even though it includes actual operation/duties for the non-profit, is similar to training that would be given in a vocational school or academic/educational institution. In other words, an intern must receive hands on experience and/or the training must be a practical application of material taught in the classroom.
- The training is for the benefit of the interns. For example, the intern earns college credit or the intern experiences real life application of the concepts taught in school.
- The interns do not displace regular employees and work under close observation. In other words, no employee is laid off, no position is eliminated and no employee loses hours as a result of the intern. Also, non-profit employees must closely monitor the work and activity of the intern.
- The non-profit must derive no immediate advantage from the activities of the interns and, on occasion, the non-profit’s operations must actually be impeded by the internship. For example, the loss of productivity by a non-profit employee as a result of that employee’s need to supervise the intern would likely satisfy the second prong of this requirement. If the intern’s activities or work duplicates the work of a non-profit employee then the first prong would be satisfied.
- The interns are not necessarily entitled to a job at the conclusion of the training period.
- The non-profit and the interns understand that the interns are not entitled to wages for the time spent in training.
Essentially, the scale of benefit should tip toward the intern. If the job training program primarily provides professional experience that furthers an intern’s educational goals, an intern may not be considered an employee entitled to compensation. But if the interns are doing work usually done by employees and are not receiving training and close mentoring, they should be paid wages (at least minimum wage). Ultimately, the experience should look more like a learning and training experience than a job.
If the internships satisfy all of the above criteria, then the FLSA will not apply and the non-profit does not have to pay the intern-trainees minimum wage (although, at non-profit’s discretion, they can provide stipend).
Fair Labor Standards Act Exemption for Volunteers
The FLSA also recognizes that a person may volunteer time to religious, charitable, civic, humanitarian or similar non-profit organizations as a public service and not be covered by the FLSA. However, such a person must volunteer his time freely for public service, religious or humanitarian objectives, and without contemplation or receipt of compensation. Typically, the volunteers serve on a part-time basis and do not displace regular employed workers nor do they perform work that would otherwise be performed by employees. In other words, if the following criteria are satisfied, then the volunteer’s services will be exempt from the FLSA:
- The volunteers perform their services freely and without compensation.
- The volunteers work part-time or on a temporary basis.
- The volunteers do not displace other regular workers nor do they perform work that would otherwise be performed by employees.
The criteria to qualify as a volunteer who is exempt from the FLSA are much less stringent than the requirements for an intern-trainee. However, there is one clear distinction between the two. The intern-trainee can be paid. The volunteer must be unpaid.
If you have any questions about this article, need help with non-profit-related decisions, or any other legal matter, please contact Merritt Green, Managing Partner and Chair of General Counsel, P.C.’s Labor and Employment Practice Group at firstname.lastname@example.org or 703-556-0411.