Expert: Shirley McAllister, CPP, PHR - 7/8/2008

Question
QUESTION: Hi Shirley,

I read with interest your response to the question titled "1099-Misc for internship."  I own a small business and wish to "hire" the 15-year old daughter of a friend as a summer intern to work on one specific project.  I had no idea when I started this process about all of the legal/payroll requirements.  She will be 15 during the project.  I now know that in California I need to limit her to the following:

Ages 14-15 (Summer/Vacation)
• 8 hours max. per day, Monday-Sunday.
• 40 hours total per week.
• 7:00 a.m. to 9:00 p.m. any day of the week

My company is an S-Corp and I am the only employee.  Other people who work for me are independent contractors who work for other companies too.  They are sent 1099s.  Here are my questions.

1. You mentioned that "It is legal for an employer to pay an intern student as a 1099 independent contractor."  Is this also true if the intern is a minor under the age of 16?

2. If yes, are there special forms I need to fill out to do this properly?

3. Some sites say I need to provide workers comp insurance.  I do not have a policy as I do not need coverage and do not have any employees.  Do I need to worry about this since she will be under a 1099?

4. I usually have my subcontractors sign an Agreement that specifies that they will be an IC not entitled to any benefits as an employee.  Do I need to do the same for a minor?

5. I also read somewhere that she will need a Work Permit.  Can you tell me how to get this now that Summer has started?

By the way, she will work part-time in my office and part-time at her house.  She will set her own hours and will be doing clerical work (i.e., no heavy lifting, no handling of chemicals, etc.).  

She is very excited about the internship because she would like to have a learning experience and something good for her resume.  Would it be easier if I made this a volunteer position?  Is that even legal?

Thanks for all of your help!
Charles in San Diego


ANSWER: http://www.cawee.org/Legal/DOL_FLSA.pdf

This website has the rules. If your student meets the criteria it is a non paid trainee in an internship. The student has to fit all 6 of the criteria.

If the criteria does not meet the situation than the student must be paid as an employee.

There are also numbers to call at the end of the information sheet. THey would be able to help you with the work permit and any other questions.

If the student is doing an internship at a hospital or a university as part of a training program for academic credit the rules are somewhat different as was in the case of the other question I answered.

Shirley

---------- FOLLOW-UP ----------

QUESTION: Thanks Shirley,

This is really helpful.  I am also impressed with how fast you responded.  I always planned to pay the intern - the idea of volunteer was to make it easier to meet all of the requirements.  I have one follow-up question.  Do you know if I can pay her via a 1099?  She will only be working a few hundred hours and a W2 seems extreme - especially as she will be far below the earnings that require a tax return.

By the way, I have tried three of the numbers on the form and so far all are disconnected.  I am going to use Google to try and find a current number.

Answer
From what I have read on the subject it appears that unless you are a University or Hospital or non profit than it is either unpaid volunteer or employee status with a W-2 form.

Sorry, but I did not find that a private business could pay a student intern on a 1099.

Sorry the numbers were not working. Here is a listing of the California Labor Standards District Offices. Your local labor standards office should be able to help you with this.

http://www.dir.ca.gov/dlse/DistrictOffices.htm

Shirley