It’s that beautiful time of year – when eager college students are looking for something to occupy their summer without making a serious commitment (or a serious dent in your company expenses.)
It’s summer internship season.
While summer internships seem like a bulletproof plan (cough, free labor, cough), there is a lot that can go wrong.
First of all, you have to make sure your internship program follows federal and state labor laws or you could be looking at a rather large lawsuit initiated by that eager intern’s overbearing parent who happens to be a savvy lawyer.
If you think this won’t happen to you, think again. In the past few years, a number of interns (all who worked for media companies in New York) sued their former employers, claiming that they should have been classified as employees under state and federal wage and hour laws because their duties were a crucial component of the work force. The plaintiffs argued that if the companies did not use interns they would have had to hire employees to perform these entry-level tasks. So the plaintiffs are seeking recovery wages for all hours worked, including overtime pay. Ouch!
Starting to rethink your summer internship program? Don’t!
The Department of Labor has made it pretty easy to check and see if your internship is legal or not. You just have to know the guidelines and that’s why we’re here!
Let’s start with the employer favorite – unpaid internships.
There is a nifty test provided by the Fair Labor Standards Act (FLSA) to help you classify an intern’s status.
Under the FLSA, an internship must meet six criteria to qualify as unpaid:
In case you still aren’t sure, the DOL recently released a statement to clarify. It stated, “the more an internship program is structured around a classroom or academic experience as opposed to the employer’s actual operations, the more likely the internship will be viewed as an extension of the individual’s educational experience,” and, therefore, the more likely it is that the individual will properly be considered an intern, as opposed to an employee.
If your internship does not meet the six criteria above, the internship likely establishes an employment relationship. This means that you need to follow a different checklist.
Now that your intern will be viewed as an employee under FLSA, you have to pay him or her at least minimum wage and follow a few more rules.
At Integrity HR, we are always promoting best practices and that is why we think companies in both the for-profit and non-profit sectors should carefully evaluate whether their existing internship programs comply with FLSA and state law standards.
The DOL’s six-factor test can be difficult to satisfy, particularly where the intern provides some useful service to the employer that otherwise would have been provided by an employee.
If an individual fails to meet the applicable tests for intern status, then the employer needs to treat the intern as an employee for purposes of state and federal wage and hour laws. This means that the intern will need to be paid at least the minimum wage for all hours worked, plus any overtime due.
In addition, employers will need to make sure that they keep proper records of the hours worked by interns/employees, as well as comply with any meal and rest break requirements imposed by state law.
Finally, employers should train their managers who deal with interns to make sure that they are ensuring compliance with these requirements.
Unpaid internships are a beautiful thing. They offer students and career-switchers great opportunities to gain experience in their field. They can also benefit employers by providing a fresh (albeit inexperienced) prospective on the industry.
That is, if you keep it legal.
Now, go inspire young minds and mold those future leaders!
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