Many employers are starting to think about additional staffing for the summer. Using unpaid interns remains an option for some employees. The rules are different for unpaid interns depending on whether the employer is public or private. My colleague, Jeff Brown recently wrote on a shift in the test for appropriate unpaid interns in private sector. You can read it here.
The U.S. Department of Labor has distinguished interns in the public sector stating that unpaid internships, “where the intern volunteers without expectation of compensation are generally permissible.” Public sector employers should exercise care to document the voluntary nature of the relationship.
Sometimes employers attach a stipend to a volunteer position to defray the costs related to being a volunteer or intern and to provide minimal remuneration or “spending money” to the volunteer who is devoting substantial time to the employer, whether or not the volunteer or intern is receiving educational credit for this work.
While an employer, whether public or private, can reimburse interns or volunteers for expenses, their status as unpaid volunteers or interns is destroyed if they are paid a stipend that does not approximate their expenses in performing their volunteer or internship work. The Department of Labor finds that a payment of this kind of stipend turns the volunteer or intern into an employee. As such, this is fine, except that then the employer, whether public or private, is bound by minimum wage and overtime laws.
No exception exists under either state or federal wage laws for stipend payments to volunteers or interns that are not strictly expense reimbursement. For instance, if an employer wishes to pay a stipend of $500 a month to its student intern or volunteer, which is not directly related to reasonable expenses of serving in that capacity, such as transportation costs or possibly meals, then what has happened is now that employer has an employee who they are paying $500 a month. The employer has to ensure that the number of hours worked by the intern or volunteer calculate to at least minimum wage to the employee and if the employee works over 40 hours in a week that they are paid overtime.
In the end, it may be better to forego paying a stipend to interns or volunteers, but reimburse them dollar for dollar for expenses.