DOL: Externs not employees of sponsoring companies

Externs—students who participate in job shadowing offered by sponsoring employers—are not employees covered by the Fair Labor Standards Act (FLSA), according to a wage and opinion letter released by the Department of Labor (DOL) on April 21.

The letter (FLSA2006-12), which was signed on April 6, answered the inquiry of an employer that lets students spend one week shadowing employees. The students do not receive compensation or college credit for the time.

The sponsoring employer invests significant effort designing experiences for the externs, but the program is purely educational. Students do not generally perform work for the employers, but may do small office tasks or help with a project.

Other than the satisfaction of assisting students’ career development, the only benefit to the sponsor is the opportunity to screen future interns or employees, the DOL noted. But externs are not guaranteed future internships or employment.

In determining whether externs are employees covered by the FLSA, the DOL uses the same six factors it applies when it evaluates whether trainees, interns, apprentices, graduate assistants or similar individuals are employees:

• The training is similar to what would be given in a vocational school or academic educational instruction.
  
• The training is for the benefit of the trainees or students.
  
• The trainees or students do not displace regular employees, but work under their close observation.
  
• The employer that provides the training derives no immediate advantage from the activities of the trainees or students, and the employer’s operations may be impeded.
  
• The trainees or students are not entitled to a job at the end of the training period.
  
• The employer and the trainees or students understand that the time spent in training will not entitle the program participants to wages.
  

If all six factors are met, there is no employment relationship. Here all six factors were met, according to the DOL, which highlighted the short duration of the sponsoring employer’s program, the fact that externs do not displace any employees and the employer’s clear notice to externs that they will not receive jobs at the end of the externship or be compensated.

The typical externship or internship program often satisfies the DOL’s six-part test, the department noted.

Allen Smith, J.D., is senior legal editor for HR News.

Related articles:

Learning goes both ways during SHRM’s Disability Mentoring Day, HR News, Oct. 21, 2005.

FLSA determines if ‘intern’ is actually ‘employee,’ HR Solutions, May 21, 2004.

School-to-Work Partnerships, SHRM White Paper, July 1999.

Status of Interns and Independent Contractors, SHRM White Paper, February 1995.

For developments in other states, visit State Workplace Law Resources on SHRM Online