Employers must frequently defend against costly wage and hour lawsuits due to widespread confusion over whether certain time counts toward compensable hours worked by nonexempt employees. The Fair Labor Standards Act (FLSA) distinguishes between exempt and nonexempt employees, as well as employer obligations to properly compensate such employees for hours worked. Under the FLSA, nonexempt employees must be paid for all hours worked in a week and must receive overtime pay for all hours worked in excess of 40 hours in a one-week period. Employers have grappled with meeting these requirements and otherwise complying with the various wage payment laws. To avoid landing in hot water, employers should tread carefully when determining payment for nonexempt employees.
Nonexempt employees must be compensated for “hours worked”
5. Generally, unpaid internships and other trainee positions need not be compensated, particularly in the public and not-for-profit sectors where interns knowingly volunteer to work without compensation. Similarly, interns often knowingly volunteer to work without compensation, even in the private sector, in exchange for academic credit from their educational institutions. Employers must be careful, however, to compensate interns and trainees as regular workers whenever they are indeed filling the shoes of employees.