Rules Governing Unpaid Internships
- By Your mom
- •
- 01 Apr, 2010
With the poor economy employers are seeing more adults willing to take unpaid
internships to get their foot in the door. Questions often arise whether it is legal to hire them
without pay.
The short answer is yes, but employers must follow certain rules to avoid wage claims for
the time worked by interns. Because of the perception that these rules are often violated, the
U.S. Department of Labor (“DOL”) has taken a greater enforcement interest in this area, and is
cracking down on unpaid internships. Nancy J. Leppink, the Acting Head of the DOL’s Wage
and Hour Division, recently stated in the NY Times that, “If you’re a for-profit employer or you
want to pursue an internship with a for-profit employer, there aren’t going to be many
circumstances where you can have an internship and not be paid and still be in compliance with
the law.”
According to the DOL, there are six criteria that employers must use to determine
whether an intern should be paid:
1. The training, even though it includes actual operation of the facilities of the employer,
is similar to what would be given in a vocational school or academic educational instruction;
2. The training is for the benefit of the trainees;
3. The trainees do not displace regular employees, but work under their close
observation;
4. 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;
5. The trainees are not necessarily entitled to a job at the conclusion of the training
period; and
6. The employer and the trainees understand that the trainees are not entitled to wages for
the time spent in training.
Unless all six of the factors are met the “intern” must be treated as a paid employee who
is subject to the minimum wage and overtime requirements of the Fair Labor Standards Act.
This is just one more area where DOL enforcement actions have accelerated. Both the state and
federal DOL have also become more aggressive in pursuing misclassifications by employers of
non-exempt employees and independent contractors. As these types of violations can often lead
to expensive class action lawsuits, employers should have counsel periodically review their
employee classifications for legal compliance.
internships to get their foot in the door. Questions often arise whether it is legal to hire them
without pay.
The short answer is yes, but employers must follow certain rules to avoid wage claims for
the time worked by interns. Because of the perception that these rules are often violated, the
U.S. Department of Labor (“DOL”) has taken a greater enforcement interest in this area, and is
cracking down on unpaid internships. Nancy J. Leppink, the Acting Head of the DOL’s Wage
and Hour Division, recently stated in the NY Times that, “If you’re a for-profit employer or you
want to pursue an internship with a for-profit employer, there aren’t going to be many
circumstances where you can have an internship and not be paid and still be in compliance with
the law.”
According to the DOL, there are six criteria that employers must use to determine
whether an intern should be paid:
1. The training, even though it includes actual operation of the facilities of the employer,
is similar to what would be given in a vocational school or academic educational instruction;
2. The training is for the benefit of the trainees;
3. The trainees do not displace regular employees, but work under their close
observation;
4. 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;
5. The trainees are not necessarily entitled to a job at the conclusion of the training
period; and
6. The employer and the trainees understand that the trainees are not entitled to wages for
the time spent in training.
Unless all six of the factors are met the “intern” must be treated as a paid employee who
is subject to the minimum wage and overtime requirements of the Fair Labor Standards Act.
This is just one more area where DOL enforcement actions have accelerated. Both the state and
federal DOL have also become more aggressive in pursuing misclassifications by employers of
non-exempt employees and independent contractors. As these types of violations can often lead
to expensive class action lawsuits, employers should have counsel periodically review their
employee classifications for legal compliance.
