With unemployment for people 20 – 24 hovering around 13.2%, college students are flocking to unpaid internships to gain some experience, stay busy, and better position themselves for jobs afterward. As recently reported by Josh Sanburn at Time MoneyLand and Steven Greenhouse in the NYT, however, these unpaid internships have serious legal problems.
Businesses are taking advantage, offering “internships” that are supposed to put the grads on the path to a super career. Instead, interns are working 12 hour days in some cases cleaning out closets, getting coffee, and running errands. They are no more learning the business than the man in the moon, unless they are studying for a runner job they could have gotten – with pay – before college.
A few of these interns have gotten smart though, and are filing lawsuits for minimum wage and overtime and employers should be concerned. In addition to collecting these back wages, the interns can collect liquidated damages of an equal amount, and attorney fees.
So, how do the employers that are using internship programs for the right reasons know they won’t get in trouble? Well, to properly be an unpaid internship, the intern must not be an employee within the meaning of the Fair Labor Standards Act (FLSA). Of course, as you might imagine, the congress painted with a pretty broad brush when they defined “employ” under the FLSA because the wanted to prevent just this type of conduct.
Though not having the force of law, the Department of Labor came up with a six factor test that it will use to decide if an internship must be paid. And, since the Department of Labor is the organization who enforces the FLSA, employers should sit up and listen. To properly be an unpaid internship:
1. The 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 internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
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; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
Of course, after reading the criteria, employers with anything less than the purest motives will want to drop the idea of an internship program all together. C’est la vie!