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When are unpaid interships illegal? 6 keys from the feds

May 28, 2010 by Sam Narisi
Posted in: Compliance, In this week's e-newsletter, Latest News & Views

Internships can be a great way to tap into the newest pool of IT talent. But companies offering unpaid internships will want to review the Department of Labor’s new rules on hiring interns.

Many businesses believe they’re offering students an opportunity to learn, while, in the government’s mind, they’re just looking for a way to get free summer labor.

Here are the six things the DOL looks for when deciding if an unpaid internship is legit:

  1. The internship is similar to training that would be given in an educational environment — even though it includes operations of the employer’s facilities
  2. The internship experience is for the benefit of the intern (even if the company benefits, too)
  3. The intern doesn’t displace regular employees, but works under their supervision
  4. The employer receives no immediate advantage from the intern
  5. The intern is not necessarily entitled to a job at the end of the internship. In other words, an internship should not be used a trial period before someone’s hired full-time, and
  6. Both the employer and the intern understand that the intern isn’t entitled to wages.

In general, unpaid interns must come away from the experience with “skills that can be used in multiple employment settings, as opposed to skills particular to one employer’s operation,” the DOL says.

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  • http://www.flsa-sca.com Morris Jennings

    DOL might be touting its position regarding employment relationship as “new,” but these are not “new rules.” These employment relationship guidelines have been available from DOL for more than forty years. The only thing new is that DOL is doing a better job of publicizing the fact that many unpaid interns are actually employees. It appears also that increased enforcement will be forthcoming. Businesses, public agencies, and not-for-profit orgs that have been receiving free labor by using the “intern” classification should scrutinize the arrangements against the DOL guidance. If in doubt, convert the worker to “employee” status, maintain an accurate record of hours worked, and pay at least the minimum wage (and overtime wages, if a workweek’s hours exceed forty). Once it has been established that there is an employment relationship, it is not likely that any of the intern’s hours will be excludable; however, examine the hours worked rules at http://www.osha.gov/pls/epub/wageindex.download?p_file=F30725/WH1312.pdf

    It should be noted that, for purposes of DOL enforcement, there are some limited exceptions to the general rules. These exceptions are quite specific, and they primarily relate to certain educational programs.

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