New York Labor Laws Explained
Unpaid Interns and New York Labor Laws
Below is a general summary of the New York labor laws as they apply to interns. The information contained in this site is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved. Citations to cases that have been omitted for the sake of brevity.
1. Objectives of the New York’s Minimum Wage Act (NYMWA)
The New York Labor law was enacted to protect employees, and to remedy the imbalance of power between employers and employees. New York’s minimum wage laws go back to 1933, when the legislature sought to provide protection for women and minors.
The New York legislature explained that the employment of women and minors in trade and industry in the State of New York at wages unreasonably low and not fairly commensurate with the value of the services rendered is a matter of grave and vital public concern. Many women and minors were not as a class on a level of equality in bargaining with their employers in regard to minimum fair wage standards, and ‘freedom of contract’ as applied to their relations with their employers is illusory.
Since a very large percentage of women and minors are obliged from their week to week wages to support themselves and others who are dependent upon them are forced to accept whatever wages are offered them. Judged by any reasonable standard, wages are in many cases fixed by chance and caprice and the wages accepted are often found to bear no relation to the fair value of the service rendered.
Furthermore, the legislature went on to explain that “women and minors are peculiarly subject to the overreaching of inefficient, harsh or ignorant employers and under unregulated competition where no adequate machinery exists for the effective regulation and maintenance of minimum fair wage standards. In the absence of any effective minimum fair wage for women and minors, the constant lowering of wages by unscrupulous employers constitute a serious form of unfair competition against other employers, reduces the purchasing power of the workers and threatens the stability of industry.”
“The evils of oppressive, unreasonable and unfair wages as they affect women and minors employed in the state of New York are such as to render imperative the exercise of the police power of the state for the protection of industry and of the women and minors employed therein and of the public interest of the community at large in their wealth and well-being and in the prevention of the deterioration of the race”.
2. New York Minimum Wage Basics
Under the New York Minimum Wage Act every employer must pay to each of its employees for each hour worked a wage of not less than $7.25 an hour.
Additionally, an employer must pay overtime to most employees at a wage rate of 1 ½ times the employee’s regular rate for all hours over 40 hours in a workweek.
3. Rights under the NYMWA are unwaivable by contract
The employment of an employee in any occupation in New York at a wage below minimum wage and overtime compensation, is declared to be contrary to public policy and any contract, agreement or understanding for or in relation to such employment is void and is no defense.
4. Am I covered by the New York Minimum Wage Laws?
A person must first demonstrate that he or she is an employee entitled to minimum wage protections.
The New York minimum wage act defines “Employee”, with limited exception, as “any individual employed or permitted to work by an employer in any occupation. . .” a definitional scope that has be noted for its remarkably broad nature.
5. Am I classified as an Intern/Trainee or an Employee under the law?
The Minimum Wage Act applies to all individuals who meet the statutory definition of “employee”, except those specifically excluded from coverage (see #5). To determine the existence of an employment relationship with respect to interns or trainees, the New York State Department of Labor uses an 11 factor test.
The New York Department of Labor makes clear that in order to be exempt from the the Minimum Wage Act, an employer must satisfy all 11 criteria.
Intern/Trainee Exception Test
1. The training, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in an educational environment.
The key factors to look for are:
- The internship program builds on a classroom or academic experience — NOT the employer’s operations. The internship teaches skills that are useful in other jobs (not skills specific to one employer’s operation).
- Direct training is provided by the supervising employees.
- Time spent engaging in vocational tasks provide the interns with a closely supervised, directed vocational experience. The training provided to participants involves extensive job shadowing and hands on training under direct supervision. The intern does not perform the routine work of the business on a regular basis.
- The intern is not engaged in the operations of the employer and does not perform productive work (such as filing, other clerical work or helping customers).
- The business does not depend upon the work of the intern.
2. The training is for the benefit of the intern.
Key factors to look for are:
- Workers are not engaged in the operations of the employer.
- If the interns are engaged in the operations of the employer or are performing productive work (for example, filing, performing other clerical work, or assisting customers), then the fact that they may be receiving some benefits in the form of a new skill or improved work habits will not satisfy the requirements of this factor.
- trainees are not performing actual work that benefits the employer and any benefit from an interns work is merely incidental.
- The work is not “regular work” that the business needs completed. If the intern does not complete his tasks correctly or at all, the employer will not suffer any real detriment. The internship is educational in nature.
- Interns are given distinct duties to show that they are working to further their own interests rather than the employer’s interests.
- The trainees do not performed work that would otherwise have been done by regular employees, and the business is not receiving money for the sale of the work.
3. The interns do not displace regular employees and any work they may do is under close supervision.
The key factors to look for are:
- Interns do not function in ways that replace or augment regular staff.
- Interns are viewed as employees if the company would need to hire additional employees or require existing staff to work more hours to do the interns’ work.
- So, if the internship did not exist, would the business still need the work completed? and would the existing full-time staff normally perform that work without the internship or would the business need to hire additional workers to complete the work? The presence of the trainee at the worksite should not result in an employee being laid off, the employer not hiring an employee it would otherwise hire, and an employee working fewer hours than he or she would otherwise work.
- Interns are considered employees if they substitute for regular workers or add to an existing workforce during specific time periods.
- If interns receive the same level of supervision as the employer’s regular workers, it suggests an employment relationship, rather than training.
- Minimal and indirect supervision is an indicator of a deficient internship program.
4. The employer who provides the training derives no immediate advantage from the activities of the trainees or students and, on occasion, operations may actually be impeded.
The essence of an internship is that an employer provides a benefit to the interns by developing their work skills or knowledge; the trainees do not benefit the employer. In a true internship, the employer cannot gain an immediate advantage from the intern’s presence. In fact, in most circumstances, interns will require employers to dedicate resources (in the form of training, supervision, etc.) that may actually detract from the productivity of the worksite for some period.
When a trainee receives direct and ongoing supervision, that any productive work performed by the trainee will be offset by the employer’s burden of training and supervising the trainee.
This criterion helps to ensure the beneficial nature of the program to the intern. Any advantage that an employer may derive from the intern’s participation in an internship program should be purely incidental to the supervision and training provided.
5. The trainees or students are not necessarily entitled to a job at the conclusion of the training period and are free to take employment elsewhere in the same field.
The internship runs for a fixed period, set before the internship begins. It has no connection with any offer of employment or promise to stay with the employer. Employers should not use unpaid internships as a trial period for those seeking employment. Interns who are placed with the employer for a trial period, with the expectation that afterwards they will be hired as permanent employees, would generally be considered employees. The longer an internship lasts, the more likely it will be considered an employment relationship.
The internship program should be of a fixed duration (which is communicated to the intern prior to the internship) and not connected with any offer of employment or promise of a permanent position at the conclusion of the internship. The purpose of this criterion is to ensure that employers are not utilizing unpaid internships as a trial period to test out individuals seeking employment. The NYSDOL advises that if an intern is placed with the employer for a trial period with the expectation that he or she will be hired on a permanent basis, that individual would generally be considered an employee.
6. The trainees or students have been notified, in writing, that they will not receive any wages for such training and are not considered employees for minimum wage purposes.
The written agreement must be clear and be given to the trainees or students before the internship starts.
This written notice must be clear and provided to the intern prior to the commencement of the internship.
Any kind of payment of benefits that is dependant on hours worked may be considered wages. Furthermore, a court has found lump sum payments to student workers as “gifts” to be an attempt to label them students rather than employees.
7. Any clinical training is performed under the supervision and direction of individuals knowledgeable and experienced in the activities being performed.
The persons who supervise or direct any clinical, hands-on work performed by the trainees must have sufficient experience and knowledge in that industry. Persons have “sufficient” experience and knowledge in the industry if they are proficient in the area and in all activities performed by the trainee. They must have adequate background, education, and experience to fulfill the educational goals and requirements of the training program. In addition, the persons must be competent to provide such training, with previous experience training employees or students.
The intern should never perform work that their supervisor does not know how to do.
8. The trainees or students do not receive employee benefits.
Receiving employee benefits is conclusive evidence of an employer-employee relationship. Examples of such benefits include, but are not limited to: Health and dental insurance, Pension or retirement credit, and Discounted or free goods and services from the employer
9. The training is general, so as to qualify the trainees or students to work in any similar business, rather than designed specifically for a job with the employer offering the program.
Skills offered through the training must be transferable to any employer in the field and not specific to the for-profit employer offering the training. Any training that is specific to the employer and its operations is conclusive evidence that an employment relationship exists.
10. The screening process for the internship is not the same as for employment, and does not appear to be for that purpose, but involves only criteria relevant for admission to an independent educational program.
Employer may not use internship programs as a loop pole around the required investment that all employers must expend when seeking to hire an employee and provide special employer specific training. This factor helps to ensure that employers do not mix recruiting of employees and interns, and ensures that interns could not be under the impression that the the internship program will conclude with a job.
11. Advertisements for the program are couched clearly in terms of education or training, rather than employment, although employers may indicate that qualified graduates may be considered for employment.
This relates to the requirement that the employer tell trainees, in writing, that they are not entitled to wages for the training. This is to avoid a trainee’s misunderstanding of the nature of the program, and/or an employer’s misrepresentation of its nature, purposes and entitlements.
6. Which employees are specifically excluded from coverage under the New York Minimum Wage Act?
The term employee does not include any individual who is employed or permitted to work: (a) on a casual basis in service as a part time babysitter in the home of the employer;
(b) in labor on a farm;
(c) in a bona fide executive, administrative, or professional capacity;
(d) as an outside salesman;
(e) as a driver engaged in operating a taxicab;
(f) as a volunteer, learner or apprentice by a corporation, unincorporated association, community chest, fund or foundation organized and operated exclusively for religious, charitable or educational purposes, no part of the net earnings of which inures to the benefit of any private shareholder or individual;
(g) as a member of a religious order, or as a duly ordained, commissioned or licensed minister, priest or rabbi, or as a sexton, or as a christian science reader;
(h) in or for such a religious or charitable institution, which work is incidental to or in return for charitable aid conferred upon such individual and not under any express contract of hire;
(i) in or for such a religious, educational or charitable institution if such individual is a student;
(j) in or for such a religious, educational or charitable institution if the earning capacity of such individual is impaired by age or by physical or mental deficiency or injury;
(k) in or for a summer camp or conference of such a religious, educational or charitable institution for not more than three months annually;
(l) as a staff counselor in a children’s camp;
(m) in or for a college or university fraternity, sorority, student association or faculty association, no part of the net earnings of which inures to the benefit of any private shareholder or individual, and which is recognized by such college or university, if such individual is a student;
(n) by a federal, state or municipal government or political subdivision thereof.
or (o) as a volunteer at a recreational or amusement event run by a business that operates such events, provided that …
7. Am I a Volunteer?
The New York Wage and Hour laws do not apply to Volunteers.
“Volunteer” means a person who works for a nonprofitmaking institution under no contract of hire, express or implied, and with no promise of compensation, other than reimbursement for expenses as part of the conditions of work.
It is worth noting that by definition a person cannot volunteer for a for-profit business.
8. What is considered “Work”?
“Work hours” means the actual hours suffered or permitted to work.
All the time the employee is required to be at his or her place of work or on duty are counted as hours worked. When an employee is performing work for the benefit of the employer outside of ones typical work schedule, and the employer has reason to know this, those hours of work are compensable work.
Call-in Pay – An employee who by request or permission of the employer reports for work on any day shall be paid for at least four hours, or the number of hours in the regularly scheduled shift, whichever is less, at the basic minimum hourly wage.
Split shift and spread of hours – An employee shall receive an one additional hour’s pay at the basic minimum hourly wage rate, in addition to the minimum wage required, for any day in which: (a) the spread of hours exceeds 10 hours; or (b) there is a split shift; or (c) both situations occur.
9. Are there Statute of Limitations? How long do I have to bring my claim?
The applicable New York Labor Laws provide for a six-year statute of limitations. Although the Fair Labor Standards Act (FLSA) has a two-year statute of limitations, except in the case of willful violations for which the statute of limitations is three years, under New York labor laws employees are allowed to seek back-wages for failure to pay the required minimum wages within six years.
10. What damages am I entitled to recover?
If any misclassified unpaid intern is not paid at least minimum wage, he or she may recover the full amount of minimum wage less any amount actually paid to him or her by the employer.
New York labor laws provide for an additional 100% award as punitive liquidated damages. [This is separate from the 100% compensatory liquidated damages available under federal labor laws].
Similar to the FLSA, there is a presumption in favor of awarding prejudgment interest on a back pay award. Prejudgment interest attempts to compensate for the delay in receiving the wages as well as offset the reduction in the value of the delayed payments caused by inflation.
New York law also allows for recovery of Attorney’s fees and court costs.
11. What about unreimbursed expenses?
Wages generally may not be subject to deductions, except for deductions authorized or required by law, such as for social security and income tax.
Some examples of prohibited deductions are: (1) deductions for spoilage or breakage; (2) deductions for cash shortages or losses; (3) fines or penalties for lateness, misconduct or quitting by an employee without notice. (b) The minimum wage shall not be reduced by expenses incurred by an employee in carrying out duties assigned by an employer.
12. What if there is no record of how many hours I worked?
The Employer has a duty under New York labor laws to keep true and accurate records of every employees hours. Failure to keep proper records is not held against the employee. An employee’s evidence, from records kept or via testimony, of his or her hours will be looked at by courts in determining how many hours an illegally unpaid intern worked. Remember, the employer has the burden of proof, since they are required under the law to maintain accurate records of their employees work hours. Failure to produce proper records will not help them.
Furthermore, beginning April 9, 2011, New York Labor Laws require every employer to furnish each employee with a statement with every payment of wages, listing the following: the dates of work covered by that payment of wages; name of employee; name of employer; address and phone number of employer; rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission, or other; gross wages; deductions; allowances, if any, claimed as part of the minimum wage; and net wages. When violated, the employer shall be liable for damages of $100 per week and the employee shall recover up to $2,500, plus costs and attorneys’ fees.
13. What if I was unfairly terminated or retaliated against?
N.Y. Lab. Law § 215(1)(a) states: “No employer or his or her agent, or the officer or agent of any corporation, partnership, or limited liability company, or any other person, shall discharge, threaten, penalize, or in any other manner discriminate or retaliate against any employee (i) because such employee has made a complaint to his or her employer, or to the commissioner or his or her authorized representative, or to the attorney general or any other person, that the employer has engaged in conduct that the employee, reasonably and in good faith, believes violates any provision of this chapter, . . .”
As of April 9th, 2011, the New York Wage Theft Prevention Act expanded the scope and penalties of New Yorks anti-retaliation laws. The use of threats was specifically added to its list of forms of retaliation. The NY Department of Labors fact sheets can be located at the following links:http://www.labor.ny.gov/formsdocs/wp/P715.pdf http://www.labor.ny.gov/formsdocs/wp/P706.pdf.
An employee may bring a civil action within two years after the violation.
The court may order all appropriate relief, including enjoining the conduct of any person or employer; ordering payment of liquidated damages, costs and reasonable attorneys’ fees to the employee by the person or entity in violation; and, where the person or entity in violation is an employer, ordering rehiring or reinstatement of the employee to his or her former position with restoration of seniority or an award of front pay in lieu of reinstatement, and an award of lost compensation and damages, costs and reasonable attorneys’ fees. Liquidated damages shall be calculated as an amount not more than ten thousand dollars. The court shall award liquidated damages to every employee aggrieved under this section, in addition to any other remedies permitted.