Does your nonprofit use volunteers or unpaid interns? You may remember that last year California started fining employers who misclassify employees between $5,000-15,000 per incident in addition to any other penalties or fines. This not only applies to when an employee is misclassified as an independent contractor, but can also apply when an employee is misclassified as a volunteer or an unpaid intern.
If classified properly, unpaid interns and volunteers should not be reclassified as employees. There is a big difference between unpaid interns and volunteers. The U.S. Department of Labor (DOL) defines volunteers are those that donate their time for religious, charitable, civic, or humanitarian purposes to nonprofit organizations without expectation of compensation.
The rules on interns were recently clarified. Only under specific circumstances may an intern be unpaid. The DOL has provided the following criteria for for-profit private sector companies to determine whether their workers may be classified as unpaid interns:
1. The internship is similar to training that would be given in an educational environment;
2. The experience is for the intern’s benefit;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer receives no immediate advantage from the intern’s activities and on occasion the employer’s operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the end of the internship; and
6. The employer and intern understand that the intern is not entitled to wages.
The DOL currently states that unpaid internships for nonprofit charitable organizations, where the intern volunteers without expectation of compensation, are “generally permissible.” But the Wage and Hour Division of the DOL is still reviewing the need for additional guidance on unpaid internships for nonprofits. In the meantime, without further clarity, the conservative approach is to ensure that your nonprofit’s unpaid interns do in fact meet the above criteria.
The question is not: Whether to use volunteers or unpaid interns. The question is: Do your nonprofit’s workers meet the criteria of volunteers or unpaid interns or must they be classified as employees? Consult with an employment attorney or HR advisor to make sure your nonprofit is classifying its workers correctly.