Must My Company Pay Its Interns Or Trainees In New York?

by admin on April 14, 2010

Generally speaking, yes. A rule of thumb is that for-profit companies in New York State must pay their interns or trainees unless, among other requirements, the interns or trainees are obtaining vocational experience and educational credit by working; are working for their own benefit rather than the company’s; and, by working, are conferring no immediate benefit on the company. Companies should consult with an experienced labor and employment attorney before permitting students or other interns to work without pay.

The strict limitations (on the ability of an employer in New York to allow interns to toil without pay) remain in effect even though, with job openings scarce for young adults, “students . . . compete in droves for the opportunity to work for free.”

Most “interns” or “trainees,” regardless of what the employer calls them, are employees within the meaning of the federal Fair Labor Standards Act, 29 U.S.C. §§ 201-219 (the “FLSA”), and its implementing regulations, 29 C.F.R. §§ 510 et seq. Likewise, most interns or trainees in New York State are employees within the meaning of the New York State Minimum Wage Act, N.Y. Labor Law § 650 et seq. (the “N.Y. Minimum Wage Act”). As a result, in most cases, both the FLSA and the N.Y. Minimum Wage Act require that an employer in New York pay its interns or trainees at least the minimum wage of $7.25 per hour.

Most employers in New York State are bound by both the federal and New York wage-and-hour laws and must abide by both laws. When there is a difference between state law and federal law, the law more beneficial to the worker governs. As a result, most employers in New York must pay their interns or trainees unless the interns or trainees fall outside of both the FLSA’s and the N.Y. Minimum Wage Act’s definition of an employee.

Federal Law

According to the regulations and Wage and Hour letter rulings of the federal Department of Labor (the “DOL”), interns or trainees are not employees under the FLSA, and therefore need not paid by an employer, if all of the following criteria apply:

  1. The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
  2. The training is for the benefit of the trainees or students;
  3. The trainees or students do not displace regular employees, but work under close supervision;
  4. The employer that provides the training receives no immediate advantage from the activities of the trainees or students and, on occasion, his operations may even be impeded;
  5. The trainees or students are not necessarily entitled to a job at the conclusion of the training period; and
  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.

The DOL’s above criteria (for whether an employer must pay its interns the minimum wage) closely track the U.S. Supreme Court’s 1947 decision in Walling v. Portland Terminal Co., 330 U.S. 148 (1947).

In the Walling case, which is linked here , the U.S. Supreme Court held that the FLSA did not require the defendant railroad to pay “prospective yard brakemen” who underwent a seven- or eight-day “course of practical training.” The Walling Court gave weight to, among other factors, that “[t]he applicant[]s[′ ] work does not expedite the company business, but may, and sometimes does, actually impede or retard it.”

New York law

An employer in New York need not pay a student who, by working for the employer, is obtaining vocational experience and educational credit. More specifically, under the regulations implementing the N.Y. Minimum Wage Act, “A student is not deemed to be working or to be permitted to work” — and accordingly, an employer need not pay a student for his or her labor — “if, in order to fulfill the curriculum requirements of the educational institution which such student attends, such student is required to obtain supervised and directed vocational experience in another establishment.” 12 N.Y.C.R.R. § 142-2.11.

For purposes of New York’s exemption from the minimum wage requirement, a “student” means “an individual who is enrolled in and regularly attends a course of instruction at a state-licensed educational institution of learning leading to a degree, certificate or diploma, or who is completing residence requirements for a degree.” 12 N.Y.C.R.R. § 142-2.23.

Call the Law Offices of David S. Rich, LLC at (212) 209-3972 to confer with a knowledgeable labor and employment attorney about assuring your company’s compliance with wage and hour laws, or to retain a skilled employment attorney to defend your company in a wage and hour lawsuit.

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