The U.S. Supreme Court has held that the words "to suffer or permit to work," as used in the Fair Labor Standards Act (FLSA) to define "employ," do not make all workers employees. For example, workers who work for their own advantage on the premises of another without any express or implied compensation agreement are not employees under the FLSA.

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 of the following criteria apply, the trainees or students are not employees within the meaning of the FLSA:

• 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;

• The training is for the benefit of the trainees or students;

• The trainees or students do not displace regular employees, but work under close supervision;

• The employer that provides the training receives no immediate advantage from the activities of the trainees or students and, on occasion, his operations may even be impeded;

• The trainees or students are not necessarily entitled to a job at the conclusion of the training period; and

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

In Michigan, as in other states, the Fair Labor Standards Act (FLSA) is the federal law that defines the employment relationship and sets standards for minimum wage, overtime pay, and child labor. The U.S. Supreme Court has clarified that not all workers are considered employees under the FLSA. Specifically, individuals who work for their own benefit without a compensation agreement are not deemed employees. When it comes to trainees or students, their status as employees under the FLSA depends on the circumstances of their activities with the employer. If the training provided meets certain criteria—such as being similar to vocational school training, benefiting the trainees, not displacing regular employees, not providing immediate advantage to the employer, not guaranteeing a job post-training, and with a mutual understanding that there is no entitlement to wages—then the trainees or students are not considered employees under the FLSA. This means they are not covered by the minimum wage and overtime protections of the Act. Michigan employers must comply with these federal guidelines, and any state regulations that may further define the employment relationship.