Before you hire that teen, know the rules
By Dana Dratch • Bankrate.com

It's summer and the living is easy, unless you're a small-business owner needing seasonal help.

Teen labor is the traditional solution. But before you hang out that help-wanted sign, make sure you're not about to break the law.

Most typical teen jobs -- bagging groceries, retail store clerking or movie ticket collecting -- are perfectly legal. However, if you're considering hiring a 17-year-old to deliver pizzas or operate a meat slicer, think again.

The federal Fair Labor Standards Act spells out exactly what jobs teens are allowed to do at every age, along with the hours they may work and what they must be paid. Many states impose additional restrictions (and the laws vary widely) on suitable employment, age of workers, hours and required breaks.

"The main danger for small-business owners in this area is that they have to comply with state laws, and they are very unique," says Gregory K. McGillivary, partner with Woodley & McGillivary, a labor law firm based in Washington, D.C.

State laws trump feds
State laws also would apply in the rare instance that the FLSA doesn't affect a business. This might be the case for a company with annual revenues of less than $500,000 and no interstate trade.

Be sure to get a knowledgeable second opinion if you think you're exempt from the FLSA. The owner who thinks he's escaped federal labor regulation may be surprised to discover that simply accepting credit cards and out-of-state checks can substantiate interstate commerce.

It's important to know and follow the rules because violations can be costly. Break federal labor law and your company could pay up to $11,000 for each infraction. Break some state child-labor laws, and you could face criminal prosecution.

But federal labor law also gives businesses a financial incentive to hire teens. Unless state law says otherwise, businesses may pay teens $4.25 an hour, 90 cents less than minimum wage, for the first 90 days of employment, roughly the entire summer season.

The FLSA also allows farms, colleges, universities and retail establishments to obtain a certificate allowing them to pay teens just 85 percent of minimum wage, $4.38 per hour, year-round provided the workers are full-time students.

And just which young workers can earn this lower pay is meticulously regulated.

Hours, age and injuries
When business owners break the law, it's usually out of ignorance, says Tammy McCutchen, administrator of the Wage and Hour Division at the U.S. Department of Labor. The most common infractions are working teens too many hours or too late at night.

"It's sort of common sense not to have a kid using a power saw," she says. "It's not common sense that during the school year [teens under 16] are only allowed to work until 7 p.m."

In many cases, what a teen can or can't do depends on age. Kids younger than 14 can legally hold a few outside jobs, such as baby-sitting, a newspaper route, acting or performing and working on a family farm. At 14, they can take jobs in offices, retail stores, amusement parks and movie theaters.

But they can't operate any power-driven machinery and can work only before or after school hours, and then for no more than 3 hours a school day. Additionally, these pre- or post-school jobs must fall between 7 a.m. and 7 p.m., and a youth can work only 18 total hours in a school week. On breaks and during the summer, 14-year-olds and 15-year-olds can work up to eight hours a day, 40 hours a week, and may work as late as 9 p.m.

Federal law also allows kids of any age to work in the family business, as long as the work isn't manufacturing or on the hazardous occupations list. There is a notable age exception for one of the most dangerous occupational areas: agriculture. The FLSA lets kids as young as 12 put in unlimited hours before and after school on commercial farms with a parent's permission.

Even with less dangerous jobs, teen injuries are a real concern, says McCutchen. On average, the National Institute for Occupational Safety and Health reports that nearly 55 younger workers are hurt on the job each day. Cuts, sprains, strains, bruises, burns and broken bones are the most common.

More jobs at sweet 16
As expected, the labor laws loosen as teens get older.

Once a youth reaches 16, there are no federal restrictions on hours. But certain hazardous occupations remain off-limits and some common tasks also are forbidden. While 16-year-olds and 17-year-olds can handle power-driven tools, the law says they cannot operate specifically prohibited machinery like meat slicers or automobiles.

"Any time you are thinking of having them use power-driven machinery, you should check the [labor department] Web page," says McCutchen.

Federal regulation of teen employment ends at 18, but that doesn't mean business owners are on their own. Many states have rules regarding employment of young adults between 18 and 21, especially when the job involves alcohol.

An employer's safest bet when hiring younger workers, says John Richard Carrigan, member of the state labor law and developments committee for the labor and employment law section of the American Bar Association, is to "know your state laws."

Before you hire
Confused by the all the age and job limitations? Then don't hesitate to call state and federal departments of labor and "ask questions before the person's on the payroll," says Carrigan. That way, you're simply posing a hypothetical, he says, and not dodging state or federal prosecution.

You'll also want to go through the same paperwork with a teen as you would with an adult: verify ID (which will allow you to confirm a young employee's age), make sure that the young person is eligible to work in the United States, and fill out the necessary state and federal tax forms.

"Age is critically important," says Carrigan, partner in the Greenville, S.C.-based labor and employment law firm of Ogletree, Deakins, Nash, Smoak & Stewart PC. "Some occupations legal for a 10-year-old in some states are only legal for a 12-year-old in another." The state's legal age of majority also makes a big difference, he says.

And if your business is unionized, make sure that employing teens for the summer passes muster with the union, says McGillivary, union chairman of the ABA's federal labor standards committee.

Beware of interns
Business owners occasionally try to get extra summer help for free. But shady tactics could cost in the long run.

Some employers classify employees as independent contractors. Never a good idea, says McGillivary. His litmus test: Does the person work out of your location? Are you the only employer? Answer yes to either, he says, and the worker is likely an employee. For more on the distinction, check Internal Revenue Service Publication 15-A, Employer's Supplemental Tax Guide, or call the Department of Labor at (866) 4US-WAGE.

And if you think you can avoid paying your summer employee by calling the job an unpaid internship, you might want to reconsider, says Carrigan. "If they do work for you, they are entitled to be paid," he says.

You also run the risk that interns will come back at the end of the summer and demand pay. At that point, the business would be hard-put not to fork over some cash, Carrigan says.

Even worse from a business owner's standpoint is a teen hurt on the job. If the youth is an employee or paid intern, worker's compensation puts a ceiling on liability, says Carrigan. "If an unpaid intern is hurt," he says, "there is no limit." He recommends employers set a pay rate they are comfortable with and treat interns like employees.

"I don't think you can save enough by not paying them to make up for one injury or lawsuit," Carrigan says. In addition, if the injured teen was working in violation of state child labor laws, some states increase the amount of worker's comp or liability the teen could collect, he says.

But business owners generally are honest when it comes to child labor, says McCutchen. "I believe that most businesses want to comply," she says. "They simply need help in knowing what the rules are."

Dana Dratch is a freelance writer based in Georgia.

-- Posted: June 5, 2002