As an employer, do you know who is covered under the Fair Labor Standards Act?  Is everyone who performs work for your company an “employee” under the Act?
The Fair Labor Standards Act (“FLSA”) was passed in 1938 and has since been amended several times.  The Act governs minimum wage, overtime pay, equal pay for men and women in similar jobs, child labor and pay-related recordkeeping.  The Act covers all employees engaged in interstate commerce, which are basically all employees. 

But who is an employee under the Act? The FLSA defines an employee as anyone who is “suffered or permitted to work” by an employer unless the individual falls under an exception.  The following categories are specifically excluded from the definition of “employee”:

Independent Contractors

If the individual meets the Internal Revenue Service definition of independent contractor, the individual is not considered an employee under the FLSA.  In short, the basis of the determination test rests on the amount of control the employer has over how the work is done.  If the employer simply directs the ultimate result but has no control over how the worker performs the job, the worker is likely an independent contractor.

Volunteers

Volunteers are not considered employees under the FLSA if the volunteers are not economically dependent on the “employer”.  In other words, the volunteer should not be treated as employees.  Volunteers who are paid for their work, receive benefits or otherwise are held accountable for their job performance may be considered employees.

Trainees

If a trainee meets the following six criteria, the trainee is not considered an employee under the FLSA:
• The training is similar to that which would be given in a vocational school.
• The training is intended to benefit the trainee.
• The trainee does not work as a replacement employee and the trainee is observed at all times while performing the work.
• The employer derives no immediate advantage from the work the trainee does, and at times, may actually be impeded by the training.
• The trainee is not necessarily entitled to a job at the end of the training period.
• The employer and the trainee understand that the trainee is not entitled to wages for the time spent in training.

Employers are encouraged to consult the FLSA for additional exemptions and guidance on interpreting the definition of employee as it relates to the FLSA.

“This article should not be construed as legal advice.”