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Wage Payments to Interns and Externs


Some business law clients have asked recently about the need to pay interns or externs. With students trying to pad their resumes and gain experience, those job opportunities can be invaluable to all parties. However, small businesses are still subject to the North Carolina Wage and Hour Act as well as the federal Fair Labor Standards Act if these individuals are not classified as trainees, but rather as employees. This means minimum wage and overtime restrictions. That is a big change from unpaid intern.
The Department of Labor has set forth some guidelines for when interns are actually employees. Employers need to satisfy all of the following factors in order to not pay their employees. Missing even one means that the individual will need to be paid.

1. The training is similar to what would be given in a vocational school or academic educational instruction.
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 their close observation.
4. The employer that provides the training derives no immediate advantage from the activities of the trainees or students, and on occasion the employer’s operations may actually be impeded.
5. The trainees or students are not necessarily entitled to a job at the conclusion of the training period.
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.

Business owners, if you are contemplating using unpaid interns or externs, make sure that you set up your program to ensure compliance with the law, and avoid liability for unpaid wages to employees. Maginnis Law, PLLC has business attorneys who can consult small businesses regarding these issues or defend these companies in civil litigation suits filed against them. Maginnis Law, PLLC is a Raleigh law firm who practices in business litigation and other business law fields. The firm also takes cases in Cary, Morrisville, Apex, Clayton and the rest of Wake and Johnston Counties. Contact the firm to speak with a Raleigh lawyer at 919.526.0450 or visit our website at www.maginnislaw.com

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