As an employer, do I need to pay my volunteers and interns?

Q.    Shouldn’t politicians be treated the same as private business?  This week Rick Perry announced that he has stopped paying his staff.  This is not new in political campaigns.  Hillary Clinton stopped paying some staff in 2008.  If my company begins to struggle, can I ask my employees to volunteer until we receive a new influx of cash?  Can I make them all interns?  How about independent contractors?

A.     The answer to all your questions is, no.   A private business that stopped paying its employees would face a host of penalties and violations.  Indeed, the private business owner could even be subject to criminal prosecution. (See Labor Code sections 1199 and 1199.5)  Although it is an open question, a political campaign may be able to have staff volunteer.  An individual is considered a volunteer if they donate their services, without contemplation of payment, for humanitarian, public service or religious reasons.  Arguably, working on a campaign is a public service.  That said, the Wage and Hour Division has never specifically determined it is.  They have, however, found a volunteer relationship in the following circumstances:

“(1) an individual volunteers his services to a nursing home; 2) members of a civic organization help out in a sheltered workshop; 3) a parent drives a school bus to transport a band or football team (4) an individual volunteers his services part time to a church to answer telephone or to perform general clerical, administrative or custodial duties; 5) an office employee of a hospital volunteers services to minister to comfort patients outside his regular working hours without accruing compensable working time, or volunteers services such as providing reading material to patients, reading to or playing with patients in pediatric wards, or similar activities directly related to a patients comfort, relaxation or entertainment; 6) a housewife donates services to a hospital as a secretary; or 7) the wife of a doctor volunteers a few hours each week as a nurse.”

(Richard Simmons, Wage and Hour Manuel for California Employers, Eighteenth Edition.)

Then, if a private employer cannot call them volunteers, how about making them interns?  The answer to that question is also, no.  In order to be an intern all six of the following must be met:  1) the training must be similar to that given in a vocational school; 2) the training must be for the benefit of the trainees or students; 3) the trainees or students must not displace regular employees but must work under their close observations; 4) the employer providing the training must derive no immediate advantage from the activities of the trainees and on occasion its operations actually be impeded; 5) the trainees or students must not necessarily be entitled to a job at the conclusion of the training period; and 6) the employer and the trainees must understand they are not entitled to wages.  This six prong test makes it difficult for any private business (or political campaign) to simply classify an individual as an intern.  Just ask Mary Kate and Ashley.

O.k. – if a private business can’t have volunteers or interns to do the work, how about calling them all independent contractors and just paying a small stipend??  Again, no.  This too, is most likely improper.  In order to be an independent contractor an individual must meet an 11 factor test.  This doesn’t generally work for businesses (or political campaigns).  For more information on independent contractors see my previous blog, http://wp.me/p67Lhq-1u

It is not easy running a business with fluctuating cash flow.  However, before any small business decides to forgo paying an employee, it would be best to be like Rick Perry and put on their smart black glasses and re-read this blog.  A call to your employment attorney may also be a good idea.

This Legal Update / Bulletin is for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. The hypothetical question is posed to illustrate a point and does not contemplate all potential legal considerations This update should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

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