THINKING ABOUT HIRING YOUR KIDS TO SAVE TAXES?

As summer approaches, many employers seize the opportunity to engage interns and young workers seeking valuable job experience. However, it is crucial to approach this process with care, adhering to established norms and regulations governing the hiring of interns and minors. Failure to do so can result in costly consequences, as violations of federal labor laws pertaining to both categories of workers can have serious implications.

KEY TAKEAWAYS:
  • The Fair Labor Standards Act (FLSA) does not require compensation for interns and students as they may not be considered "employees.”
  • The U.S. Department of Labor's Wage and Hour Division has established prohibited employment for minors aged 14-15 and 16-17. These prohibitions include specific occupations and activities deemed unsafe or inappropriate for young workers.
  • The FLSA sets limitations on the working hours for minors aged 14-15, including restrictions on school days, weekly hours, and daily hours. The regulations differ during the summer period and may vary among states.
  • Hiring younger employees, such as minors, can be cost-effective due to their limited work experience and the possibility of paying a subminimum wage during the initial 90 days (about 3 months) of employment.
  • Employers must comply with I-9 requirements to verify the work authorization of new hires. However, interns who do not receive compensation are not required to complete an I-9 form.
  • Posting requirements may apply to the employment of minors. Employers subject to the FLSA must display the "Employee Rights Under the Fair Labor Standards Act" poster, and some states have additional posters addressing child labor laws.

With the onset of summer, firms start considering the recruitment of interns and young individuals on summer break. Engaging summer interns and minors can prove to be fruitful venture for both businesses and the aspiring youth in search of job experience. However, it is crucial to be mindful of the regulations pertaining to both paid and unpaid internships, as well as child labor, as violating federal rules governing these categories of workers can result in substantial financial consequences for companies.

Interns According to the FLSA: The Fair Labor Standards Act (FLSA) requires that "for-profit" firms pay their workers a living wage. Interns and students, however, may not be considered "employees" under the FLSA. As a result, they might not be eligible for payment for their labor.

The Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) has published Fact Sheet #71 outlining its position on interns and trainees as defined under the FLSA. According to the information sheet, unless their employment satisfies all seven independent conditions, every intern and trainee would be regarded as an employee under the FLSA.

Permitted and Prohibited Employment

The U.S. Department of Labor’s Wages and Hour Division has developed extensive rules that control the employment of juveniles, who are divided into two age groups: those between 14 and 15 and those between 16 and17. The Fair Labor Standards Act (FLSA) also gives states the option to enact stronger child labor regulations. Employers should not take it for granted, and abiding by federal regulations would automatically ensure they comply with state laws.

EXEMPTIONS TO CHILD LABOR LAWS INCLUDE THE FOLLOWING :
  • Working for parents: A minor can be employed by their parents or guardians in occupations other than manufacturing, mining, or hazardous occupations, outside of school hours.
  • Agricultural work: Agricultural work: Minors under 12 may work on a family farm outside their school hours. Children aged 10 and 11 can work as hand harvest laborers in agricultural operations, receiving payment on a "piecework" basis. Children aged 12 and 13 can work on a farm where one of their parents is employed, but only outside of school. Children aged 14 and 15 can work on farms outside their school hours, except in hazardous occupations.

Permitted Employment

The FLSA laws have created rules for the types of work that children are authorized to do and the tools they are allowed to use:

  • Cooking with electric or gas grills does not entail cooking over an open flame.
  • Bagging and delivering customers' orders.
  • Cleanup tasks, such as operating vacuum cleaners and floor waxers, as well as ground maintenance (however, minors are prohibited from using power-driven mowers, cutters, trimmers, edgers, or similar equipment).
  • Office and clerical work, including operating office machines.
  • Work involving intellectual or artistic creativity, such as computer programming, software development, teaching, or tutoring.
  • Price marking and tagging using hand or machine methods, assembling orders, packing, and shelving.
  • Running errands and making deliveries on foot, by bicycle, or using public transportation.
  • Loading and unloading specific items onto and from motor vehicles.
  • Lifeguarding (only if the individual is 15 years old or above and has completed certain training requirements).
  • Kitchen work and other tasks related to food and beverage preparation and service, including operating machines and devices used in such work.
  • Cleaning vegetables and fruits, as well as wrapping, sealing, labeling, weighing, pricing, and stocking items, including vegetables, fruits, and meats, when performed in areas physically separate from a freezer or meat cooler.

HOURS OF EMPLOYMENT

The FLSA law controls minors' job hours and the types of labor permissible for them. Only juveniles aged 14 or 15 are subject to the FLSA's hour requirements. To the contrary, each state has its own regulations that specify when and how long kids under the age of 18 may work. In some places, such as Arizona and Colorado, 16-year-old employees may be subject to different regulations than other minors. You can refer to the Department of Labor's resources to learn more about state child labor laws that apply to people under the age of 18.

For work done on school days or the days before them, specific time and hour limits could also be in force. It is significant to highlight that minor employees who are engaged in summer school may not be subject to the rules that are in effect during this time.

Employees who are 14 or 15 years old have special limitations on their working hours under the Fair Labor Standards Act (FLSA).The following restrictions apply:

  • Working no longer than three hours on school days.
  • Working a maximum of 18 hours a week while classes are in session.
  • If a minor is engaged in a program that allows them to participate in work experience or career exploration, they may work up to 23 hours per week while they are still in school.
  • On days when school is not in session, working no more than eight hours in a single day.
  • Only working from 7 a.m. to 7 p.m., except from June 1 to Labor Day, when nighttime work hours may be increased to 9 p.m.

The Fair Labor Standards Act (FLSA) does not specify the maximum number of days per week that a 14- or 15-year-old minor employee can work. However, certain states have put in place rules in this regard, including Alabama, Delaware, and Massachusetts. Therefore, employers must make sure that the number of days worked is in accordance with the appropriate state legislation when scheduling underage employees. Employers should also be aware that a minor employee should not be permitted to work another employee's shift if doing so would violate the limitations imposed by federal and state legislation.

16 & 17 YEAR OLDS

The Fair Labor Standards Act (FLSA) does not govern the maximum number of days a 16- & 17-year-old[JL1] minor may work each workweek, nor does it regulate the number of hours per day or week that a minor employee may work. In states such as Arizona, Georgia, and Oklahoma, where there are no specific time and hour requirements for these young employees, employers are obligated to adhere to the relevant time and hour limits that apply to adult employees.

However, many states have specific time and hour requirements for employees who are 16 or 17 years old. Like the regulations that apply to 14- and 15-year-old employees, these requirements may differ based on whether school is in session or if work is carried out on a school day or the day before. Moreover, there might be a restriction on the number of days per week a 16- or 17-year-old employee can work.

COMPENSATION

Hiring younger employees can be viewed as a creative solution for addressing staffing shortages. Given their limited work experience, minors do not demand high compensation, making them a cost-effective choice. Moreover, in certain cases, they may be legally eligible for a subminimum wage (the provision allowing employees under the age of 20 to be paid $4.25 per hour during their first 90 consecutive days of employment, which is $3 less than the minimum wage). This could potentially be even lower if they are hired as interns. However, it is important to consider the associated risks involved in implementing these practices.

I-9 REQUIREMENTS

The federal Immigration Reform and Control Act of 1986 (IRCA) prohibits the employment of individuals who are not authorized to work in the U.S. Interns are not required to complete a Form I-9 unless they receive remuneration or compensation. Individuals who are not remunerated are not obligated to file an I-9 Form. According to the law, employers must document the identity and work authorization of new hires by completing a Form I-9 within a specified time. It is also crucial to retain I-9 documentation throughout the employment period and for three years after the hire date, or one year after the termination of the employee. Failure to verify a new hire's legal work status can lead to penalties.

POSTING REQUIREMENTS

Federal or state laws may impose specific notice or posting requirements for the employment of minors in the workplace. For example, employers subject to the Fair Labor Standards Act (FLSA) must prominently display the "Employee Rights Under the Fair Labor Standards Act "poster, which contains information about child labor. Additionally, certain states, including the District of Columbia, Indiana, and Kansas, have their own individual posters that specifically address child labor laws.

CONCLUSION

As summer approaches, many firms consider hiring interns and younger staff who are available during the summer break. It can be beneficial for both parties, but it is crucial to understand and comply with the rules and regulations regarding internships, child labor, and employment of minors. Employers must be aware of the limitations and restrictions on working hours for minors, and these regulations may vary from state to state.

To ensure compliance with labor laws and regulations, it is recommended that the company takes the following steps:

  • Familiarize yourself with federal and state laws regarding internships and child labor in your district. Keep up to date with any changes in these laws to avoid violations.
  • Seek guidance from legal professionals who specialize in labor and employment law to ensure your internship programs and employment practices follow relevant regulations.
  • Develop comprehensive policies and procedures that address internships, child labor, working hours, compensation, and I-9requirements. Retain I-9 documentation as required by law.
  • Keep detailed records of interns and minor employees, including their hours worked, compensation, and employment eligibility verification.
  • Comply with posting requirements by prominently displaying labor law posters related to child labor, such as the "Employee Rights Under the Fair Labor Standards Act" poster. Check for additional state-specific posting requirements.
  • Continuously review and update your policies and procedures to reflect any changes in labor laws and regulations. Stay proactive in ensuring compliance with evolving requirements.

By implementing these suggestions, the company can minimize legal risks, protect its reputation, and provide a safe and compliant work environment for interns and minor employees.