Monday, May 2, 2011

About Those Unpaid Summer Interns: You May Need to Pay Them

If your business is like so many others, this time of year brings a flood of applicants.  Some are the usual high school and college students looking for something to do during the summer break.  In recent years, a growing number are out-of-work individuals hoping to open doors to new job opportunities.  Whatever the case, a surprising number of these folks are willing to work without pay.

Don’t make the mistake, however, of thinking that you can pay them little or nothing simply by calling them interns, trainees, or something other than “employees” – even if it’s OK with them.  Unless an internship meets very specific federal criteria, the person in the position is an employee who must be paid at least the federal minimum wage ($7.25 per hour), plus time and a half for all hours worked beyond 40 in a work week.

According to the Department of Labor’s longstanding guidelines, an intern whose “work” for an employer consists of activities that are only for his or her own educational benefit, with the employer simply providing aid or instruction, does not have to be paid.  Whether an internship or training program qualifies for this exception to the general wage payment requirement depends on all of the facts and circumstances of each such program, and all of the following six criteria must be met:
  • The internship, even though it includes actual operation of the facilities of the employer, is similar to training that 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 that 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; and 
  • The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
So, if your organization is thinking about hiring interns for little or no pay, take some time to ensure that your internship program will meet the federal criteria, as well as any state-law requirements that may exist in your locale.  Consequences for misclassification of interns can include back wages, overtime, benefits, penalties, and more.

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