Contributed by Julie Proscia
As the tulips begin to pop-up, so do the students applying for internships. In a sluggish economy this is even more prevalent as students are now examining any option that would give them that “experience” edge following graduation. Unpaid internships are a great opportunity but can subject a company to liability if not administered correctly. If administered incorrectly the hopeful doe-eyed unpaid intern can quickly turn into a green-eyed plaintiff looking for back wages and unpaid overtime.
The basic principle behind an unpaid internship is simple – unpaid interns cannot do any work that contributes to a company’s core operations. This includes any tasks that predominately help you run your business, like documenting inventory, filing papers, answering emails, etc. These principles are for “for profit” organizations and are not applicable to “not-for-profit” entities.
So what does that leave? Unpaid interns are allowed to shadow other employees and perform duties that don’t serve a business need. The Department of Labor has developed six factors that should be used to determine if the unpaid intern is really an intern or an employee. ALL six factors must be met in order for an internship to be properly classified as unpaid. If any of the six factors are not met the intern is considered an employee.
Here are the factors:
- 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;
- Training is for the benefit of the trainee;
- The trainees do not displace regular employees, but works under close observation;
- The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded;
- The trainees are not necessarily entitled to a job at the completion of the training period; and
- The employer and the trainee understand that the trainees are not entitled to wages for the time spent in training.
If an intern fails to meet any of the six factors they should be paid minimum wage for all hours worked and overtime, if overtime is applicable. It is also prudent to require that the intern receive college credit and their internship should be conducted through an approved program at their school or university. The latter will not absolve the company from wage and hour liability if the factors are not met, but it will go a long way in protecting the employer if questions are raised.