By: Hector A. Chichoni, Esq.
Much information has been published on the basics of employment verification, but some important information for employers is not easily found. For as good as the Handbook for Employers M-274 may be, it does not cover every possible employment verification scenario. Moreover, some of these verification of employment scenarios must be considered in parallel with other employment rules.
A client recently consulted with me in connection with a foreign national wanting to do an unpaid internship while authorized for OPT. The employer’s questions were not surprising but made me realize that the answers are not easily available when it comes to unpaid internships, Optional Practical Training (OPT), I-9s, and E-Verify. This is what employers should know about this topic:
Students on 12 months OPT may undertake unpaid internships, for as long as the work: 1) relates to the student’s field of study and 2) does not violate any U.S. Department of Labor (USDOL) laws.
An employer may request to see an F-1 student’s OPT EAD (Employment Authorization Document) for an unpaid internship, but it is not required. An unpaid internship that meets USDOL guidelines is considered “training”, not employment.
Although it is not required to see the EAD, employers might still ask for documentation to verify the student’s OPT status and ensure the internship relates with their field of study.
Individuals authorized for OPT must have their valid I-20 endorsed by a Designated School Official (DSO) for the specific employer where he or she is conducting the unpaid internship.
USCIS states that “…is frequently asked whether an unpaid intern needs to complete Form I-9. In general, an unpaid intern does not need to complete Form I-9 unless he or she will receive remuneration, which is something of value such as no-cost or reduced-cost meals, lodging or other benefits in exchange for his or her labor or services.”
E-Verify rules state that “You may only create an E-Verify case for an employee who receives payment or remuneration and for whom you complete a Form I-9, Employment Eligibility Verification . An intern may be considered a paid employee if he or she receives payment or anything of value , which could include free or reduced housing, meals, etc.
Companies allowing individuals authorized for OPT to do unpaid internships, however, must be careful and should ensure the unpaid intern is not determined to be an “employee”:
The Fair Labor Standards Act (FLSA) requires “for-profit” employers to pay employees for their work. Interns and students, however, may not be “employees” under the FLSA in which case the FLSA does not require compensation for their work. Courts have used the “primary beneficiary test” to determine whether an intern or student is, in fact, an employee under the FLSA. In short, this test allows courts to examine the “economic reality” of the intern-employer relationship to determine which party is the “primary beneficiary” of the relationship. Courts have identified the following seven factors as part of the test:
The extent to which 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 an employee—and vice versa.
The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.
Courts have described the “primary beneficiary test” as a flexible test, and no single factor is determinative. Accordingly, whether an intern or student is an employee under the FLSA necessarily depends on the unique circumstances of each case.
If analysis of these circumstances reveals that an intern or student is actually an employee, then he or she is entitled to both minimum wage and overtime pay under the FLSA. On the other hand, if the analysis confirms that the intern or student is not an employee, then he or she is not entitled to either minimum wage or overtime pay under the FLSA.[1]
If you have specific concerns regarding compliance and your business immigration needs, please do not hesitate to reach out to [email protected] click here.
[1] https://www.dol.gov/agencies/whd/fact-sheets/71-flsa-internships
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