Many people, especially in my own profession of law, utilize college students or graduate students looking to gain experience in lieu of pay as unpaid interns. These businesses give the student an opportunity to get hands-on, real world experience and the business gets a little help around the office without the burden of having to pay this individual a salary. This is how the traditional internship relationship works. The business gets the temporary free help, and the intern is paid through experience.
But there has been a shift in this sort of set up. Increasingly, businesses have taken advantage of interns by assigning them menial tasks such as filing or answering phones. This has resulted in a surge of lawsuits on behalf of unpaid interns who have felt taken advantage of by employers for failing to provide minimum wages and overtime pay.
The U.S. Department of Labor has put out a fact sheet to help small business owners navigate these waters. In for-profit private sector businesses, unpaid interns who receive training for their own educational benefit are acceptable if the training meets certain criteria. The Department of Labor gives six criteria to determine if the internship is acceptable:
- The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees, but works under close supervision of existing staff;
- The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
If all of the factors are met, the minimum wage and overtime provisions of the FLSA do not apply to the intern.
It is important to be aware of these factors when considering taking on an intern. It should be remembered that bringing on an intern is for the benefit of the intern, and not for the benefit of the business owner. So keep these factors in mind if you are considering bringing on an intern to avoid getting sued for violating the FLSA.
It is important to remember that failing to pay interns who would otherwise qualify as employees can have very stiff penalties for the employer, and courts have been trending in this direction. just earlier this year, former interns who were unlawfully denied minimum wages by Warner Music Group Corp. received $4.2 million to resolve a class action dispute in New York federal court. While this was on a large scale, it can be expected that more lawsuits over internships will arise throughout the country as these high-profile cases consistently settle. Be sure that you are in compliance with the FLSA and state and local laws if you plan to use an unpaid intern, consider having your potential intern enter into a signed written agreement ensuring that all parties are clear on what the internship consists of, and consult an employment attorney to make sure you do not run afoul of the law. It could be very costly in this new environment.
Tim LeFebvre, Esq.