School is Out—Summer Interns and Child Labor
By Lehr Middlebrooks Vreeland & Thompson, P.C.
May 30, 2019
This article was prepared by Lyndel L. Erwin, Wage and Hour Consultant for the law firm of Lehr Middlebrooks Vreeland & Thompson, P.C. Prior to working with the firm, Mr. Erwin was the Area Director for Alabama and Mississippi for the U. S. Department of Labor, Wage and Hour Division, and worked for 36 years with the Wage and Hour Division on enforcement issues concerning the Fair Labor Standards Act, Service Contract Act, Davis Bacon Act, Family and Medical Leave Act and Walsh-Healey Act. Mr. Erwin can be reached at 205.323.9272.
Each year as we approach the end of another school year, I try to remind employers of the potential pitfalls that can occur when employing persons under the age of 18.
While summer employment can be very beneficial to both the minor and the employer, one must make sure that the minor’s employment is permitted under both the state and federal child labor laws. According to some information I found on the Wage Hour website, they are not spending nearly as much of their resources, as their emphasis is currently on traditional low-wage industries in conducting directed child labor investigations as they have previously. However, they still conducted 695 child labor investigations and found almost 2,300 minors employed contrary to the child labor requirements of the Fair Labor Standards Act last year. Consequently, employers still need to be very aware of those requirements before hiring a person under the age of 18.
In 2016, Congress amended the child labor penalty provisions of the Fair Labor Standards Act, increasing the maximum penalties and implementing an annual escalator provision. Effective January 2019, any violation that leads to serious injury or death may result in a penalty of up to $58,383, while the penalty for other prohibited employment of minors may be as great at $12,845. Additionally, the amount can be doubled for violations found to have been repeated or willful.
The Act defines “serious injury" as any of the following:
1. Permanent loss or substantial impairment of one of the senses (sight, hearing, taste, smell, tactile sensation);
2. Permanent loss or substantial impairment of the function of a bodily member, organ or mental faculty; including the loss of all or part of an arm, leg, foot, hand or other body part; or
3. Permanent paralysis or substantial impairment causing loss of movement or mobility of an arm, leg, foot, hand or other body part.
For example, employers are also required to have a record of the date of birth of any employee under the age of 19 on file and if you have not maintained such a record there is a penalty of $398 per investigation. Further, if a minor that is employed contrary to the regulations and is killed or seriously injured, the maximum penalty is more than $58,000.
There are seventeen non-farm occupations determined by the Secretary of Labor to be hazardous that are out of bounds for teens below the age of 18. Those that are most likely to be a factor are:
• Driving a motor vehicle or being an outside helper on a motor vehicle.
• Operating power-driven wood-working machines.
• Operating meat packing or meat processing machines (includes power-driven meat slicing machines).
• Operating power-driven paper-products machines (includes trash compactors and paper bailers).
• Engaging in roofing operations.
• Engaging in excavation operations.
In recent years, Congress has amended the FLSA to allow minors to perform certain duties that they previously could not do. However, due to the strict limitations that are imposed in these changes and the expensive consequences of failing to comply with the rules, employers should obtain and review a copy of the regulations related to these items before allowing an employee under 18 to perform these duties. Below are some of the more recent changes.
1. The prohibition related to the operation of motor vehicles has been relaxed to allow 17-year-olds to operate a vehicle on public roads in very limited circumstances. However, the limitations are so strict that I do not recommend you allow anyone under 18 to operate a motor vehicle (including the minor’s personal vehicle) for business related purposes.
2. The regulations related to the loading of scrap paper bailers and paper box compactors have been relaxed to allow 16 & 17-year-olds to load (but not operate or unload) these machines.
3. Employees aged 14 and 15 may not operate power lawn mowers, weed eaters or edgers.
4. 15-year-olds may work as lifeguards at swimming pools and water parks, but they may not work at lakes, rivers or ocean beaches.
There are no limitations on the work hours, under federal law, for youths 16 and 17 years old. However, the state of Alabama prohibits minors under 18 from working past 10:00 p.m. on a night before a school day. Youths 14 and 15 years old may work outside school hours in various non-manufacturing, non-mining, and non-hazardous jobs (basically limited to retail establishments and office work) up to;
• 3 hours on a school day
• 18 hours in a school week
• 8 hours on a non-school day
• 40 hours on a non-school week
• Work must only be performed between the hours of 7 a.m. and 7 p.m., except from June 1 through Labor Day, when the minor may work until 9 p.m.
In the state of Alabama, to make it easier on employers, the Alabama Legislature several years ago amended the state law to conform very closely to the federal statute. Further, the state of Alabama statute requires the employer to have a work permit on file for each employee under the age of 18. Although the federal law does not require a work permit, it does require the employer to have proof of the date of birth of all employees under the age of 19. A state issued work permit will meet the requirements of the federal law. Currently, work permits are issued by the Alabama Department of Labor. Instructions regarding how to obtain an Alabama work permit are available on the Alabama Department of Labor website.
If you operate in states other than Alabama, I recommend that you check with those states in order to determine their requirements. Typically, that information is available on the website of the Department of Labor of each state.
The Wage Hour Division of the U. S. Department of Labor administers the federal child labor laws while the Alabama Department of Labor administers the state statute. Employers should be aware that all reports of injury to minors, filed under Workers Compensation laws, are forwarded to both agencies. Consequently, if you have a minor who suffers an on the job injury, you will most likely be contacted by either one or both agencies. If Wage Hour finds the minor to have been employed contrary to the child labor law, they will assess a substantial penalty in virtually all cases. Thus, it is very important that the employer make sure that any minor employed is working in compliance with the child labor laws.
Another issue that many employers face during the summer is the use of Interns. In 2018, Wage Hour issued some revised guidelines setting forth their position as to whether the Interns are employees or do not have to be compensated for the time they spend at the firm. Below is some information from a fact sheet that is found on the Wage Hour website.
The FLSA requires “for-profit” employers to pay employees for their work. Interns and students, however, may not be “employees” under the FLSA—in which case the FLSA does not require compensation for their work.
The test for unpaid interns and students:
Courts have used the “primary beneficiary test” to determine whether an intern or student is, in fact, an employee under the FLSA. In short, this test allows courts to examine the “economic reality” of the intern-employer relationship to determine which party is the “primary beneficiary” of the relationship. Courts have identified the following seven factors as part of the test:
1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.
Courts have described the “primary beneficiary test” as a flexible test, and no single factor is determinative. Accordingly, whether an intern or student is an employee under the FLSA necessarily depends on the unique circumstances of each case.
I suggest that an employer who is planning to not pay his interns at least the minimum wage and overtime after 40 hours in a workweek seek guidance from counsel to ensure that the intern is not in fact an employee. Unless the intern is participating in an educational program at an institution of higher education, I find that it is very difficult to convince Wage Hour that the intern is not an employee.