Ask Rita: Are Summer Helpers Employees, Contractors, or Interns?

For seasonal workers, what’s the right way to classify them?

Dear Rita in HR,

We are a small nonprofit looking to add extra help to further our cause this summer. Usually we hire high school or college students to do special projects or catch up, support employees that have fallen behind, or cover for staff vacations.

What’s the right way to classify our help?

Can we use summer helpers like high school students to work full-time and just pay them a stipend (or not) as interns, or can we write up a contract with them as independent contractors? It seems like a lot of work to add people to the payroll each year when they only stay for the summer.

Sincerely,

The Dog Days of Summer

Dear Dog Days,

Summer presents a great opportunity to take advantage of all the extra help that’s available, especially considering high school and college students are out of class and looking to make some extra money or gain experience and build their résumés.

However, this also means complying with a number of labor and employment laws. When bringing on seasonal workers, you need to pay close attention to age and properly classify workers to keep your nonprofit cool during the summer heat.

Hiring Minors

When hiring a high school student or anyone who is a minor, your first stop should be your state’s Department of Labor (“DOL”) website, where you can read up on the special rules surrounding youth employment.

While employers must comply with federal law, you should follow state law when the protections to minors are greater. For starters, the U.S. Department of Labor (DOL) website is a good reference point.

As you navigate child labor laws, you will quickly find that you are limited in the type of work you can offer underage summer workers and in the hours they are permitted to work. Also, be aware that permits may be required and some additional supervision requirements may apply.

Proper Classification

Next, regardless of the age of your workforce, how you classify summer help is equally important to avoid subjecting your nonprofit to risk and penalties resulting from a misclassification. So once again, pay special attention to federal and state requirements here.

Independent Contractors

Let’s address whether you can hire summer workers as independent contractors. Independent contractors are those who generally offer others in the community the same service that they provide you. Think landscapers, plumbers, painters, or suppliers.

Because minors do not have the capacity to contract, and because they are generally not self-employed or providing specialized services to others in the community, this is not a likely classification for your young helpers.

Keep in mind that just because you have an Independent Contractor agreement does not mean your classification is correct. The DOL considers behavioral and financial factors, such as who controls what the worker does and how the work is performed, along with how the worker is paid, who provides the supplies, and who bears the risk and benefit of losses and profits.

Interns

• Classifying workers as interns may also pose risk of penalties for misclassification, especially if you are looking to pay a stipend to your interns. The DOL has established a seven-factor “Primary Beneficiary” test to help employers with assessing potential interns. Consider the following to determine if your summer workers truly are interns, or whether they’re simply extra summer employees; if the answer to these questions overall leans toward the affirmative, then odds are you’re clear to classify the worker as an intern because the primary beneficiary will be your worker, instead of your organization:
• The intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is actually an employee.
• The internship provides training similar to that given in an educational environment, including clinical and other hands-on training provided by educational institutions.
• The internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
• The internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
• The internship’s duration is limited to the period in which the internship provides the intern with beneficial learning, versus a focus on completing tasks that help the organization.
• The intern’s work complements instead of displaces the work of paid employees, while providing significant educational benefits to the intern.
• The intern and the employer understand that the internship is conducted with no entitlement to a paid job at the conclusion of the internship.

Of these factors, pay close attention to the first, which addresses pay. Remuneration in exchange for labor is likely to result in a DOL classification that your intern is in fact an employee, requiring payment of minimum wage and overtime, and subject to withholdings. 

Therefore, it is high risk and not advisable to bring on summer workers with stipends and not to treat them as employees. If you insist on doing so, seek the advice of local counsel to ensure proper analysis and your compliance with both state and federal wage and hour laws.

Final Thoughts

Lastly, don’t forget that all workers — even temporary summer employees — should be properly on-boarded, trained, and made aware of health and safety laws. Applications should be kept on file, along with all required new hire disclosures and forms.

If your nonprofit is overwhelmed by new hire administration, consider using a temporary staffing firm to handle onboarding compliance. In any case, don’t ever forget to train your workforce on your work rules, codes of conduct, and requirements of the positions.

Nonprofits are encouraged to check with their states on workers’ compensation and unemployment insurance, as coverage and eligibility varies from state to state.

Taking all this into account, don’t let state and federal requirements discourage you from taking full advantage of the larger labor pool available during the summer months. Rather, take heed and consider classifying your paid summer workers as employees since it’s the least risky option.

This approach and compliance with any child labor laws will help keep you from getting burned by the heat of summer employment issues.

About the Author

Kim Spilker

Kim Spilker, JD is a Director of Risk Management Services for Nonprofits Insurance Alliance.  Kim’s experience includes work as in-house counsel and Vice President, Human Resources in the long term care industry where she focused on labor and employment matters, health care compliance and workers’ compensation. Kim focuses on helping nonprofits understand employment law mandates and best practices to motivate and manage employees.

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