Does your company have an internship program? These days, when there are more applicants for entry-level positions than there are jobs, some employers have taken to hiring unpaid interns. This gives new workers a chance to learn the ropes and get some experience, while the company gets free labor and an opportunity to scout the best potential hires. It's a win for everyone, right?
Not quite. The basic premise of federal labor laws is that workers should be paid for their labor. As a result, the rules around unpaid internships are very restrictive. Private employers can offer unpaid internships only when the experience is truly educational and requires some time and effort on the part of the employer. Otherwise, employers must treat their interns like employees and comply with all of the same wage and hour laws.
An intern is a type of temporary worker, usually a student or person who is new to the field, who takes an internship position to learn what the job is like and get some hands-on experience. Internships are common in both the public and private sectors. However, while federal laws typically allow government and nonprofit employers to have unpaid interns, the rules are very different for private, for-profit employers.
For an internship to be unpaid, it must meet certain requirements under the law. Labeling a worker as an “unpaid intern” – even with the worker’s consent – is not enough for employers to avoid their wage and hour obligations. In general, an unpaid internship must be primarily for the benefit of the intern. This means that the intern shouldn’t be performing work that benefits the employer. If an intern spends the majority of his or her time running errands, contributing to work product, or dealing with customers, he or she will probably be seen as an employee. On the other hand, a worker who is simply shadowing a regular employee, for school credit, will more likely be seen as an intern.
The federal Department of Labor looks at six factors to determine whether a true internship exists (meaning the intern is not legally considered an employee entitled to minimum wage and overtime). Generally, these factors are intended to uncover whether the internship is a benefit to the intern or to the employer:
Before hiring that summer intern, you may want to review your internship program and consider what the intern will do on a daily basis. Misclassifying employees as interns can lead to large wage claims, especially if you hire interns on a regular basis. Interns who are misclassified are entitled to receive unpaid minimum wage, overtime, and other wages and benefits that they were denied.