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Posted: June 24, 2011

Got interns?

Know the new labor rules!

Todd Fredrickson

With the recession dragging on and unemployment still stubbornly high, employers have been quick to embrace unpaid internships in recent years. And job-seekers have been eager to showcase their work ethic and to make workplace connections that might lead to a fulltime position. Interns are typically undergraduate students who are either unpaid or receive a modest stipend.

But last year the federal Department of Labor (DOL) issued a fact sheet governing internships and warned that enforcement would be a priority. Now employers must meet a six-point federal test to justify taking on unpaid workers. The "test" determines whether an intern is an employee for purposes of the Fair Labor Standards Act and reads as follows (to meet the "intern" designation, all six of these criteria must be met, according to the DOL):

1. The training is similar to vocational school.
2. The training is primarily for the benefit of the intern.
3. Interns do not displace regular employees, but instead work under their close supervision.
4. The company derives no immediate advantage from the intern's activities.
5. Interns are not necessarily entitled to a job at the conclusion of training.
6. Interns understand they are not entitled to wages

In light of these new regulations, employers should be very cautious about creating or continuing unpaid internships. The expectation now is that anyone making any worthwhile contributions in your workplace should be paid in accordance with standard wage and hour laws and regulations - and even if the intern agrees to receive no remuneration, it doesn't necessarily make the deal acceptable.

To avoid any misunderstandings, employers are advised to:

• Provide each intern with a written description of the program at the outset of the internship. This should indicate the duration of the internship as well as details such as the expectations and requirements of the position, the benefits to the intern, the training afforded by the program and whether the intern can expect future employment when the internship ends.

• State whether the position is an unpaid internship and if there is a stipend to cover expenses.

• Strive to comply with all six of the DOL's criteria - although at least one court has found that the determination should be based upon the "totality of the circumstances" even if all six factors are not satisfied.

• If in any doubt, consult with a knowledgeable employment attorney when setting up your internship program: A non-compliance finding by the DOL could have significant consequences and your company could be liable for back wages, including possible overtime pay, for all of its interns.
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Todd Fredrickson is managing partner of the Denver office of Fisher & Phillips LLP, representing employers across the country in labor, employment, civil rights, employee benefits and immigration matters. He can be reached at 303-218-3660 or at tfredrickson@laborlawyers.com

 

Todd Fredrickson is managing partner of the Denver office of Fisher & Phillips LLP, representing employers across the country in labor, employment, civil rights, employee benefits and immigration matters. He can be reached at 303-218-3660 or tfredrickson@laborlawyers.com

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Readers Respond

I think it good that your company pays its interns, and at that a pretty fair wage for an intern. However it is important that the government regulates this because many young people are finding themselves being taken advantage of. I agree an internship is valuable, however when the position becomes less about educating and more about performing labor, remedial tasks or even giving invaluable input the position is more like a JOB, and if you are performing a JOB you deserve to be compensated at least the minimum hourly wage. By Matt Griffin on 2012 04 16
Thanks for the great info, Todd. The problem, of course, is that the government, as usual, is making it harder for companies to operate and people to find jobs. Working as an unpaid intern often leads to a paid job. At the very least, it gives valuable resume experience and fills in gaps on some people's resumes. It also lets someone who needs to change careers get valuable experience in that field, since employers often will not hire without relevant experience. We do have a summer intern whom we pay $10 an hour to. But not all companies can pay that. The government needs to stay out of this one, as it is a lose-lose for both potential employees and the companies who want to give them priceless experience. By John Heckers, MA, CPC, BCPC on 2011 06 24

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