Field Operations Handbook — Chapter 10

Chapter 10
FLSA COVERAGE: EMPLOYMENT RELATIONSHIP,
STATUTORY EXCLUSIONS, GEOGRAPHICAL LIMITS
Source: FOH Modernization revision 677, published 03/31/2016. Substantive revisions made
after 03/31/2016 are noted at the end of affected provisions below. Historical information on
revisions published prior to 03/31/2016 can be found at https://www.dol.gov/agencies/whd/field-
operations-handbook.

Table of Contents
10a GENERAL
10a00 Purpose of chapter.
10b THE EMPLOYMENT RELATIONSHIP
10b00 Employment relationship required for FLSA to apply.
10b01 FLSA employment relationship distinguished from the common law concept.
10b02 Method of compensation not material.
10b03 Religious, charitable, and nonprofit organizations, schools, institutions, volunteer
workers, members of religious orders.
10b04 Employer asserts homework performed by independent contractor.
10b05 Employment relationship.
10b06 Determining whether a worker is an employee or independent contractor:
applying the six economic reality factors.
10b07 Facts that do not determine the worker’s employment status.
10b08 Effect of sale on the employment relationship.
10b09 Subject-matter of the employment relationship.
10b10 Effect of determination of the employment relationship.
10b11 Trainees and student-trainees.
10b12 Government-sponsored employment development programs.
10b13 Employer identification numbers issued by Internal Revenue Service.
10b14 Students training in skilled paramedical occupations: nurses, x-ray technicians,
etc.
10b15 Golf course caddies.
10b16 Special duty nurses or sitters in hospitals and nursing homes.
10b17 Newspaper area correspondents or stringers.
10b18 Graduate students: research assistants.
10b19 Externs.
10b20 Administrative residents in hospitals.
10b21 Student observers in hotels and motels.
10b22 Job Corps enrollees.
10b23 School employees: after hours work.
10b24 University or college students.
10b25 Fraternal orders: officers and volunteers.
10b26 School-related work programs.
10b27 Prison inmates.
10b28 Jurors.
10b29 Foster parents.

10b30 Volunteers under the Domestic Volunteer Services Act of 1973.
10b31 Government activities: volunteer services.
10b32 Government-financed child care services.
10b33 Election judges and officials.
10b34 Patient workers.
10b35 Residential drug abuse and alcohol treatment programs.
10b36 Veterans making artificial poppies.
10b37 Pharmaceutical externs and interns.
10b38 Programs for youthful or first-time offenders designed as an alternative to
incarceration.
10b39 Drying out period for alcoholics in sheltered workshops (SWS).
10b40 Welfare/workfare programs.
10c TYPES OF EMPLOYERS
10c00 Scope of the term “employer.”
10c01 A partnership as an employer.
10c02 Cooperatives as employers.
10c03 Corporations as employers.
10c04 Excluded employers.
10c05 Political subdivisions of a state.
10c06 Status of contractors with a government.
10c07 Federal Reserve Bank employees.
10c08 Farm Credit Administration Banks and Associations.
10c09 Status of state-sponsored workshops.
10c10 Status of foreign governments.
10c11 States and political subdivisions: single employers.
10c12 Community action agency.
10d TYPES OF EMPLOYEES
10d00 Scope of the term “employee.”
10d01 Employees of the Library of Congress.
10d02 Employees of the United States.
10d03 Suits by federal, state, and local government employees under section 16(b).
10d04 (Reserved.)
10d05 Member of the elected official’s personal staff.
10d06 National Guard technicians.
10e GEOGRAPHICAL LIMITS
10e00 Geographical limits of FLSA.
10e01 FLSA application to employees performing duties both in the U.S. and foreign
countries such as Canada, Mexico, or Panama.
10e02 Employees in foreign countries.
10f (RESERVED)
10a GENERAL
10a00 Purpose of chapter.

FOH chapter 10 contains interpretations regarding the employment relationship required for
the Fair Labor Standards Act (FLSA or Act) to apply, the geographical limits of the Act’s
applicability, and employment which is specifically excluded from coverage under the Act.
These coverage concepts are equally applicable to activities which constitute engagement in
or production for interstate or foreign commerce and to employment in an enterprise
described in section 3(s).
10b THE EMPLOYMENT RELATIONSHIP
10b00 Employment relationship required for FLSA to apply.
In order for the FLSA to apply there must be an employer-employee relationship. This
requires an “employer” and “employee” and the act or condition of employment. FLSA
sections 3(d), (e), and (g) define the terms “employer,” “employee,” and “employ.”
10b01 FLSA employment relationship distinguished from the common law concept.
The courts have made it clear that the employment relationship under the FLSA is broader
than the traditional common law concept of the master and servant relationship. The
difference between the FLSA employment relationship and the common law employment
relationship arises from the FLSA statement that “[E]mploy includes to suffer or permit to
work.” The courts have indicated that, while “to permit” requires a more positive action than
“to suffer,” both terms imply much less positive action than required by the common law.
Mere knowledge by an employer of work done for him or her by another is sufficient to
create the employment relationship under the FLSA.
10b02 Method of compensation not material.
The fact that no compensation is paid and the worker is dependent entirely on tips does not
negate his/her status as an employee, if other indications of employment are present. If the
worker is paid, the fact that he or she is paid by the piece or by the job or on a percentage or
commission basis rather than on the basis of work time does not preclude a determination that
the worker is, on the facts, an employee with respect to the work for which such
compensation is received.
10b03 Religious, charitable, and nonprofit organizations, schools institutions, volunteer
workers, members of religious orders.
(a) There is no special provision in the FLSA which precludes an employer-employee
relationship between a religious, charitable or nonprofit organization and persons who
perform work for such an organization. For example, a church or religious order may operate
an establishment to print books, magazines, or other publications and employ a regular staff
who does this work as a means of livelihood. In such cases there is an employer-employee
relationship for purposes of the Act.
(b) Persons such as nuns, monks, priests, lay brothers, ministers, deacons, and other members of
religious orders who serve pursuant to their religious obligations in the schools, hospitals, and
other institutions operated by their church or religious order shall not be considered to be
“employees.” However, the fact that such a person is a member of a religious order does not
preclude an employer-employee relationship with a state or secular institution.

(c) In many cases the nature of religious, charitable, and similar nonprofit organizations and
schools is such that individuals may volunteer their services in one capacity or another,
usually on a part-time basis, not as employees or in contemplation of pay for the services
rendered. For example, members of civic organizations may help out in a sheltered
workshop; women’s organizations may send members or students into hospitals or nursing
homes to provide certain personal services for the sick or the elderly; mothers may assist in a
school library or cafeteria as a public duty to maintain effective services for their children; or
fathers may drive a school bus to carry a football team or band on a trip. Similarly,
individuals may volunteer to perform such tasks as driving vehicles or folding bandages for
the Red Cross; working with children with disabilities or disadvantaged youth; helping in
youth programs as camp counselors, scoutmasters, or den mothers; providing child care
assistance for needy working mothers; soliciting contributions or participating in benefit
programs for such organizations; and volunteering other services needed to carry out their
charitable, educational, or religious programs. The fact that services are performed under
such circumstances is not sufficient to create an employer-employee relationship.
(d) Although the volunteer services (as described in (c) above) are not considered to create an
employment relationship, the organizations for which they are performed will generally also
have employees performing compensated services whose employment is subject to the
standards of the Act. Where such an employment relationship exists, the Act requires
payment of not less than the statutory wages for all hours worked in the workweek.
However, there are certain circumstances where such an employee may donate services as a
volunteer, and the time so spent is not considered to be compensable work. For example, an
office employee of a hospital may volunteer to sit with a sick child or elderly person during
off-duty hours as an act of charity. The Wage and Hour Division (WHD) will not consider
that an employer-employee relationship exists with respect to such volunteer time between
the establishment and the volunteer or between the volunteer and the person for whose
benefit the service is performed. Another example is where an office employee of a church
may volunteer to perform non-clerical services in the church preschool during off-duty time
from his or her office work as an act of charity. Conversely, a preschool employee may
volunteer to perform work in some other facet of the church’s operations without an
employment relationship being formed with respect to such volunteer time. However, this
does not mean that a regular office employee of a charitable organization can volunteer
services on an uncompensated basis to handle correspondence in connection with a special
fund drive or to handle other work arising from exigencies of the operations conducted by the
employer.
(e) As part of their overall educational program, public or private schools and institutions of
higher learning may permit or require students to engage in activities in connection with
dramatics, student publications, glee clubs, bands, choirs, debating teams, radio stations,
intramural and interscholastic athletics and other similar endeavors. Activities of students in
such programs, conducted primarily for the benefit of the participants as a part of the
educational opportunities provided to the students by the school or institution, are not work of
the kind contemplated by section 3(g) of the Act and do not result in an employer-employee
relationship between the student and the school or institution. Also, the fact that a student
may receive a minimal payment for participation is such activities would not necessarily
create an employment relationship.
(f) The sole fact that a student helps in a school lunchroom or cafeteria for periods of 30 minutes
to an hour per day in exchange for their lunch is not considered to be sufficient to make him
or her an employee of the school, regardless of whether he or she performs such work

regularly or only on occasion. Also, the fact that students on occasion do some cleaning up
of a classroom, serve the school as junior patrol officers or perform minor clerical work in the
school office or library for periods of an hour per day or less without contemplation of
compensation or in exchange for a meal or for a cash amount reasonably equivalent to the
price of a meal or, when a cash amount is given in addition to a meal, it is only a nominal
sum, is not considered sufficient in itself to characterize the students as employees of the
school. A similar policy will be followed where the students perform such tasks less
frequently but for a full day, with an arrangement to perform their academic work for such
days at other times. For example, the students may perform full-day cafeteria service four
times per year. In such cases, the time devoted to cafeteria work in the aggregate would be
less than if the student worked an hour per day. However, if there are other indicia of
employment, or the students normally devote more than an hour each day or equivalent to
such work, the circumstances of the arrangement should be reviewed carefully.
(g) In the ordinary case, tasks performed as a normal part of a program of treatment,
rehabilitation, or vocational training in the following situations will not be considered, under
section 3(g) of the Act, as work of a kind requiring a hospital patient, school student, or
institutional inmate to be considered an employee of the hospital, school, or institution
conducting the program, for purposes of the FLSA: tasks performed by individuals
committed to training schools of a correctional nature, which are required as a part of the
correctional program of the institution as a part of the institutional discipline and by reason of
their value in providing needed therapy, rehabilitation, or training to help prepare the inmate
to become self-sustaining in a lawful occupation after release.
(h) The WHD will not assert that initial participation by a student with disabilities in a school-
work program constitutes an employment relationship if certain conditions are met.
However, after an employment relationship has developed, the provisions of the Act will be
applicable.
(i) The conditions under which an employment relationship initially will not be asserted are:
(1) The activities are basically educational, are conducted primarily for the benefit of the
participants, and comprise one of the facets of the educational opportunities provided
to the students. The student may receive some payment for their work in order to
have a more realistic work situation, or as an incentive to the student or to insure that
the employer will treat the student as a worker.
(2) The time in attendance at the school plus the time in attendance at the experience
station (either in the school or with an outside employer) does not substantially
exceed the time the student would be required to attend school if following a normal
academic schedule. Time in excess of 1 hour beyond the normal school schedule or
attendance at the experience station on days when school is not in session would be
considered substantial.
(3) The student does not displace a regular employee or impair the employment
opportunities of others by performing work which would otherwise be performed by
regular employees who would be employed by the school or an independent
contractor including, for example, employees of a contractor operating the food
service facilities at the school.

(j) The shift to an employment relationship may occur shortly after the placement or it may
occur later. As a general guide, work for a particular employer, either a private employer or
the school, after 3 months will be assumed by the WHD to be part of an employment
relationship unless the facts indicate that the training situation has not materially changed.
Thus, if the conditions which warranted the finding that the student is not considered an
employee continue, he or she may remain for a period of time as a trainee rather than an
employee. On the other hand, if after the 3-month period the training aspects are
subordinated and the work aspects clearly predominate, the student will be considered as an
employee.
10b04 Employer asserts homework performed by independent contractor.
If the employer asserts their outside work or homework is performed by independent
contractors, whether the workers are employees or independent contractors under the FLSA is
determined by applying a multi-factor economic reality analysis that focuses on whether the
worker is dependent on the employer for work (and thus is an employee) or is in business for
themself (and thus is an independent contractor). See FOH 10b05–10b07.
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10b05 Employment relationship.
(a) An “employee” under the Act is an individual whom an employer suffers, permits, or
otherwise employs to work. 29 U.S.C. 203(e)(1), (g). “Employer” is defined to “include [ ]
any person acting directly or indirectly in the interest of an employer in relation to an
employee.” 29 U.S.C. 203(d).
(b) In order for the provisions of the Act to apply, the worker must be considered an employee of
an employer. In other words, there must be an “employment relationship” between the two.
The provisions of the Act do not apply to workers who are properly classified as independent
contractors.
(c) Under the FLSA, the fundamental question is whether, as a matter of economic reality, the
worker is economically dependent on the employer for work (and is thus an employee) or is
in business for themself (and is thus an independent contractor).
(d) Economic dependence does not focus on the amount of income the worker earns, or whether
the worker has other sources of income. In fact, there is no single formula for determining
whether an individual is economically dependent on the potential employer for work. Rather,
an “economic reality test” is used to consider all the facts of a work relationship, rather than
assuming that a label, contractual arrangement, or form of business decides if a worker is
economically dependent on the potential employer. In assessing economic dependence, courts
and the Department have historically analyzed the circumstances of the employment
relationship, considering multiple factors to determine whether a worker is an employee or an
independent contractor, with no factor or combination of factors having more weight than
another.
(e) FOH 10b06–07 discusses the analysis for determining whether a worker is an employee or
independent contractor under the FLSA. If an employer asserts that a worker is not an
employee for another reason (e.g., because the worker is a volunteer or trainee), a different
analysis may apply. See generally FOH 10b.

References:
29 CFR 795.100–.110

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10b06 Determining whether a worker is an employee or independent contractor: applying the
six economic reality factors.
(a) Economic reality test. To determine if a worker is in business for themself (and thus an
independent contractor) or is economically dependent on an employer for work (and thus an
employee), six factors (described in paragraphs (b)(1) through (6) of this section) are used to
assess the economic realities of the working relationship. No one factor or combination of
factors determines if a worker is an employee or independent contractor. Rather, all the
circumstances of the work relationship should be examined. The weight given to each factor
will depend on the facts and circumstances of the individual situation. In addition, these six
factors are not exhaustive. As explained in paragraph (b)(7) of this section, additional factors
may be considered if the factors in some way indicate whether the worker is in business for
themself, as opposed to being economically dependent on the potential employer for work.
(b) Economic reality factors
(1) Opportunity for Profit or Loss Depending on Managerial Skill
a. This factor considers whether the worker has opportunities for profit or loss
based on managerial skill that affect the worker's economic success or failure
in performing the work. Managerial skill can include initiative or business
expertise or judgment. The following facts, among others, can be relevant in
the determination:
1. Whether the worker determines or can meaningfully negotiate the
charge or pay for the work provided;
2. Whether the worker accepts or declines jobs or chooses the order
and/or time in which the jobs are performed;
3. Whether the worker engages in marketing, advertising, or other
efforts to expand their business or secure more work; and
4. Whether the worker makes decisions to hire others, purchase
materials and equipment, and/or rent space.
b. If a worker has no opportunity for a profit or loss, then this factor suggests
that the worker is an employee. Some decisions by a worker that can affect
the amount of pay that a worker receives, such as the decision to work more
hours or take more jobs when paid a fixed rate per hour or per job, generally
do not reflect the exercise of managerial skill indicating independent
contractor status under this factor.
c. Examples: Opportunity for Profit or Loss Depending on Managerial Skill

1. Example 1: A worker for a landscaping company performs
assignments only as decided by the company for its corporate clients.
The worker does not independently choose assignments, ask for
additional work from other clients, advertise the landscaping
services, or try to reduce costs. The worker regularly agrees to work
additional hours to earn more money. In this example, the worker
does not exercise managerial skill that affects their profit or loss.
Rather, their earnings may change based on the work available and
their willingness to work more. Because of this lack of managerial
skill affecting their opportunity for profit or loss, these facts indicate
employee status under the opportunity for profit or loss factor.
2. E
xample 2: In contrast, a worker provides landscaping services
directly to corporate clients. The worker produces their own
advertising, negotiates contracts, decides which jobs to perform and
when to perform them, and decides when and whether to hire helpers
to assist with the work. This worker exercises managerial skill that
affects their opportunity for profit or loss. These facts indicate
independent contractor status under the opportunity for profit or loss
factor.
(2) Investment by the worker and the potential employer
a. This factor considers whether any investments by a worker are capital or
entrepreneurial in nature. The fact that the worker makes investments that
support the growth of a business, including by increasing the number of
clients, reducing costs, extending market reach, or increasing sales, would
weigh in favor of independent contractor status. On the other hand, costs of
tools and equipment to a worker to perform a specific job, costs of workers’
labor, and costs that the potential employer imposes unilaterally on the
worker, for example, would tend to indicate employee status.
b. Additionally, the worker’s investments should be considered on a relative
basis with the potential employer’s investments in its overall business. The
worker’s investments do not have to be equal to the potential employer’s
investments and should not be compared only in terms of the dollar values of
investments or the sizes of the worker and the potential employer. Instead,
the focus should be on comparing the investments to determine whether the
worker is making similar types of investments as the potential employer
(even if on a smaller scale) to suggest that the worker is operating
independently, which would indicate independent contractor status.
c. Examples: Opportunity for Profit or Loss Depending on Managerial Skill
1. Example 1: A graphic designer provides design services for a
commercial design firm. The firm provides software, a computer,
office space, and all the equipment and supplies for the worker. The
company invests in marketing and finding clients and maintains a
central office from which to manage services. The worker
occasionally uses their own preferred drafting tools for certain jobs.
In this scenario, the worker's relatively minor investment in supplies

is not capital in nature and does little to further a business beyond
completing specific jobs. These facts indicate employee status under
the investment factor.
2. Example 2: A graphic designer occasionally completes specialty
design projects for the same commercial design firm. The graphic
designer purchases their own design software, computer, drafting
tools, and rents their own space. The graphic designer also spends
money to market their services. These types of investments support
an independent business and are capital in nature (e.g., they allow the
worker to do more work and find new clients). These facts indicate
independent contractor status under the investment factor.
(3) Degree of permanence of the work relationship
a. This factor considers the nature and length of the work relationship. A work
relationship that is indefinite in duration, continuous, or exclusive of work
for other employers would weigh in favor of the worker being an employee.
If the work relationship is definite in duration, non-exclusive, project-based,
or sporadic based on the worker being in business for themself and marketing
their services or labor to multiple businesses, that would weigh in favor of
the worker being an independent contractor. This may include regularly
occurring fixed periods of work. The lack of a long working relationship
does not necessarily suggest that the worker is an independent contractor.
Short-term jobs for multiple employers may be due to the seasonal or
temporary nature of the work or industry, and not the worker’s business
decision, and therefore may indicate employee status.
b. Examples: Degree of Permanence of the Work Relationship
1. Example 1: A cook has prepared meals for an entertainment venue
continuously for several years. The cook prepares meals as decided
by the venue, depending on the size and specifics of the event. The
cook only prepares food for the entertainment venue, which has
regularly scheduled events each week. The relationship between the
cook and the venue is characterized by a high degree of permanence
and exclusivity as the cook does not cook for other venues. These
facts indicate employee status under the permanence factor.
2. E
xample 2: A cook has prepared specialty meals intermittently for an
entertainment venue over the past three years for certain events. The
cook markets their meal preparation services to multiple venues and
private individuals and turns down work from the entertainment
venue for any reason, including because the cook is too busy with
other meal preparation jobs. The cook has a sporadic or project-
based nonexclusive relationship with the entertainment venue. These
facts indicate independent contractor status under the permanence
factor.
(4) Nature and degree of control

a. This factor considers the level of control the potential employer has,
including reserved control, over the performance of the work and the
economic aspects of the working relationship. Reserved control means the
employer has the right to control even if they do not actually exercise the
control.
b. Facts relevant to the potential employer’s control over the worker include
whether the potential employer:
1. sets the worker's schedule;
2. supervises the performance of the work;
3. explicitly limits the worker’s ability to work for others, or places
demands or restrictions on workers that do not allow them to work
for others or work when they choose;
4. uses technological means to supervise the performance of the work
(such as by means of a device or electronically);
5. reserves the right, for example, to supervise or discipline workers; or
6. controls economic aspects of the working relationship, such as the
prices or rates for services and the marketing of the services or
products provided by the worker.
c. More facts that show control by the potential employer indicate employee
status; more facts that show control by the worker indicate independent
contractor status for this factor.
d. Actions taken by the potential employer for the sole purpose of complying
with a specific, applicable federal, state, tribal, or local law or regulation are
not indicative of control. However, actions taken by the potential employer
that go beyond compliance with a specific, applicable federal, state, tribal, or
local law or regulation and instead serve the potential employer’s own
compliance methods, safety, quality control, or contractual or customer
service standards may be indicative of control.
e. Examples: Nature and degree of control
1. Example 1: A registered nurse provides nursing care for Alpha
House, a nursing home. The nursing home sets the work schedule
with input from staff regarding their preferences and determines the
staff assignments. Alpha House’s policies prohibit nurses from
working for other nursing homes while employed with Alpha House
to protect its residents. In addition, the nursing staff are supervised
by regular check-ins with managers, but nurses generally perform
their work without direct supervision. While nurses at Alpha House
work without close supervision and can express preferences for their
schedule, Alpha House maintains control over when and where a

nurse can work and whether a nurse can work for another nursing
home. These facts indicate employee status under the control factor.
2. Example 2: Another registered nurse provides specialty movement
therapy to residents at Beta House. The nurse maintains a website
and was contracted by Beta House to assist its residents. The nurse
provides the movement therapy for residents on a schedule agreed
upon between the nurse and the resident, without direction or
supervision from Beta House, and sets the price for services on the
website. In addition, the nurse provides therapy sessions to residents
at Beta House as well as other nursing homes in the community at
the same time. These facts—that the nurse markets their specialized
services to obtain work for multiple clients, is not supervised by Beta
House, sets their own prices, and has the flexibility to select a work
schedule–indicate independent contractor status under the control
factor.
(5) Extent to which the work performed is an integral part of the potential employer’s
business
a. This factor considers whether the work performed is an integral part of the
potential employer’s business.
1. If the work performed by a worker is critical, necessary, or central to
the potential employer's principal business, then this factor indicates
that the worker is an employee.
2. If the work performed by a worker is not critical, necessary, or
central to the potential employer's principal business, then this factor
indicates that the worker is an independent contractor.
b. This factor does not depend on whether any individual worker in particular is
an integral part of the business, but rather whether the function they perform
is an integral part of the business.
c. Examples: Extent to Which the Work Performed is an Integral Part of the
Potential Employer’s Business
1. Example 1: A large farm grows tomatoes that it sells to distributors.
The farm pays workers to pick the tomatoes during the harvest
season. Because a necessary part of a tomato farm is picking the
tomatoes, the tomato pickers are integral to the company’s business.
These facts indicate employee status under the integral factor.
2. E
xample 2: Alternatively, the same farm pays an accountant to
provide non-payroll accounting support, including filing its annual
tax return. This accounting support is not critical, necessary, or
central to the principal business of the farm (farming tomatoes), thus
the accountant’s work is not integral to the business. Therefore, these
facts indicate independent contractor status under the integral factor.

(6) Skill and initiative
a. This factor considers whether the worker uses specialized skills to perform
the work and whether those skills contribute to business-like initiative.
1. This factor indicates employee status where the worker does not use
specialized skills in performing the work or where the worker is
dependent on training from the potential employer to perform the
work.
2. Where the worker brings specialized skills to the work relationship,
this fact is not itself indicative of independent contractor status
because both employees and independent contractors may be skilled
workers. It is the worker’s use of those specialized skills in
connection with business-like initiative that indicates that the worker
is an independent contractor.
b. Examples: Skill and Initiative
1. Example 1: A highly skilled welder provides welding services for a
construction firm. The welder does not make any independent
decisions at the job site beyond what it takes to do the work
assigned. The welder does not determine the sequence of work, order
additional materials, think about bidding for the next job, or use their
welding skills to obtain additional jobs, and is told what work to
perform and where to do it. In this scenario, the welder, although
highly skilled technically, is not using those skills in a manner that
evidences business-like initiative. These facts indicate employee
status under the skill and initiative factor.
2. E
xample 2: A highly skilled welder provides a specialty welding
service, such as custom aluminum welding, for a variety of area
construction companies. The welder uses these skills for marketing
purposes, to generate new business, and to obtain work from
multiple companies. The welder is not only technically skilled, but
also uses and markets those skills in a manner that evidences
business-like initiative. These facts indicate independent contractor
status under the skill and initiative factor.
(7) Additional factors
a. Additional factors may be relevant in determining whether the worker is an
employee or independent contractor for purposes of the FLSA, if the factors
in some way indicate whether the worker is in business for themself, as
opposed to being economically dependent on the potential employer for
work.
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10b07 Facts that do not determine the worker’s employment status.

(a) In an FLSA case, the following are examples of facts that do not determine whether the
worker is an employee or independent contractor:
(1) The worker is licensed by a state or local government;
(2) The worker relies entirely on tips;
(3) The worker has other sources of income;
(4) The worker is highly compensated;
(5) The place where work is performed (working at home or at the sites of the
employer’s customers does not indicate that the worker is an independent contractor);
(6) The absence of a formal employment agreement;
(7) An agreement stating that the worker is an independent contractor (the economic
realities of the relationship, as opposed to the employer’s characterization of the
relationship, are relevant);
(8) The worker receives an Internal Revenue Service (IRS) Form 1099-MISC from the
employer;
(9) The worker has obtained an employer identification number or has incorporated as an
LLC, for example; or
(10) The worker has obtained worker’s compensation insurance.
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10b08 Effect of sale on the employment relationship.
(a) An employment relationship may exist between the parties to a transaction which is
nominally a sale. For example, house-to-house canvassers who sell at retail the products of a
particular company are typically employees of the company, although the specific facts of the
canvassers’ relationship with the company will be determinative. This may be the case
notwithstanding that the company may issue contracts which are in the form of dealer
contracts under which the company purports to sell its products to the canvassers at fixed
wholesale prices and to recommend retail prices at which the products should be sold. As
explained in FOH 10b05–07 above, a contract or agreement stating that the worker is an
independent contractor does not determine the workers’ status; instead, the economic realities
of the relationship are determinative.
(b) Similarly, an employee is not converted into an independent contractor by virtue of a
fictitious sale of the goods produced by the employee to an employer, so long as the other
indications of the employment relationship exist. Homeworkers who sell their products to a
manufacturer are considered employees of the manufacturer where the economic realities of
the relationship show that the worker is dependent on the employer for work instead of in
business for themself. When applying the nature and degree of control factor discussed in
10b06(a)(4) above, control exercised by the manufacturer over the homeworkers through its
ability to reject or refuse to buy the product is similar to the control ordinarily exercised by a

manufacturer over employees performing work for the manufacturer at home on a piece rate
basis.
[03/11/2024]
10b09 Subject-matter of the employment relationship.
(a) The subject-matter of the employment relationship must be work or its equivalent. The
Supreme Court has set forth the essential elements of work as:
(1) Physical or mental exertion (whether burdensome or not)
(2) Controlled or required by the employer
(3) Pursued necessarily and primarily for the benefit of the employer and his or her
business
(b) An essential element of work is not only that the employer receives certain benefits from the
services of the alleged employees but that “the work necessarily or primarily benefits the
company.”
10b10 Effect of determination of the employment relationship.
(a) Once it is determined that one who is reputedly an independent contractor, lessee, partner, or
the like, is in fact an employee, then all the employees of this so-called independent
contractor engaged in the work for the principal employer likewise become the employees of
the principal employer, who must guarantee compliance with the FLSA. Thus, the one who
is responsible will be charged with seeing to compliance with the FLSA and must keep the
records of the employees.
(b) However, a manufacturer or producer may undertake to see to it that a true independent
contractor complies with the FLSA, in order to avoid interference with the manufacturer’s
own operations through a “hot goods” action under FLSA section 15(a)(1). Such an
arrangement does not make the manufacturer or producer the employer.
10b11 Trainees and student-trainees.
(a) The Supreme Court has held that the words “to suffer or permit to work,” as used in the
FLSA to define “employ,” do not make all persons employees who, without any express or
implied compensation agreement, may work for their own advantages on the premises of
another.
(b) Whether trainees or students are employees of an employer under the FLSA will depend upon
all of the circumstances surrounding their activities on the premises of the employer. If all
six of the following criteria apply, the trainees or students are not employees within the
meaning of the FLSA:
(1) The training, even though it includes actual operation of the facilities of the
employer, is similar to that which would be given in a vocational school.
(2) The training is for the benefit of the trainees or students.

(3) The trainees or students do not displace regular employees, but work under their
close observation.
(4) The employer that provides the training derives no immediate advantages from the
activities of the trainees or students, and on occasion operations may actually be
impeded.
(5) The trainees or students are not necessarily entitled to a job at the conclusion of the
training period.
(6) The employer and the trainees or students understand that the trainees or students are
not entitled to wages for the time spent in training.
10b12 Government-sponsored employment development programs.
(a) Certain federal and state training programs are designed to equip the labor force in an area
with needed and marketable skills and may be specifically directed toward providing local
industries with a labor pool from which workers having particular skills may be drawn.
(b) Investigators may encounter programs of this type conducted under the auspices of federal
and state agencies in which the facilities of business establishments are utilized during
training hours under an agreement or lease arrangement with the agency. The instructors for
such programs may, outside of training hours, be employed by the establishment whose
facilities are used. Certain of the workers being trained may also be employed by this
establishment outside of training hours.
(c) Where the employees of the establishment are involved as either instructors or trainees,
particular care shall be taken to determine whether there exists in actual fact an employment
relationship, between the employer being investigated and the employees involved, during the
hours devoted exclusively to the training program. The fact that the employer’s facilities are
utilized in the training program is not determinative of the existence of an employment
relationship between the employer and trainees or instructors involved insofar as the hours
devoted exclusively to such training is concerned. Nor is the fact that the training program is
directly related to the employees’ regular jobs in itself controlling where, as may be the case,
the program is an independent training course conducted by the agency from which both
employees and the employer benefit. See FOH 10b11 and 29 CFR 785.27 -.32.
(d) These instructions do not reflect a change in policy regarding the applicability of FLSA to
trainees who are employees, during the training periods, of establishments investigated. They
are designed, instead, to call attention to the need for a careful examination of the facts in
each situation where training programs of the general type described are encountered. The
existence of an employment relationship during training periods is of particular significance
since an employee may be subject to the FLSA by virtue of employment in a covered
enterprise even though not engaged in or producing goods for interstate commerce.
10b13 Employer identification numbers issued by Internal Revenue Service.
The issuance of employer identification numbers by the Internal Revenue Service (IRS) does
not constitute a determination as to employer-employee relationship under the FLSA.
10b14 Students training in skilled paramedical occupations: nurses, x-ray technicians, etc.

(a) Whether a student training for certain paramedical occupations is viewed as an employee of a
hospital within the meaning of the Act will depend upon all the circumstances of the student’s
activities on the premises of the establishment. Where a bona fide student training program
exists for such paramedical occupations and such program meets the criteria in FOH 10b11,
no employment relationship will be deemed to exist. Generally this involves students
training for such occupations as registered nurse, licensed vocational or practical nurse, x-ray
technician, certified laboratory assistant, or any other skilled paramedical position. Such
programs involve on-the-job training combined with extensive classroom lectures and
laboratory instruction generally resulting in students receiving degrees, licensing, registration,
or certification by an appropriate board or society. The mere payment of a scholarship,
stipend, or allowance (as long as it does not exceed a reasonable approximation of the
expenses incurred by the trainee taking the course or where it serves as an allowance for
subsistence) will not be considered to establish an employment relationship.
(b) Situations may be encountered where such a student will work in the hospital for
compensation outside of the training schedule. In the typical case a student may do office or
switchboard work. In such cases the student will be considered an employee during the time
spent on such work and must be paid in compliance with the Act’s requirements for such
time. However, the fact that the student would be considered an employee during such time
would not require the time spent in activities described in (a) above to be counted as hours
worked.
(c) On the other hand, the principles in (a) above do not include certain training programs such as
those conducted for nurses’ aides and orderlies where much of the training consists of on-the-
job training and work experience with little if any related classroom lectures or laboratory
instructions and which ordinarily do not lead to licensing, registration or certification. In
many cases these programs exist only for the purpose of filling existing vacancies on the
hospital staff. In such cases the students would be considered employees of the hospital. In
this regard any time spent in the classroom or attending lectures would not be considered
hours worked.
10b15 Golf course caddies.
Golf course caddies are engaged to serve the needs of particular players for substantial
periods of time and their services are generally directed by and are of most immediate benefit
to the players themselves. Arrangements may vary but the players, in one way or another, are
expected to pay for the services rendered to them by the caddy. Because of these
circumstances, the WHD is not prepared to assert that caddies are employees of the golf
course operator.
10b16 Special duty nurses or sitters in hospitals and nursing homes.
(a) In some cases a special duty nurse or sitter may be employed to care for a patient in a hospital
or nursing home. Whether the employee is employed by the patient or by the hospital or
nursing home is a question of fact. For example, if the hospital or nursing home determines
whether use of a special duty nurse or sitter will be permitted, what the pay is to be (even
though paid directly by the patient), and decides which special duty nurse or sitter will be
assigned to a particular patient, the hospital or nursing home is considered to be the employer.
(b) On the other hand, if the patient or their representative contracts directly with the special duty
nurse or sitter as to pay, hours of work and other working conditions, and the establishment

does not control or supervise such work, an employment relationship does not exist between
the special duty nurse or sitter and the establishment. This same principle will apply to a
nurse or other employee on the hospital or nursing home staff who is employed during her
off-duty hours as a special duty nurse or sitter by a patient in the establishment. During the
period or periods in which the employee is so engaged on this special duty by the patient, the
WHD will consider the employment relationship as with the patient and not with the hospital
or nursing home.
(c) A special duty nurse or sitter who is employed by the patient to care for such patient in a
hospital or nursing home, as described in (b) above, is not employed “in connection with the
operation of” the hospital or nursing home (see 29 USC 203(r)). The employment is in the
nursing home or hospital only because the patient is there and the work is not connected
“with the operation of” the hospital or nursing home as such.
10b17 Newspaper area correspondents or stringers.
Some newspapers have arrangements to obtain news stories (particularly local interest stories
from outlying areas served by the newspaper) from persons identified in the industry as area
correspondents or stringers. These writers ordinarily select their own materials which they
obtain in the course of other occupations or while attending local events such as parties,
athletic contests, and the like. They are paid on a per word or per line basis for stories
submitted and accepted by the newspaper. The arrangements vary but traditionally the
newspapers have considered these people to be in the same general category as professional
free-lance writers and not employees. The WHD will not assert that an employer-employee
relationship exists in such cases.
10b18 Graduate students: research assistants.
In some cases graduate students in colleges and universities are engaged in research in the
course of obtaining advanced degrees and the research is performed under the supervision of
a member of the faculty in a research environment provided by the institution under a grant or
contract. Normally, the graduate students involved in these programs are simultaneously
performing research under the grants or contracts and fulfilling the requirements of an
advanced degree. Under such circumstances the WHD will not assert an employer-employee
relationship between the students and the school, or between the student and the grantor or
contracting agency, even though the student receives a stipend for their services under the
grant or contract.
10b19 Externs.
In some cases medical students elect in their senior year of medical school to work as externs
in a hospital for a short period, sometimes 6 weeks. An extern is assigned to one of the
hospital’s major areas of post-graduate training, such as medicine, general surgery or
obstetrics. They attend the needs of patients under the immediate supervision of licensed
physicians and also attend conferences, teaching rounds, and classroom exercises. The
program is designed to provide the student with professional experience in the furtherance of
their medical education in the same general manner as that provided interns. Such a program
constitutes a part of the educational opportunities provided to the externs. Since such training
is so predominantly for the benefit of the extern, the WHD will not assert that such externs
are employees of the hospital to which they are assigned.

10b20 Administrative residents in hospitals.
(a) Some college graduate school programs provide that candidates for the degree of Master of
Hospital Administration (sometimes identified as Master of Business Administration, Master
of Arts, Master of Public Health, etc.) must serve a certain period (often 12 months) of
administrative residency in a hospital. The candidates continue as students on the rolls of the
college. In the usual case, the hospital administrator responsible for the resident is also on the
college faculty. The resident performs various tasks in the hospital, and generally prepares a
thesis or various reports to the college concerning hospital administration. The resident may
receive a stipend or allowance from the hospital. Pending interpretation by the courts, the
WHD for purposes of enforcement of the Act will not assert that such students are employees
of the hospital to which they are assigned as residents.
(b) In some instances, the resident to augment income may secure employment in the hospital
entirely apart from any duties performed as a resident. The principles stated in FOH
10b14(b) apply to such employment.
10b21 Student observers in hotels and motels.
(a) Certain colleges providing academic training in hotel administration require their students to
obtain a stipulated number of practice credits in order to qualify for a degree. These students
act as observers in hotels and motels, usually during the summer months. Typically, the
students have some assigned duties and move from department to department to learn the
business. Generally, the students are paid a nominal sum, such as $100 per month plus room
and meals.
(b) Where such a program is designed to provide a student with professional practice in the
furtherance of his or her college education and the training is academically oriented for the
benefit of the student, the WHD will not assert that the students are employees of the hotel or
motel to which they are assigned.
10b22 Job Corps enrollees.
(a) The Job Corps is a residential program for youths between 16 and 21 years of age established
under the Economic Opportunity Act of 1964, as amended. Enrollees live in a Job Corps
center (or camp) which is operated by either a governmental organization or a private
organization, in either case supervised by a federal agency. Under section 107(a) of this act,
the Director of the Job Corps is authorized to “provide or arrange for the provision of
programs of useful work experience and other appropriate activities for enrollees.”
(b) In implementing this provision, the Job Corps has made arrangements for the enrollees to
work in private firms where they may perform work covered by the FLSA. Such
arrangements with private employers are usually for part-time work and the average duration
is 4 months. In such work experience programs, supervision over the enrollees is maintained
in order to monitor their progress and maximize the quality of training given them.
Arrangements are made between the Job Corps and the private employer-trainer regarding the
division of training costs and the payment of wages.
(c) If a Job Corps enrollee performs work subject to the FLSA in a private firm in such a work
experience program he would be considered for purposes of the FLSA to be jointly employed
by the corporation operating the center or camp and the private employer. Wages paid to

enrollees by either of the joint employers will be considered in determining compliance with
the Act.
(d) It is the position of the WHD that where such an enrollee is assigned to receive training and
work experience with a private employer in an off-the-center work site, the following
activities will not create an employer-employee relationship:
(1) In the preliminary stages of work experience, when the enrollee has had little or no
previous training in the occupation and does no useful work, but is merely being
acquainted with the employer’s business
(2) Time spent by the enrollee in a classroom situation in which no useful work is
performed
(e) The following activities will generally create an employer-employee relationship assuming
productive work is performed:
(1) When an enrollee has been sent to the employer for a short period in order to
determine his or her aptitude and interest in an occupation preliminary to giving
training
(2) When the enrollee has been sent to the employer for a short period in order to
determine whether the training received is adequate to enable him or her to get and
keep a job in the occupation
(f) Job Corps enrollees also engage in on-site work experience, in connection with the
conservation and development of natural resources and public recreational areas usually in
conservation centers, and in performing other tasks at the center itself. No such work
performed by enrollees inures to the benefit of the contractor who provides the training
program and the WHD will not assert that these activities are considered as work for an
employer within the coverage of the Act. Similarly, classroom activities whether or not
resulting in a useful product would be part of or incidental to the vocational training program.
(g) In determining the wages paid employees described in (c) above the joint employers may
include the reasonable cost of such items as food, lodging, clothing, laundry, transportation to
and from work, and medical and dental care in accordance with 29 CFR 531. The reasonable
cost of providing an employee with medical and dental care may be based on the average of
the costs actually incurred for all employees over a representative period.
(h) In a Job Corps center (or camp) operated by a private employer, the above principles in no
way affect the application of the FLSA, McNamara-O’Hara Service Contract Act (SCA) or
Walsh-Healey Public Contracts Act (PCA) to the employer’s own employees or employees of
any subcontractors involved. See FOH 13b10 and FOH 14c01.
10b23 School employees: after hours work.
(a) In some cases school employees will work outside of their normal working hours where a
third party (either public or private) uses the school facilities. For example, a community
organization may use the school cafeteria for a banquet or the auditorium for a concert, and
the food service or custodial employees of the school will perform the necessary services.
Time spent in the operation of a school and the maintenance of school property, both during

and after regular school hours is normally considered hours worked under the Act. School
employees engaged in the operation and maintenance of school facilities during periods in
which their services are made available to a third party are considered to be jointly employed
by the school and the third party if the school itself contracts for the use of such employees.
The total time spent in work for the joint employers will be counted as hours worked and paid
for in compliance with the minimum wage and overtime pay provisions of the Act.
(b) If the school does not require that its employees be utilized by nonschool organizations when
using school facilities but such employees are hired merely for the convenience of the outside
group and are paid directly by them, the hours worked and compensation paid to such
employees for this time need not be included in determining compensation due to the
employee for their employment by the school.
10b24 University or college students.
(a) University or college students who participate in activities generally recognized as
extracurricular are generally not considered to be employees within the meaning of the Act.
In addition to the examples listed in FOH 10b03(e), students serving as residence hall
assistants or dormitory counselors, who are participants in a bona fide educational program,
and who receive remuneration in the form of reduced room or board charges, free use of
telephones, tuition credits, and the like, are not employees under the Act.
(b) On the other hand, an employment relationship will generally exist with regard to students
whose duties are not part of an overall educational program and who receive some
compensation. Thus, students who work at food service counters or sell programs or usher at
athletic events, or who wait on tables or wash dishes in dormitories in anticipation of some
compensation (money, meals, etc.) are generally considered employees under the Act.
10b25 Fraternal orders: officers and volunteers.
The WHD will not assert that an employment relationship exists under the Act for persons
who volunteer their services, including those who are elected, to a fraternal order not as
employees and without contemplation of pay. Included would be such persons as the
secretary and director or trustees of individual lodges. The payment of a nominal sum would
not affect the status of a bona fide volunteer. See FOH 12a03.
10b26 School-related work programs.
(a) Pursuant to the provisions of section 14(d) of the FLSA, the WHD will take no enforcement
action with respect to minimum wage or overtime for public or private elementary or
secondary students employed by any school in their school district in various school-related
work programs, provided that such employment is in compliance with applicable child labor
provisions. This position is adopted without prejudice to the rights of individual employees
under section 16(b). This non-enforcement policy is not applicable to workers with
disabilities in sheltered workshops operated by elementary or secondary schools since
sheltered employment is not considered to be an integral part of a regular education program.
(b) If such employment is not in compliance with applicable child labor provisions, the students
so employed must be paid minimum wage and overtime for all hours worked in any
workweek in which they were so employed. Also, the employer will be subject to child labor
civil money penalties (CMPs).

10b27 Prison inmates.
(a) Generally, a prison inmate who, while serving a sentence, is required to work by or who does
work for the prison, within the confines of the institution, on prison farms, road gangs, or
other areas directly associated with the incarceration program, is not an employee within the
meaning of the Act (see FOH 10b03(g)).
(b) A different situation exists, however, where inmates are contracted out by an institution to a
private company or individual. In such instances an employer-employee relationship is
created between the private company or individual and the prisoners. This is true regardless
of whether the work is performed within the confines of the institution or elsewhere.
10b28 Jurors.
Service on jury duty for either a petit or grand jury does not result in the establishment of an
employment relationship. Thus, all jurors and prospective jurors called to serve by the
requesting public agency are not employees under the Act.
10b29 Foster parents.
(a) Some governmental agencies operate social service programs which arrange for and finance
the rearing of children by foster parents. No employment relationship will be deemed to exist
where:
(1) A state or licensed private agency selects an individual who voluntarily agrees to
become a foster parent in accordance with state standards, and
(2) The foster parent services are provided in the foster parent’s home, and
(3) The state either directly or indirectly finances the foster parent services.
10b30 Volunteers under the Domestic Volunteer Service Act of 1973.
(a) “Foster Grandparent” and “Senior Companion” programs
Volunteers participating in either the “Foster Grandparent” or “Senior Companion” programs
under the Domestic Volunteer Service Act of 1973 (DVSA) are not employees under the
FLSA.
(b) “University Year for Action” (UYA) programs
(1) Situations may be encountered where a university has established a federally-funded
“University Year for Action” service learning program pursuant to the DVSA. These
programs provide that students will receive college credits when they volunteer to
perform various services, often for a nonprofit private organization, on a full-time
basis for a year. The students receive a subsistence-level stipend to cover their
expenses, and they are required to live at the low income level of the people they
serve. The legislative history of the DVSA and the FLSA make clear that these
students are not considered employees for purposes of the FLSA.

(2) Universities which receive federal UYA funds have a 5 year funding limit, but are
required to make every effort to continue the program after federal funds cease.
Under such UYA continuation programs, the students generally receive college
credit, pay tuition, receive a stipend, keep a journal of their experiences, make
presentations of their work and learning, and present periodic written reports of their
progress in achieving the program’s objectives. In addition, the sponsor, ordinarily a
faculty member, evaluates their internship performance.
(3) Where a UYA continuation program meets this description, the WHD will not assert
that an employment relationship exists. However, where programs are encountered
which differ materially from the above described circumstances, obtain all the facts
of the case and refer the file to the National Office (NO)/Division of Enforcement
Policy and Procedures (DEPP), ATTN: FLSA/Child Labor Branch.
10b31 Government activities: volunteer services.
The principles in FOH 10b03(c) may apply with respect to certain governmental activities.
For example, an office employee of the city may volunteer to perform non-clerical services,
such as coaching a softball or basketball team in a city-sponsored program during his or her
off-duty time as a charitable or civil act. Similarly a person may participate in the civil
defense program for civil or personal motives. Where a person performs such volunteer
services without promise or expectation of compensation, at hours that suit his or her own
convenience whether by schedule or otherwise, and where no regular employee is replaced in
the performance of normal duties, no employer-employee relationship exists with respect to
such time. The activity may be performed on the employer’s premises so long as it is not
done during any time the employee is required to be on the premises and the control
exercised by the employer is only minimal. A person, however, may not be both an
employee and a volunteer while performing essentially the same duties. Thus, a person
employed in park activities cannot have his or her time divided into working hours and
volunteer hours while performing the same or related duties.
10b32 Government-financed child care services.
(a) Whether individuals who provide child care services in their own homes under an agreement
with a government social service agency are employees of such agency would depend upon
the total fact situation involved in the arrangement. If the parent (or person standing in the
place of a parent) is free to select, and in fact does select, an individual from a list of persons
supplied by the agency as qualified to perform the child care services, with the agency merely
agreeing to reimburse the child care operator selected, an employer-employee relationship
would not exist between the government agency and the operator. Further, if the agency
utilizes bona fide volunteers as day care operators over whom no control is exercised, and the
monetary payment is simply to reimburse the operator for expenses, no employment
relationship would exist. However, the activities of such day care homes may be covered
under the Act, and the operator responsible for compliance with respect to any employees
employed in connection with the operation of the child care center. See FOH 12g00.
(b) Conversely, if in fact such freedom of choice does not exist, and the parent is told to which
home the child must be taken for this service, and the agency is closely involved in directing
and controlling the operator in performing the duties in rendering the child care services, an
employer-employee relationship would exist between the agency and the operator.

10b33 Election judges and officials.
The WHD will take no position as to whether persons employed by a public agency, such as a
Board of Elections or similar office, to serve as election judges and officials on election days
are employees of the public agency and covered by the Act.
10b34 Patient workers.
(a) The court has held that patient workers in hospitals or institutions whose work is of any
consequential economic benefit to the facility are to be treated as employees. While the court
has generally considered all circumstances in determining whether an employment
relationship existed, the court specifically rejected as determinative the alleged therapeutic
value of the work or the patient’s level of performance. In general, we would hold that there
is consequential economic benefit to the institution if the work in question would be
performed by someone else if it were not done by the patient. However, where a patient is
undergoing evaluation or training, we will not hold the patient to be an employee during the
first three months of engagement in a work activity or activities provided the patient spends
no more than 1 hour a day and no more than 5 hours a week in such activities and provided
further that competent instruction and supervision is provided the patient during such period.
(b) A patient in a hospital or institution may volunteer and need not be considered an employee
for such services which would not be compensated by the institution if performed by a person
other than a patient. Such volunteer services may include wheeling another patient in a
wheelchair to and from certain activities, planting a vegetable garden if the fruits of such
labor belong to the patient, and other similar activities. However, the ordinary maintenance,
patient care, office work and other activities that are performed in the operation of an
institution would create an employment relationship.
10b35 Residential drug abuse and alcohol treatment programs.
(a) There are certain types of situations in residential drug abuse and alcohol treatment programs
where an employment relationship would not be deemed to exist. For example, a residential
care program which seeks to establish a family setting for treatment of persons with drug or
alcohol problems would not create an employment relationship under the Act between the
residents and the institution where:
(1) The work performed by the residents is that which is ordinarily done on a daily basis
in a private home and is solely for the mutual benefit of the occupants of the home
(institution).
(2) Residents do not perform work activities which would ordinarily be performed by
full-time employees of the institution so that there is no displacement of regular full-
time employees through substitution of resident workers.
(3) Residence in the institution and performance of activities by the occupants is short-
term (usual no more than a year) as opposed to generally long term occupancy in
such institutions as those concerned with the mentally ill, individuals with intellectual
or developmental disabilities, the aged, or the terminally ill.
(4) The institution is relatively small, houses a limited number of residents, and has no
paid staff other than counselors.

10b36 Veterans making artificial poppies.
It has long been the practice in United States (U.S.) Department of Veterans Affairs (VA)
hospitals to have disabled veterans make artificial poppies that are dispensed on street corners
by the Veterans of Foreign Wars and the American Legion. Whether these veterans are
performing this work as employees would depend on the fact in each case. However, in view
of VA’s involvement, the WHD will not handle complaints or investigate in this area but will
refer such matters to the VA.
10b37 Pharmaceutical externs and interns.
(a) Colleges and universities which offer degree programs in pharmacy may require clinical or
work experience at a pharmacy site. These externship courses combine classroom lectures
and lab work with on-site work training under the supervision of a qualified pharmacist.
Participation by students in such extern courses as part of their pharmacy curriculum is
predominantly for their benefit and in furtherance of their educational opportunities. In some
states completion of such courses may reduce the postgraduation and prelicensing internship
requirements, thus enabling the students to become licensed in a shorter time. Therefore, the
WHD will not assert that an employment relationship exists because of such work training.
(b) The states generally have a requirement that graduates of a pharmacy degree program must
serve as an apprentice or intern for up to a year prior to licensure. However, where such
individuals are serving in a postgraduation internship, an employment relationship would
exist between the graduate interns and the pharmacies at which they work prior to licensing.
10b38 Programs for youthful or first-time offenders designed as an alternative to
incarceration.
(a) As part of their sentences, youthful or first-time offenders may spend a number of hours in
public service activities in community action programs or nonprofit organizations formed for
a public purpose. The WHD will not assert that an employment relationship exists between
offenders and participating organizations where the juvenile or first-time offenders:
(1) voluntarily enter into the program for their own benefit,
(2) do not displace regular employees or impinge on the employment opportunities of
others,
(3) are under the supervision or control of the courts, and
(4) perform the work without contemplation of pay.
10b39 Drying out period for alcoholics in sheltered workshops (SWS).
An alcoholic admitted to an SWS frequently requires a drying out period before he/she is
capable of performing work. The alcoholic’s presence in the SWS during this period is
primarily intended to keep him/her away from alcohol and not to perform any significant
productive work. Consequently, the WHD will not assert that an employment relationship
exists in the case of an individual who is substantiated to be an alcoholic (see FOH 64f09)
during the first 4 weeks (28 consecutive calendar days) in the SWS unless it is clearly evident

that the individual has been engaged in activities which provide consequential service or
benefit to the SWS (see FOH 64f05).
10b40 Welfare/workfare programs.
(a) More and more states are adopting welfare/workfare programs, i.e. programs that require
persons to perform work in some capacity in exchange for receiving welfare assistance.
These programs need to be carefully examined to determine if an employer-employee
relationship subject to the FLSA exists. If the welfare recipient is an employee subject to the
FLSA, the following facts must be determined:
(1) Does the state welfare/workfare statute grant the state authority to require the welfare
recipient to work for their assistance?
(2) What hours of work are required of welfare recipients and are records kept of those
work hours?
(3) Does the welfare assistance (cash/benefits) provide a wage of not less than the
applicable minimum wage and proper payment of overtime when worked?
(4) Are recipients employed in violation of the child labor provisions?
(b) If FLSA violations exist, potential back wage and CMP liability should be determined, and
copies of documentation supporting the facts obtained above, forwarded to the DEPP for
review prior to any discussion with state authorities regarding FLSA compliance. After this
review, the Assistant Administrator for the Office of Policy will advise the Regional Office
(RO) on how to proceed.
10c TYPES OF EMPLOYERS
10c00 Scope of the term “employer.”
(a) Section 3(d) of the amended Act defines “employer” to include “... any person acting... in the
interest of an employer in relation to an employee and includes a public agency...” and
section 3(a) defines “person” to mean “...an individual, partnership, association, corporation,
business trust, legal representative, or any organized group of persons.” Thus, by
interpolation of the definition of “person” into the definition of “employer,” the scope of the
term “employer” becomes apparent.
(b) Section 3(x) of the amended Act defines “public agency” to mean the Government of the
U.S., the government of a state or political subdivision thereof, any agency of the U.S.
(including the U.S. Postal Service and Postal Rate Commission), a state, a political
subdivision of a state, or any interstate governmental agency.
10c01 A partnership as an employer.
A partnership is a “person” for purposes of the FLSA, and may be a party to the employment
relationship as an employer. The employment relationship is not considered to exist between
a bona fide partnership and the partners of whom it is composed. Such partners are self-
employed, since they cannot be said to be employed by an employer separate and distinct
from themselves. Merely calling individuals who are essentially employees by the term

partners under a so-called partnership agreement, which fails to invest them with the usual
attributes of partnership in an enterprise, does not make them such.
10c02 Cooperatives as employers.
The FLSA contains nothing to indicate that cooperative organizations, as such, are to be
excluded from the category of employers subject to its terms. It is clear that the employment
relationship may exist at least between such an organization and non-members whom it hires
or suffers or permits to work. Nor can it be said that membership in a cooperative in the
ordinary case establishes a mutual agency analogous to a partnership or otherwise identifies
the member so closely with the cooperative that they cannot become, respectively, employer
and employee. Among the circumstances which may be taken to indicate that a cooperative
is an entity separate and distinct from its worker-members, are a corporate form of
organization, the presence of the usual incidents of the employment relationship (i.e., control
by the governing body or a designated officer over the work performed, the member’s hours
of labor, selection for and discharge from the job and the like) and the exercise of financial or
managerial control or the furnishing of capital or management services by outsiders,
especially if such outsiders are wholesalers, manufacturers, or others who purchase or dispose
of the products of the cooperatives.
10c03 Corporations as employers.
A corporation is a legal entity separate and distinct from its stockholders. In the ordinary
case, a corporation and a stockholder therein can become parties to the employment
relationship as employer and employee, and a worker who is, in other respects, in the position
of an employee of a corporation must be treated as such for the purposes of the FLSA, even
though the worker owns shares of stock in his or her corporate employer. Ownership of stock
does not destroy the duality of the parties to the relationship, even where the worker is an
officer of the corporation or where none but stockholders do the corporation’s work.
10c04 Excluded employers.
The term “employer,” as used in section 3(d) of the FLSA, “does not include any labor
organization (other than when acting as an employer) or anyone acting in the capacity of
officer or agent of such labor organization.” The qualifying phrase, “other than when acting
as an employer,” indicates observance of the FLSA with respect to any individuals directly
employed by it, whether or not such individuals are members of the organization, and even
though they are elected to their positions by the entire membership.
10c05 Political subdivisions of a state.
The determination of whether a particular body is a “political subdivision” of a state within
the meaning of FLSA section 3(d) must be controlled by the intention of Congress. In
general, the term “political subdivision” is interpreted for purposes of the FLSA to include
counties, townships, cities, towns, villages, school districts, drainage districts, etc.
10c06 Status of contractors with a government.
The fact that an employer is doing work for the federal government or a state government
does not transform the employer into a government instrumentality, nor place him/her in the
position of the “United States or any [s]tate or political subdivision of a [s]tate.” Not even

the fact that the federal or a state government has contracted for the performance by a private
employer of a function purely governmental in character is sufficient to make the government
the employer of the individuals employed by the contractor to perform the function.
10c07 Federal Reserve Bank employees.
Federal Reserve Bank employees are not employees of the U.S. within the meaning of FLSA
section 3(d).
10c08 Farm Credit Administration Banks and Associations.
Employees of the following Farm Credit Administration Banks and Associations are
considered as “employees” within the meaning of FLSA and subject to its provisions in the
same manner as employees of the ordinary commercial bank or credit establishment: Federal
Land Banks, Federal Land Bank Associations, Federal Intermediate Credit Banks, Production
Credit Associations, and Banks for Cooperatives.
10c09 Status of state-sponsored workshops.
(a) A state-sponsored workshop or other institution for aid to the handicapped may or may not be
considered the same as the state, depending on the facts concerning the establishment and
operation of the particular institution. Employment in a state workshop for the blind is
considered to be employment by the state itself where:
(1) The institution was founded by an act of the legislature for the purpose of providing a
central and responsible state unit to administer relief to the blind.
(2) The financial operations of the institution were audited by a fiscal officer of the state.
(3) Its identity with the state was further established by statutory provisions vesting
supervision and control in a board of trustees, of whom a majority were appointed by
the Governor, and providing for the financing of the institution out of public funds.
10c10 Status of foreign governments.
Although the FLSA does not expressly exclude foreign governments from the category of
employers subject to its provisions, the usual principles of international comity are applied to
exclude the direct agencies of such governments from compliance with the Act. This rule,
however, applies only if the agency is exercising part of the sovereign power of the foreign
government. If the agency is a commercial one engaged in commercial operations in
competition with American industries, the agency is not excluded under this principle and the
employees are entitled to the benefits of the FLSA. The United Nations is in the same
category as a foreign government.
10c11 States and political subdivisions: single employers.
(a) The government of a state, that is, all the departments and agencies of any of the 50 states,
constitutes a single employer under the Act. Similarly, the government of a political
subdivision, e.g., county, city, etc., with all of its departments and agencies, constitutes a
single employer under the Act. However, such entities are separate and distinct from the
government of the state and from other political subdivisions. Thus, where an employee

works for more than one agency of the state government, or for more than one agency of a
political subdivision, such employee’s employment is by a single employer. Each agency is
both individually and coequally responsible for compliance with all applicable provisions of
the Act with respect to such employee. However, see FOH 59d.
(b) Political subdivisions (see FOH 10c05) and interstate agencies have traditionally been
recognized as entities separate and distinct from the government of the state.
10c12 Community action agency.
(a) Public agencies
(1) Whether a community action agency, which administers various antipoverty and
economic opportunity programs, is a covered employer under the FLSA depends
upon the facts in a particular situation. Any community action agency which is an
entity of a state, a political subdivision of a state, or a combination of public agencies
is clearly an employer covered under the Act. See 29 USC 203(d), 29 USC 203(x),
and FOH 10c05.
(2) However, a community action agency which consists solely of a private nonprofit
agency or organization that has been designated by the state (or political subdivision
thereof) would not thereby become a “public agency.” This does not, of course,
preclude coverage of such private community action agency under another provision
of the FLSA. A private community action agency does not become a “public
agency” merely because it receives and disburses federal funds. However, see FOH
59d.
(b) Enterprise coverage
Enterprise coverage does not apply to the charitable, educational, religious or similar
activities of private nonprofit organizations except where such activities are performed in
connection with the type of institution set out in section 3(s)(1) of the Act or in connection
with commercial ventures.
(c) Individual coverage
Individual coverage may apply to employees of such organizations.
10d TYPES OF EMPLOYEES
10d00 Scope of the term “employee.”
(a) Section 3(e)(1) of the amended Act defines the term “employee” to include any individual
employed by an employer, except as provided in sections 3(e)(2), (3), and (4).
(b) Section 3(e)(2) of the amended Act provides that in the case of an individual employed by a
public agency, the term “employee” means:
(1) any individual employed by the Government of the United States -

b. as a civilian in the military departments (as defined in section 102 of title 5,
United States Code),
c. in any executive agency (as defined in section 105 of such title),
d. in any unit of the legislative or judicial branch of the Government which has
positions in the competitive service,
e. in a nonappropriated fund instrumentality under the jurisdiction of the Armed
Forces, or
f. in the Library of Congress;
(2) any individual employed by the United States Postal Service or the Postal Rate
Commission, and
(3) any individual employed by a state, political subdivision of a state, or an interstate
governmental agency, other than such an individual -
g. who is not subject to the civil service laws of the state, political subdivision,
or agency which employs him, and
h. who
3. holds a public elective office of that state, political subdivision, or
agency,
4. is selected by the holder of such an office to be a member of his
personal staff,
5. is appointed by such an office holder to serve on a policy-making
level, or
6. who is an immediate adviser to such an office holder with respect to
the constitutional or legal powers of his or her office, or
7. is an employee in the legislative branch or legislative body of such
state, political subdivision, or agency and is not employed by the
legislative library of such state, political subdivision, or agency.
i. The first category (FOH 10d00(b)(3)b.1., above) is limited to those persons
who are elected by the voters of the pertinent jurisdiction.
With respect to the second and third categories (FOH 10d00(b)(3)b.2. and 3.,
above) the following are examples of tests which are to be considered:
8. Is the person’s employment entirely at the discretion of the elected
office holder?
9. Is the position not subject to approval or clearance by the personnel
department or division of any part of the government?

10. Is the work performed outside of any position or occupation
established by a table of organization as part of a legislative,
executive, or judicial branch, or a committee or commission
established by such a branch?
11. Is the person’s compensation dependent upon a specific
appropriation or is it paid out of an office expense allowance
provided to the office holder?
The fourth category (FOH 10d00(b)(3)b.4., above) is limited to that of a legal
advisor (i.e., a lawyer).
j. Thus individuals such as pages, stenographers, telephone operators, clerks,
typists and others employed by the branch or commission as a whole, may be
considered “employees” under the Act. An additional example would be
deputy sheriffs who, although they are selected by and work under the
direction of the sheriff, are employed only after approval of their
employment by the Board of Commissioners. They are not employed at the
sole discretion of the sheriff pursuant to the second (FOH 10d00(b)(3)b.2.,
above) category.
(c) Of course, employees who are not excluded by the provisions of section 3(e)(2)(C) may
qualify for exemption under 29 CFR 541 if the tests are met.
(d) Pursuant to section 3(e)(4) of the FLSA, the term “employee” does not include any individual
who volunteers to perform services for a public agency which is a state, a political
subdivision of a state, or an interstate government agency, if-
(1) the individual receives no compensation or is paid expenses, reasonable benefits, or a
nominal fee to perform the services for which the individual volunteered, and
(2) such services are not the same type of services which the individual is employed to
perform for such public agency.
(e) An employee of a public agency which is a state, political subdivision of a state, or an
interstate governmental agency may volunteer to perform services for any other state,
political subdivision, or interstate governmental agency, including a state, political
subdivision or agency with which the employing state, political subdivision, or agency has a
mutual aid agreement.
10d01 Employees of the Library of Congress.
Pursuant to section 4(f) of the amended Act, the Secretary is authorized to enter into an
agreement with the Librarian of Congress for enforcement of the FLSA with respect to any
individual employed in the Library of Congress. An agreement is now in effect which
provides that the Library of Congress will investigate its own complaints.
10d02 Employees of the United States.
Section 4(f) of the amended Act authorizes the Civil Service Commission (now the Office of
Personnel Management) to administer the provisions of the FLSA with respect to any

individual employed by the U.S. (other than an individual employed in the Library of
Congress, U.S. Postal Service, Postal Rate Commission, or the Tennessee Valley Authority).
10d03 Suits by federal, state, and local government employees under section 16(b).
Section 16(b) of the FLSA and section 6 of the Portal-to-Portal Act provide that employees of
a public agency may sue for back wages in any federal or state court of competent
jurisdiction for themselves or other employees.
10d04 (Reserved.)
10d05 Member of the elected official’s personal staff.
(a) Section 3(e)(2)(C) excludes from the definition of employee under the FLSA individuals who
are selected by an elected office holder to be a member of his or her personal staff. The
personal staff does not include individuals who are directly supervised by someone other than
the elected official even though they may be selected by and serve at the pleasure of such
official.
(b) Generally personal staff includes only persons who are under the direct supervision of the
elected official and who have almost daily contact with him or her. It would, for example,
include the official’s private secretary, but not the secretary to his or her assistant, or the
stenographers in a pool that services the official’s department, or staff members in an
operational unit whose head reports to the elected official. It would typically not include all
members of an operational unit, since all the members could not have a personal working
relationship with the elected official.
10d06 National Guard technicians.
National Guard technicians, whose positions are created by federal statute, are federal civilian
employees and the application of the FLSA to them is a matter within the jurisdiction of the
Civil Service Commission (now Office of Personnel Management) under section 4(f) of the
Act. See FOH 10d02.
10e GEOGRAPHICAL LIMITS
10e00 Geographical limits of FLSA.
(a) Pursuant to section 13(f) of the FLSA, the provisions of sections 6, 7, 11, and 12 of the Act
do not apply to any employee whose services are performed in a work place within a foreign
country or within territory under the jurisdiction of the U.S. states other than the following:
(1) A state of the United States
(2) The District of Columbia
(3) Puerto Rico
(4) Virgin Islands
(5) Outer Continental Shelf lands as defined in the Outer Continental Shelf Lands Act
(43 USC 1331)

(6) American Samoa
(7) Guam
(8) Wake Island
(9) Johnston Island
(b) Effective 03/24/1976, the FLSA, except for section 6, applied to the Northern Mariana
Islands.
(c) Effective 10/21/1986, the FLSA no longer applied to Eniwetok Atoll or Kwajalein Atoll (99
Stat. 1770).
10e01 FLSA application to employees performing duties both in the U.S. and foreign countries
such as Canada, Mexico, or Panama.
(a) Coverage shall be asserted for U.S. and foreign citizens employed at or working out of an
establishment or work site, located in a state, as defined in the Act, even though the employer
is a foreign citizen, when such employees are engaged in or producing goods for interstate
commerce or are employed in an enterprise described in section 3(s).
(b) Employees employed by and working in an establishment located in a foreign country are not
considered subject to the FLSA merely because they make deliveries in the states, or pick up
materials in the states for transport to a foreign country.
On the other hand, where an employee of such an establishment is working in the U.S. for a
substantial period of time and performs covered, nonexempt work, coverage would be
asserted. A worker who travels more than 25 miles from the U.S. border or spends more than
72 hours in the U.S. on a single visit (whichever occurs first) is considered to have spent a
substantial period of time in the U.S. Once a worker has spent a substantial period in the U.S.,
all hours of work in the U.S. on that visit must be compensated at no less than the minimum
wage, including hours of work prior to the worker reaching the 25 mile or 72 hour mark.
10e02 Employees in foreign countries.
The FLSA does not apply to employees exclusively employed in foreign countries even
though they may be American citizens and employees of an American employer.
10f (RESERVED)
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