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Eric Sarver, Esq.

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Thursday, April 13, 2017 - 5:53pm

Warning:  The following article contains graphic descriptions of extreme financial loss, stringent government penalties, and stressful, protracted litigation.  Such material may not be suitable for some startups.  Reader discretion is advised….

As a startup with competing financial demands, many new tech companies look to the possibility of hiring unpaid interns. These candidates are usually off from college or unemployed. An unpaid internship can be mutually enriching and valuable for both the intern and the company. However, it is vital to make sure that you carefully follow certain criteria, to avoid running afoul of federal and state labor laws.

Federal And New York State Law: Requirements For Hiring Unpaid Interns:
An individual performing work that an employee would normally perform must be paid minimum wage. This requirement was set by The Fair Labor Standards Act, 29 U.S.C. § 206, et seq., and the U.S. Dept. Of Labor’s Guidelines. In addition, if your employees are “nonexempt” under the FLSA (i.e., not performing executive or administrative duties, and are not salaried, and not earning more than $455 per week), then, in addition the minimum wage requirements, you must also pay “time and a half”, or 1.5 times the employee’s hourly rate of pay, for any hours worked beyond 40 hours in a work week. This is true under both the federal Fair Labor Standards Act and the New York State Minimum Wage Act.

Eric Sarver, Esq. is an attorney with eighteen years of experience practicing law – fifteen of which as the sole proprietor / principal at The Law Offices of Eric M. Sarver. Mr. Sarver’s practice areas include: business law, startup law, and labor & employment law for small and mid-sized businesses - including within the startup and technology industry.