'Tis the season. No, not that season, but the time of year when employers ask, "Can we still use unpaid interns?" The answer is a qualified, "Yes!" The key is ensuring you and the intern meet certain criteria (what else is new?).
First, let's bust a few myths and misconceptions.
- If I use a student as part of a local college or university's internship program it's OK if it is unpaid. Not necessarily. The source of the intern is not a factor in determining whether an intern must be paid or may be properly unpaid.
- If the student agrees in advance and in writing that the internship is unpaid then that's OK. You're closer this time but the intent or understanding of the parties is only one of six (6) factors the US Department of Labor (DOL) uses to assess intern classification as paid or unpaid.
So let's look at those six factors. They are published by the DOL in Fact Sheet #71.
- 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.
Now how do we apply these? Notice the key word at the end of Item #5..."and." This is not a weighted test. The intern must meet all six factors in order to be properly unpaid.
What's the risk? This issue is so prevalent there are even law firms and websites cropping up and dedicated to ensuring interns are properly paid. You may have read headlines in the last year related to litigation, legislation and new laws at the state and local levels addressing unpaid interns' right to certain employment protections. Even the White House has been subjected to pressure and criticism for its use of unpaid interns.
What's the issue? Take the case of an unpaid intern who is unlawfully harassed (sexually or otherwise) by a manager at the company where s/he is participating in the internship. If the intern is not an employee then the intern is not entitled to the protections of Title VII of the Civil Rights Act so could not sue the employer for unlawful harassment. That was the finding of one court last summer, which seemed to trigger national attention on this issue.
Practical Tips? Get it right the first time. Consider the six factors above for each and every intern before you let that individual begin an internship with you. If all six factors are not met then consider paying the individual at least minimum wage (higher of federal or state). And in the interim watch for legislation at the federal and/or state levels that may impact your use of unpaid interns.
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