Are employers violating 'trainee rates'?

Are employers violating 'trainee rates'?

I am curious to know if any employers, particularly in Texas, are taking advantage of the "trainee" rate allowed in the Federal minimum wage regs. Specifically, the regulations allow payment of $4.25 per hour during the first 90 days of employment for people under age 20. I'm certain in the past few if any employers took advantage of this, as they would not be able to hire anyone. I'm wondering now with so many people on the job market if anyone has revisited this.

Answer Paywizard:
The "Texas Workforce" gave on Oct. 2008 a very detailed answer about what is violation of the Fair Labor Standards Act (FLSA) concerning trainees in Texas, and what is not. I've copy pasted a part of their text below, you can find the complete text in this link: http://www.twc.state.tx.us/news/efte/advanced_flsa_issues.html#interns_trainees

I quote:" Certain types of trainees are completely excluded from FLSA coverage. However, the requirements for such total exclusion are quite stringent. In an administrative letter ruling dated February 22, 1974 (WH-254, BNA WHM 99:1152), the DOL stated that if a person is considered a "trainee", that person is not considered an "employee" and does not have to be paid minimum wage and overtime. The letter gave the following six criteria for the designation of a person as a trainee; commentary on each criterion follows in italics:

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.

3. The trainees do not displace regular employees, but work under close observation.

4. The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion his operations may actually be impeded.

5. The trainees are not necessarily entitled to a job at the completion of the training period.

6. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

The article mentions the Donovan vs. American Airlines as a landmark case in this area. The case involved a well-known training academy run by American Airlines for flight attendants and other airline personnel; the students received no pay for the training they received both in the classroom and in airplanes. Further, any work they did was secondary to the training program. Importantly, the airline was not obligated to hire the graduates of the program, and other airlines generally considered the training to be a good qualification for hire. See for more information than the article this link as well: http://bulk.resource.org/courts.gov/c/F2/726/726.F2d.415.83-1661.html

A Fifth Circuit case, Atkins v. General Motors, Inc.

, 701 F.2d 1124 (5th Cir. 1983), ruled that people who participated in a state-sponsored training program that included hands-on experience and was designed to provide the company with a trained pool of workers were not employees, but rather trainees.

There are lots of blogs and articles though who are mentioning the use of unpaid interns in violation of minimum wage and possibly overtime laws. See therefore the links below:

http://laborlaw.typepad.com/labor_and_employment_law_/2007/11/unpaid-internsh.html

http://flsa.blogspot.com/search/label/mcdonald%27s%20flsa%20exemption%20compliance

http://blog.marketplace.nwsource.com/careercenter/hiring_interns_for_free_labor_is_a_nono.html

http://www.californiawagelaw.com/wage_law/2006/07/most-unpaid-internships-are-unlawful.html

http://www.californiawagelaw.com/wage_law/2008/11/flsapaycheck-withholding-for-reimbursement-of-training-costs.html

http://www.paemploymentlawblog.com/2007/05/articles/wage-and-hour/summer-internships-to-pay-or-not-to-pay/#more

http://uncommon-priors.com/?p=71

During trial the courts seem to find that the most important element is the question of who primarily benefits from the arrangement, according to the Texas Workforce.  If the employer is the primary beneficiary, the individuals will be considered employees, but if the individuals are the ones who primarily benefit from the work experience, they will be considered trainees...

I'll hope this information is helpful for you.