Legal Issues with Student Workers

Legal Issues With Student Workers:

A Primer for SUNY’s Partners in Experiential Education

In recent years, both employers and their college and university partners have increased focus on different forms of experiential education as a way to deepen the educational experience and promote workforce readiness. Concurrently, regulators and claimants have increased their efforts to ensure that labor laws and protections are applied and enforced correctly within the workplace environments that students engage. This primer is meant as an introduction and a guide to help SUNY’s partners identify and navigate the legal issues that may arise when they participate in educational programs with SUNY campuses.

Paid vs. Unpaid “Employees”

One of the more active and high-profile areas involving student workers has been a recent spate of lawsuits and enforcement actions under the Fair Labor Standards Act (FLSA), which imposes a federal minimum wage that employers must pay anyone defined as an “employee” under the FLSA (N.Y. Labor Law has a corresponding requirement). Critical here is determining whether a student worker is an “employee” under the FLSA. If someone is an employee under FLSA, then minimum wage and overtime rules apply regardless of what his or her title is (e.g., intern, assistant, trainee, etc.) or whether s/he receives academic credit.

Although courts around the country have disagreed about the applicable standard in the past, the safest way to determine whether a student worker will be entitled to minimum wage under the FLSA is what is known as the Six-Part Test. According the U.S. Department of Labor (DOL), an unpaid internship will not violate the FLSA if it is a training program which meets the following criteria:

1. The training, even though it includes actual operations of the facilities of the employers, is similar to that which would be given in a class.
2. The training is for the benefit of the student.
3. The student does not displace a regular employee, but rather works under the close observation of a regular employee or supervisor.
4. The employer derives no immediate advantage from the activities of the student; and on occasion, the employer’s operations may actually be impeded by the training.
5. The student is not necessarily entitled to a job at the conclusion of the training period.
6. The employer and the student understand that the student is not entitled to wages for the time spent.

The third and fourth factors used by the DOL tend to cause the most problems for SUNY’s experiential education partners. Whether student worker displaces regular employees will largely depend on the level of responsibility assigned to him or her, the number of workers and the number of hours each works. Generally, the fewer the hours worked, the less likely it is that student worker displaces regular employees. Other important considerations when evaluating the third factor are the amount of supervision the student worker requires and the relative staffing levels when the student workers are present or away. If an employer must consistently assign employees to supervise student workers, those workers are incapable of displacing the regular employees. Likewise, if staffing levels are constant regardless of the presence of student workers, it is unlikely that those students are impacting employment opportunities.

Properly understood, the fourth criterion does not necessarily prohibit the use of the student’s work product unless the product is both substantial and ready for use without adaptation or assistance. The more a student worker’s product needs modification or revision, or involves collaboration between the student worker and the employer’s personnel, the more it can be said that the employer “derives no immediate benefit.” Similarly, if the employer or its staff must continuously supervise the student worker, the benefits it will reap are not immediate.

It must also be noted that, the FLSA makes a special exception for employers in the public sector. Individuals who volunteer to perform services for a state or local government agency—and sometimes for religious, charitable, civic, or humanitarian non-profit organizations—may be exempt from the minimum wage requirements of FLSA. Unpaid internships in the public sector and certain non-profit charitable organizations, where the intern volunteers without expectation of compensation, are generally permissible. If such workers are paid anything, they must be paid at least minimum wage or only a stipend for expenses related to their internship, such as transportation costs, meals, etc.

It is, of course, always preferable when possible to offer paid internships, whether in the public or private sector.

Workers Compensation

From the Employers’ Handbook to Workers’ Compensation in New York State:

“Student interns are individuals that are providing services to gain work experience.

An unpaid student intern providing services to a for-profit business, a nonprofit or a

government entity is generally considered to be an employee of that organization and should

be covered under that organization’s workers’ compensation insurance policy. Workers’

Compensation Law Judges have ruled that the training received by student interns constitutes

compensation (even though the student interns may not be receiving actual ‘cash payments’

for their efforts).

Exception: Please note that student interns (paid or unpaid) providing non-manual services to

a religious, charitable or educational institution (covered under Section 501(c)(3) of the IRS

tax code) are exempt from mandatory coverage (but can also be covered voluntarily).

[Manual labor includes but is not limited to such tasks as filing; carrying materials such as

pamphlets, binders, or books; cleaning such as dusting or vacuuming; playing musical

instruments; moving furniture; shoveling snow; mowing lawns; and construction of any sort.]

Naturally, a paid student intern providing services to a for-profit business, a nonprofit (other

than a nonprofit that is covered under Section 501(c)(3) of the IRS tax code) or a government

entity should be covered under that organization’s worker’s compensation insurance policy.”

Affordable Care Act (ACA)

The general rule under the ACA is that employees working more than 30 hours a week must be counted for determining coverage and, if the employer is covered, offered health insurance. The final ACA regulations do not adopt a special rule for student employees working as interns or externs for an outside employer, and, therefore, the general rules (including those for measuring hours worked) apply. Under those rules, however, services by an unpaid intern or extern would not count as hours of service for ACA purposes.

Liability & Insurance

As with any employee, when students are working on your site and/or under your supervision, it is unavoidable that you may be legally responsible for any damages their actions may cause. The law does not generally recognize an exception to the rule of respondent superior (i.e., an employer is responsible for the actions of employees performed within the course of their employment) for student workers. Moreover, since a core part of the educational experience is that the student is working under the direction of more skilled and experienced people, it is unlikely that a student worker would be classified as an independent contractor.

The risks associated with liability for the actions (including mistakes) of student workers can best be avoided by close supervision. However, as with most forms of liability exposure, mitigation through insurance is also an option. Your general or specific liability insurance policies may already provide coverage, but a conversation with your insurer is likely warranted.

SUNY also provides liability coverage for its students in certain limited circumstances.