New Fact Sheet Released by the DOL Regarding Unpaid Internships

In these difficult economic times, it is not unusual for employers to continually seek ways to do more with less. With students home from school, the idea of internships may come to mind. What could be better than offering a student real-world experience while having an extra pair of hands around the workplace? However, if you as an employer are thinking of utilizing unpaid interns to supplement your workforce, think again.

The Department of Labor (DOL) recently announced plans to step up its scrutiny of unpaid internships. The Wage and Hour Division (WHD) has issued Fact Sheet #71 entitled: Internship Programs Under the Fair Labor Standards Act. This fact sheet distinguishes interns in the “for profit” private sector from those in the public sector or non-profit sector.

Interns in the “for profit” sector will usually be viewed as employees who must be paid at least the minimum wage and overtime for any hours worked over 40 in a workweek, unless ALL the following 6 factors are met:

(1) The internship is similar to training that would be given in an educational environment, even though it includes the actual operations of the employer’s facilities.

(2) The internship experience is for the benefit of the intern, not the company. If the intern is engaged in operations of the employer or is performing productive work (e.g. filing, other clerical work, assisting customers, etc.), he/she would be considered an employee.

(3) The intern does not displace regular employees, but works under close supervision of existing staff. If an employer uses interns to substitute for regular workers or to augment its existing workforce, these interns need to be paid.

(4) 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.

(5) The intern is not necessarily entitled to a job at the conclusion of the internship.

(6) The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

So, be sure to think through what the objectives for hiring an intern are before doing it, not after.

The above information is provided for informational purposes and is not to be considered legal advice. Questions, call Larry Elinskas at 804-966-8100.