Internships are a wonderful way for students to learn and apply the education received in an undergraduate or graduate field of study to a real-life work environment.
But for many companies, unpaid interns are a source of free labor during a time of ever-shrinking budgets and downsizing.
There is a right way and a wrong way to hire interns – especially if the intern is unpaid. If you view hiring unpaid interns as a way to get cost free extra help in the office, you are venturing down a slippery slope with the Department of Labor’s Fair Labor Standards Act, (FLSA).
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When considering bringing onboard, unpaid interns, you should keep the following 6 tips in mind according to Jared Wade in the article “When Unpaid Internships Become Illegal“:
1. Is the training similar to that which would be given in a vocational school?
If the intern receives training in the types of skills or intellectual prerequisites for success in your field, it will increase the chances you satisfy this criterion. Certainly, if the internship is in conjunction with an academic program for which the intern is required to write a paper or provide periodic written reports, this will help satisfy DOL officials. If the intern is only performing basic clerical work-such as answering phones and handling mail, however, this would not be characteristic of vocational school training.
2. Is the training primarily for the benefit of the intern? Is there some indication that the intern is benefiting from the program, in terms of training, exposure to the industry and contacts for potential job opportunities?
If your interns are earning academic credit, this criterion is more than likely satisfied. The focus of the internship should not be upon the free labor that the intern is providing; it should be upon the educational benefit to the intern. Communications to the intern should stress the value of the program to them, not how valuable they are to you. Fairly or unfairly, your communications to the intern could convey the erroneous impression that the program is primarily for the company’s benefit.
3. Does the intern displace regular employees or work under their observation?
To the extent the intern is involved with tasks such as answering phones, delivering mail and other clerical activities, it could be perceived as lightening the workload of existing employees. If the intern is working under someone else’s close supervision, then displacement is less likely to be found. An individual should be assigned to observe, or at least periodically monitor, the intern’s activities.
4. Does the company derive immediate advantages from the intern’s activities?
To the extent the company is primarily utilizing the intern to get needed work accomplished, it looks like it is deriving an immediate economic advantage from the intern’s presence. Instead, to satisfy this component, there should be more of an emphasis on the learning opportunity for the intern, the training afforded by the company. It also helps if there is and an indication that the company is committing some of its resources to such training, perhaps to the detriment of operations.
5. Is the intern entitled to a job at the conclusion of the training period?
Interns are often hopeful that the experience will lead to a position with the company. Understandably, many companies view the internship program as a low-risk opportunity to evaluate potential candidates for full-time employment. While it is permissible to give consideration to your interns when assessing your employment needs, there should be no guarantee of employment at the end of the internship.
6. Does the intern understand they are not entitled to wages for the training time?
The law firm of Fisher & Phillips sums it up quite well in the article, “Risks of Internship Claims and Liability Still Increasing“:
Whether an unpaid internship would occur under the auspices of an educational institution or otherwise, ask yourself this: If there is a later FLSA claim, will the circumstances clearly, provably, and readily show (i) that the relationship was for the purpose of providing education, instruction, and training that imparted significant, substantive, transferrable knowledge of a broadly-applicable kind; and (ii) that what actually occurred was consistent with and carried out this purpose?
If the intern’s activities establish instead that the idea and/or the outcome was to have the person perform work, then the risks of FLSA liability are likely to be substantial. For example, if management’s motivation is along the lines of, “We could sure use a summer intern,” this does not bode well for successfully defending against an unpaid intern’s later FLSA claim.
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