While internships are a great opportunity for businesses and students alike, it’s important to know the liability and legal exposure that these arrangements can cause. Many recent court rulings have challenged the notion of unpaid internships and have resulted in large payments of back wages, overtime and penalties.
Before you decide to go the unpaid intern route, there are a number of things you should consider. In order to qualify as an unpaid intern, the Department of Labor requires all of the following 6 criteria to be met:
1. The training is similar to what would be provided in a vocational school or educational institution.
2. The training is for the benefit of the intern.
3. The intern does not displace any regular employees, but works under their close observation.
4. The employer derives no immediate advantage from 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. Both the employer and the intern understand that the internship is unpaid.
This means that the internship must be a valuable learning experience and not simply a photo copying or coffee delivery service. In addition, Massachusetts views these regulations even more closely and recommends that an internship program be directly affiliated with an educational institution.
Looking to play it safe? Paying interns at least minimum wage and tracking hours for overtime purposes takes away much of the regulation and liability risk for the employer. Most benefit plans can be crafted to exclude interns who work less than full time or for a limited time period (such as a semester or summer break).
Interns hired as substitutes for regular workers or to augment its existing workforce during specific time periods, should be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek. If the employer would have hired additional employees or required existing staff to work additional hours had the interns not performed the work, then the interns will be viewed as employees and entitled compensation under the FLSA.
Season and temporary employees are usually hired for a specified period of time, generally less than one year. As with paid interns, seasonal and temporary employees should paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek.
Seasonal, temporary and per diem employees (including paid interns) are eligible to accrue sick time. An employee retains the right to use any accrued sick time after a break in service, whether voluntary or not, for up to one year from the last date of work if the employee returns to work.
Feel free to Contact us with your internship questions.