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Posted: June 04, 2012

Doing anything for nothing

The free internship trap can snare employers

Cindy Wolf

Slavery was abolished by the 13th Amendment to the U.S. Constitution, but some interns might not believe it. With a tight job market, students and new graduates are willing to do almost anything for any price – even free. And that can be attractive to cash-starved companies.

But internships aren’t just free labor. In fact, if you are a for-profit employer and your interns are unpaid, your internship program must meet specific criteria or you can be in trouble with the Department of Labor (DOL). Internships can be a benefit to both the employer and the intern by creating positive, long term relationships with well qualified potential employees and employers. But the key is that an internship is an educational experience, not a free worker program.

The DOL has six criteria it uses to determine if an intern or trainee is exempt from the minimum wage and overtime laws – meaning it’s OK not to pay. All of them must be met:

1. The training or internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment.
2. The training is for the benefit of the intern or trainee.
3. The employer derives no immediate advantage from the activities of the intern or trainee, and on occasion the program may even impede company operations.
4. The intern does not displace regular employees, but works under their close supervision.
5. The intern is not necessarily entitled to a job at the conclusion of the training program.
6. Both the employer and the intern understand that the intern is not entitled to be paid for the time spent in the internship.

The DOL looks at unpaid interns and unpaid trainees the same way. Most employers understand that if you do OTJ training on your specific products and systems so that the trainee can move into a production position, you must pay the trainee for that time. In contrast, the training your unpaid intern receives should be transferable to other employment settings. The intern’s activities are not for your benefit, so limit the generic chores like filing or making deliveries. Have your intern or trainee shadow regular employees, not replace their coworkers. Then the intern is acting as a trainee, not an employee. (Go here for more examples.) .

Charitable organizations are allowed to use volunteers, so they are not subject to the DOL test. And even though this may sound obvious, for profit companies are not allowed to use volunteers, even willing relatives or retirees. That’s what the Fair Labor Standards Act - and the 13th Amendment - are all about.

The states also have their own laws about interns. Colorado will still consider the intern an employee for worker compensation and liability insurance purposes unless the internship is sponsored by an educational institution that teaches its students using a combination of instruction by qualified teachers and on-the-job training. Student teachers are subject to separate rules. California requires an unpaid intern to get college credit for his or her work. Be sure to consider the rules of each state where you might hire an intern.

While a small amount of coffee fetching and drudge work may be tolerated, the DOL and various states have been cracking down on employers for taking advantage of unpaid interns. If you really need a general go-fer or a production worker, hire one. If you want to start an internship program, the best way is to coordinate with an academic or vocational institution. They will provide you support in setting up a meaningful program as well as help you comply with the law. And consider paying your interns. Even though you will then need to treat them as employees for legal purposes, it will widen your applicant pool and the range of activities that the interns can do.

 

 Cindy Wolf is a Colorado lawyer with more than 25 years experience representing large and small domestic and multinational companies. Her expertise is in corporate law and commercial contracting, with an emphasis on international issues, technology licensing and the Internet. She can be reached at cindy@cindywolf.com  or visit her blog at www.cindywolf.com

This publication is provided for informational purposes only. It does not constitute legal advice. There is no implicit guarantee that this information is correct, complete, or up to date. This publication is not intended to and does not create an attorney-client relationship between you and the author.

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Readers Respond

Thanks for the information. We get inquires from people wanting to do internships. We have politely turned them away, but really because we did not know what to do with the request. I have taught in the past in other jobs and would someday possibly consider doing internships. By Tom Jones on 2012 06 04
I was a free intern at a travel agency because I wanted to go into tourism management when I was in High School. I ended up spending 40 hours just filing and cleaning their office. I didn't get to learn anything about anything. To make matters worse, the agency was PAID to have me intern with them by a program through my school. To this day, I really wish they trusted me more with meaningful tasks or took the time to explain what they were so busy doing at their computers while I did drudge work with a smile. -M By misheel on 2012 06 04
Interesting to know the criteria. After managing a company for several years, we paid a small wage. However after history kept repeating itself in the more recent years, we unfortunately had to stop paying because we usually had to have their work redone and in a few instances cost the company out of pocket costs. The significant difference of work ethic and ability from othe 90's and before vs. after to present is monumental. We gave up on interns 8 years ago because in our industry, the headache wasn't worth having. By Marsha on 2012 06 04
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