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The Return of the Unpaid Labor Force: A Refresher on Unpaid Summer Interns
May 21, 2015
This time every year, employers across the country welcome student interns into their workforce in droves. Internships are mutually beneficial relationships: the intern receives real-world, practical experience and the employer receives free labor and an extra set of hands. 
In many cases, employers welcome an unpaid intern into their workforce without a second thought. Employers rarely consider whether or not that intern is actually an employee. For-profit companies do so at their peril.
The default rule according to the Department of Labor Wage & Hour Division is that an intern should be treated as an employee who is to be paid minimum wage and be eligible for overtime. To avoid the obligation to pay your summer intern, an internship program must meet the following six requirements:
1.  The internship must be similar to training given in an educational environment. 
  • The more the internship is structured around a classroom or academic experience as opposed to the employer’s operations (which occurs most often when a college or university exercises oversight and provides academic credit), the more likely it will be viewed as an extension of the intern’s educational experience.
  • If the employer provides job shadowing opportunities that allow the intern to learn functions while being closely and constantly supervised by regular employees, then the activity is more like a bona-fide educational experience.
  • The more the internship provides the skills that can be used in multiple employment settings, as opposed to skills specific to a particular employer, the more likely the intern will be viewed as receiving training.
  • A bona fide internship program will avoid having the intern performing “productive work”, i.e., filing, clerical work or assisting customers.
  • The intern should not perform the routine work of the business on a regular and recurring basis, and the business should not be dependent on the intern.
  • Providing the same training to an intern that a regular member of the employer’s workforce receives suggests an employment relationship.
2.  The experience must benefit the intern.
3.  The intern does not displace regular employees, but works under close supervision of existing staff.
  • An intern cannot substitute for regular workers or augment the employer’s existing workforce during certain time periods.
  • If the employer would have hired other employees or required existing staff to work additional hours without the presence of the interns, then the intern is an employee.
4.  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.
  • Work performed by an intern cannot be billed to the business’s clients/customers.
5.  The intern is not necessarily entitled to a job at the conclusion of the internship.
  • The internship should be for a fixed duration established prior to the internship.
  • This unpaid internship should not be used by the employer as a trial period.
  • If the intern is placed with the employer for a trial period with the expectation of hire on a permanent basis that would generally constitute employment.
6.  The employer and the intern understand that the intern is not entitled to wages.
  • Memorialize the unpaid nature of the internship in writing signed by both the employer and the intern.
The shorter version of the test: Nobody is fired to make room for the intern; the company doesn’t benefit because it has interns; and the internship has a legitimate academic or vocational training component. The standard issue internship that consists of some percentage of filing, getting coffee and proofreading probably fails the test and should be paid. 

For help in structuring a legally compliant unpaid internship program or for questions regarding interns in your workforce, please contact our Labor & Employment Practice Group

Labor & Employment Law Carrie H. Grundmann