In 2013 the United States Department of Defense founded Skill Bridge, a program that partners the U.S. Armed Forces with private employers to provide internships to active duty service members during their last six months of military service. Service members obtain valuable skills by participating in Skill Bridge—skills that allow them to transition into the work force with minimal impact after discharge. Participating employers obtain highly skilled and motivated individuals who may become employees after their service is completed.
The Department of Defense's instructions (Instructions) regarding Skill Bridge prohibit participating employers from compensating the service member for the work performed. Instead, service members receive their full military pay, allowances, and benefits.
Skill Bridge is a program benefiting both service members and partner companies. But the Instructions fail to clarify whether the service member is an "employee" under the Fair Labor Standards Act (FLSA) and other related laws, or an "intern" not subject to FLSA requirements. This is a particularly critical issue because the Instructions prohibit private employers from compensating the service member for the work performed.
A second concern is whether employers that participate in Skill Bridge are considered federal contractors and subject to regulation by the U.S. Office of Federal Contract Compliance Programs (OFCCP).
The Department of Labor recently issued two opinion letters clarifying these questions. The Department's Wage and Hour Division determined that the FLSA, the Davis Bacon Act (DBA), the Service Contract Act (SCA), and the Contract Work Hours and Safety Standards Act (CWHSSA) do not apply to private employers that participate in Skill Bridge. The OFCCP issued a separate opinion clarifying that a private employer's participation in Skill Bridge does not, by itself, classify that employer as a government contractor subject to the OFCCP's regulations.
The Wage and Hour Division Letter
The Wage and Hour Division letter concludes that active duty service members who participate in Skill Bridge are not employees covered by the FLSA, the DBA, the SCA, or the CWHSSA. In reaching this conclusion with respect to the FLSA, the Wage and Hour Division analyzed the seven factors of the "primary beneficiary test," determining that those factors point to the service member being an intern, not an employee.
The DBA establishes minimum wages to be paid to various classes of laborers and mechanics employed for certain federal construction contracts. But the DBA may not "supersede or impair any authority otherwise granted by federal law to provide for the establishment of specific wage rates." Because the Department of Defense is paying the wages and benefits to the service members participating in Skill Bridge, the Wage and Hour Division concludes that the DBA does not apply.
The SCA establishes certain minimum compensation standards for service employees under covered contracts. In determining that Skill Bridge employers are not required to meet the SCA's requirements, the Wage and Hour Division looked to the Act's structure and purpose, concluding that because the Instructions expressly prohibit employers from providing compensation for a Skill Bridge position, the SCA's requirements do not apply.
The CWHSSA protects laborers and mechanics working more than 40 hours per week. Because Skill Bridge's requirements limit participants to 40 hours per work week, the CWHSSA does not apply to Skill Bridge participants.
The OFCCP's Opinion
The OFCCP analyzed whether businesses participating in Skill Bridge are federal contractors under multiple statutes and an executive order. The OFCCP determined that Skill Bridge does not reflect a contractual arrangement, but resembles more of a cooperative agreement. Because its jurisdiction does not extend to cooperative agreements, the OFCCP determined that participation in the Skill Bridge program is insufficient in and of itself to make the employer a federal contracting employer.
The DOL's opinion letters provide clarity for employers hoping to work with Skill Bridge service members. Although these letters are not binding, they are persuasive authority on which employers can rely to assure compliance participation in the Skill Bridge program.
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