It is the height of the summer season and many employers are providing young people with student intern opportunities in their businesses. If you are among them, congratulations! Now let’s make sure you don’t get sued.
In the past, businesses and other organizations saw student interns as the perfect opportunity to secure some eager-and-willing labor for free.
As an employer, the most important thing for you to keep in mind is the bright line that exists between who are paid and who can be unpaid interns.
Federal law requires that all individuals who are “employed” must be compensated for their labors. There are exceptions, but they apply only to “trainees,” which are strictly defined as people who receive internship training while on the job which furthers their own education.
“Before hiring that summer intern, think through the above test carefully to see if the internship qualifies for the exception,” says attorney Tracey E. Diamond of the law firm of Pepper Hamilton LLP. “Most interns must be paid for their time.”
Internships in the for-profit private sector are most often viewed as a form of employment, she notes.
The question is whether the intern or the employer is the primary beneficiary of the relationship. If the intern is the primary beneficiary, he or she is not an employee and doesn’t need be paid.
If, however, the employer is the primary beneficiary, the intern is an employee and must receive at least whatever is the minimum wage.
In recent years several high-profile lawsuits – including some targeting the movie industry – have changed previously accepted standards for who can and who can’t be treated as an unpaid intern.
These days courts look to the following six-part test to determine whether an internship can be considered legally voluntary:
- The internship, even though it includes actual operation of the facilities of the employer, also 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 who 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.
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
Keep in mind that all six standards must be met if an employer is free not to pay an intern. Diamond also warns that employers should be aware that the test for determining whether an internship is volunteer work is interpreted quite narrowly.
Interns also do not need to be paid if the internship program is structured around a classroom or academic experience, such as receiving college credit for the program, instead of simply working employer’s actual operations.
If the intern displaces a regular employee and is expected to perform productive work, he or she come under minimum wage and overtime laws.
Some employers try to get around minimum wage laws by hiring an intern as an independent contractor – a relationship that can be a problem if not classified correctly, Diamond points out.
As a general rule, if the employer expects an intern to work at a job site under supervision, they are considered an employee and not an independent contractor.