Many farrier business owners utilize novice farriers, apprentices and other interested individuals to help with day-to-day tasks such as loading and unloading tools, clean-up and finishing feet. But you need to be aware that a person being utilized in this manner may very well be an employee, entitled to employee benefits.
Defining who is or isn’t an employee is very important for your farrier business in order to avoid legal and financial consequences.
Defining An Externship
Think of an externship as job shadowing. Externships vary in length, from 1 or 2 days, to as long as several weeks.
Externships involve following a professional through a normal day. Externships offer no pay or academic credit.
The goal of an externship is getting an insider’s view of the chosen profession. It is an excellent way for some to learn about the day-to-day work life of a farrier. It offers the person a chance to see if the farrier profession is what they desire, as well as providing some professional contacts for future networking.
An extern may participate in some farrier job duties, but must be closely supervised. There is less focus on job training, as the extern may or may not choose to pursue that career. Externs are generally not considered employees.
Defining An Internship
An internship is any official or formal program that provides practical experience for a person in an occupation or profession. Most internships are work-experience internships — essentially on-the-job training in a field the intern wants to learn more about.
There isn’t one sole legal definition of an intern, in large part because there are many laws, both state and federal, that govern relationships when people perform labor or services for others.
An internship is primarily designed to educate the intern. Sometimes interns are paid a low wage, sometimes they are unpaid, but receive academic or some other form of credit, and sometimes they are strictly volunteers. Interns are not bound to work for an employer after the internship is over, although many interns do receive job offers.
If interns are unpaid, they are usually subject to stringent labor guidelines and in some states — such as California — unpaid interns must receive college credit for their work.
If the employer is providing opportunities that allow an intern to learn certain functions — under the close and constant supervision of the employer or regular employees — but the intern performs no or very minimal work, the activity is more likely to be viewed as a bona fide educational experience.
The Fair Labor Standards Act (FLSA) defines the term “employ” very broadly as including to “suffer or permit to work.” Individuals who are “suffered or permitted” to work must be compensated under the law for the services they perform for an employer.
Internships in the private sector will most often be viewed as employment, unless they meet certain requirements. Interns who qualify as employees must be paid at least the minimum wage and overtime compensation for hours worked over 40 in a workweek.
The requirements to be considered an intern and non-employee are:
- The internship is similar to training that would be given in an educational environment.
- The internship experience is for the benefit of the intern.
- The intern does not displace regular employees, but works under close supervision of existing employees.
- The employer that provides the training derives no immediate advantage from the activities of the intern, and on occasion operations may actually be impeded.
- The intern is not necessarily entitled to a job at the conclusion of the internship.
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
If all of the factors listed above are met, an employment relationship does not exist under the FLSA.
Defining An Apprenticeship
An apprenticeship is generally defined as when a person undertakes a system of learning a craft or trade and is paying for that instruction by giving a length of time (days, months, years) for work. The terms of apprenticeship are regulated by many labor agreements as well as by law.
Because a person is working and learning at the same time, apprentices are considered employees, and are subject to the benefits of an employee.
Apprenticeship programs are occupational training programs that combine on-the-job work experience with technical or classroom study. Such programs are designed to help individuals develop useful job skills for working in the chosen profession. In many states, apprenticeship programs are required to obtain occupational licensing or certification in order to offer apprenticeships. This is to ensure that the programs meet standards relating to job duties, instruction, wages, safety and health conditions.
What About Independent Contractors?
Sometimes who is and isn’t an independent contractor is difficult to define. Broad outlines have been drawn up based on common law principles, FLSA, and the decisions of some courts.
The IRS and many states have adopted common law principles to define an independent contractor. These rules focus primarily on the level of control an employer has over a service or product. This means whether or not the employer actually defines what is being done and how it will be accomplished.
Common law principles further define independent contractor status by method of compensation. A person who is on an employer’s payroll and receives a steady paycheck clearly is an employee and not an independent contractor.
Other considerations when identifying someone as an independent contractor may include the following “economic realities” tests:
- If the person supplies his or her own equipment, materials and tools.
- If all necessary materials are not supplied by the employer.
- If the person can be discharged at any time.
- If the person chooses whether or not to come to work without fear of losing employment.
- If the person controls the hours of employment.
When a person is an employee, employers must pay state and federal unemployment tax, Social Security tax and workers’ compensation/disability premiums.
Should employers incorrectly define a person as an independent contractor, they may find themselves liable for past taxes including FICA and federal unemployment tax. Misclassification of an individual as an independent contractor may also have a number of costly legal consequences.