Exploiting Opt Students: Avoid Paying Wages

In Canada, co-op students are excluded from the Employment Standards Act (ESA), meaning that employers are not mandated to provide them with entitlements such as minimum wage, vacation pay, breaks, and termination pay. However, employers are still responsible for adhering to the Ontario Human Rights Code and the Occupational Health and Safety Act in their treatment of co-op students. While most co-op positions are paid, unpaid or underpaid opportunities may be approved in certain industries, including charitable organizations, NGOs, and medical settings. Additionally, co-op students can be a cost-effective resource for employers, who can also claim tax credits for their employment.

Unpaid internships are allowed for non-profit organisations, research institutions and startups

Unpaid internships are a complex area, and while it may be desirable for organisations to avoid paying interns, there are strict rules in place to ensure interns are not exploited. The Fair Labor Standards Act (FLSA) requires "for-profit" employers to pay employees for their work, but interns and students may not be considered "employees" under the FLSA, and therefore compensation may not be required.

The FLSA does exempt certain people who volunteer to perform services for state or local government agencies or humanitarian purposes for non-profit food banks, for example. Unpaid internships for public sector and non-profit charitable organisations are generally permissible, but only where the intern volunteers without the expectation of compensation.

Research institutions and universities often have their own policies regarding unpaid internships, and these must be primarily for the benefit of the intern, providing hands-on training in an educational environment. A mentoring compact is often used to outline the terms of the internship and ensure both parties understand the time commitment and the benefits to the intern.

Startups may fall into the "for-profit" category, and therefore, they would need to pay interns unless the intern is not considered an "employee". Courts use the "primary beneficiary test" to determine whether an intern is an employee, examining the "economic reality" of the relationship and which party benefits most. If the internship provides training similar to an educational environment, this suggests the intern is not an employee.

Overall, while unpaid internships may be allowed in certain contexts, organisations must carefully consider the applicable laws and regulations to ensure compliance and avoid exploitation of interns.

OPT employment must be directly related to the student's major field of study

The Optional Practical Training (OPT) program allows F-1 students to gain U.S. work experience directly related to their field of study. OPT employment must be directly related to the student's major field of study and commensurate with the degree level. This means that any employment, whether paid or unpaid, must align with the student's academic program. For example, if a student is majoring in Computer Science, their OPT employment should be related to software development, programming, or another related field.

Students can engage in paid employment or serve as a volunteer, unpaid intern, researcher, or community service worker, as long as it does not violate any labor laws. Students can work for multiple employers, including short-term gigs, self-employment, contract work, or work for hire, as long as the total number of hours is within their authorized limit.

To ensure compliance, students must provide a description demonstrating a logical connection between their regular job duties and their major area of study. This description should be reported to the ISSO, and the burden of proof is on the student to demonstrate the relationship if called into question. Students are encouraged to contact their academic advisor or career center for assistance in determining the fit of a job offer.

Additionally, students must keep thorough and accurate records of their OPT experience and employment, as they may be required to show proof of their OPT activities. This includes maintaining a list of all gigs, dates, and durations if the student is working multiple short-term gigs.

By adhering to these guidelines, students can ensure that their OPT employment is directly related to their major field of study and maintain compliance with OPT regulations.

Students can work for multiple short-term employers, but the cumulative number of hours must be within the authorised limit

Optional Practical Training (OPT) is a type of temporary employment that is directly related to an F-1 student's major area of study. Students can participate in pre-completion OPT, post-completion OPT, or both. Pre-completion OPT can be authorised as part-time (up to 20 hours per week) or full-time (21 hours or more per week) and can be paid or unpaid. Post-completion OPT authorises students for full-time OPT participation (20 hours or more per week) and can also be paid or unpaid.

It is important to note that OPT employment must be directly related to the student's major field of study and commensurate with their degree level. Students must ensure that their employment, whether paid or unpaid, aligns with their academic program and complies with US immigration laws to maintain their F-1 status. Employers must also understand their obligations when hiring F-1 students on OPT to remain compliant with labour laws and immigration regulations.

To maintain their F-1 status, students should also be mindful of unemployment rules during their OPT authorisation period. Students on post-completion OPT may accrue up to 90 days of unemployment during the entire 12-month OPT period. If a student accumulates 90 days or more of unemployment, they are in violation of their F-1 status and may be required to leave the US or change their visa status.

OPT students are taxed on their wages at graduated rates from 10% to 37%

Optional Practical Training (OPT) allows international students in the United States with an F-1 visa to gain work experience related to their field of study. OPT employment must be directly related to the student's major field of study and commensurate with their degree level.

Additionally, the tax percentage withheld on scholarships and grants for F-1 and J-1 visa holders is 14%. Students must ensure that their employment complies with U.S. immigration law to avoid jeopardizing their F-1 status and future visa applications. While OPT regulations allow for unpaid work, such work must still comply with U.S. labor laws, particularly the Fair Labor Standards Act (FLSA). Employers must also understand their obligations when hiring F-1 students on OPT to remain compliant with labor laws and immigration regulations.

Students may work as volunteers or unpaid interns, as long as it does not violate any labour laws

Students may take part in unpaid internships, but there are several factors that must be considered to ensure that the internship is lawful and does not violate labour laws.

Firstly, the internship must be directly related to the student's major field of study. This is a requirement for all OPT employment, which includes both paid and unpaid work.

Secondly, the internship must be compliant with the Fair Labor Standards Act (FLSA). The FLSA establishes minimum wage and labour protections for US employees. Courts have used the "primary beneficiary test" to determine whether an intern or student is an employee under the FLSA. This test examines the "economic reality" of the intern-employer relationship to determine which party benefits more from the relationship. If the intern is found to be the primary beneficiary, they may not be considered an employee, and thus may not be subject to wage requirements. However, if the intern performs tasks that directly benefit the employer without significant academic training, they may be misclassified and entitled to minimum wage and overtime pay.

To ensure compliance with the FLSA, unpaid internships must meet certain criteria. Firstly, the internship must be for the benefit of the intern, providing them with educational training similar to that which would be given in an academic environment. Secondly, the intern should not displace or expedite the work of paid employees, but rather work under their supervision. Additionally, both the intern and the employer should understand that there is no expectation of compensation and that the internship does not guarantee a paid job at the end.

Unpaid internships are more commonly found in non-profit organisations, research institutions, and startups, where opportunities for compensation may be limited. Unpaid internships offered by for-profit companies are subject to the FLSA, and may only be exempt if the internship is structured to benefit the intern.

It is important to note that unpaid internships are not allowed for STEM OPT. Additionally, working without authorisation in the United States can have serious consequences, including removal from the country and impacting future visa applications.

Frequently asked questions