Today’s job market is less than ideal. While the pool of job candidates is large, companies struggle to find manpower to fit their budgets. The solution for many companies is internship programs.
Internships are becoming a standard graduation requirement at many colleges and universities with benefits to both employer and student. According to Brian Burnsed, of U.S News and World Report, “Internships are a near necessity in a student’s quest to find a job in today’s market.”
Internships Benefit Companies and Students
For students, an internship can offer important learning opportunities and vital hands-on experience, setting them apart from the competition. It’s also a glimpse into the culture of the company to see if it’s a fit. If the internship is paid, it gives the strapped college student a little money.
For companies, internships provide free or affordable manpower to cover current employees during summer vacations and the opportunity to give a potential hire a “test run.” Additionally, if hired, interns typically have a higher retention rate.
Understanding Interns and the Fair Labor Standard Act
If you’re considering beginning an intern program at your company, or you have already, you must know the laws and how they impact your business. One of the biggest legal risks associated with internships is determination whether they should be paid or unpaid. Many unpaid internships are recently being targeted by the Department of Labor investigations concluding that many unpaid internships have been misclassified.
The Department of Labor has issued guidelines to help employers to determine whether their internship programs can be unpaid. Businesses utilizing unpaid interns should familiarize themselves with the following six criteria to mitigate the risk of wage-related investigations or minimum wage lawsuits.
- 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;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees, but works under close supervision of existing staff;
- 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;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
According to the U.S Department of Labor, “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 to compensation under the FLSA (Fair Labor Standard Act.)”
Safeguard Your Company’s Internship Program
An unpaid intern may sound ideal for your business objectives, but you must know if it complies with FLSA guidelines. Former interns have sued – and won. In November 2014, interns sued Conde Nast, parent company of the W Magazine and the New Yorker for violation of the FLSA, among other claims, resulting in an award of $5.8 million. Other big name companies like NBC Universal, Warner Music Group and Hearst Publications have also been successfully sued by former interns.
Internships can be of immense benefit to companies, students and the community. Implementing an internship program at your company can be invaluable, but you must protect your company’s interests. With the current controversy around this topics, it’s vital to consult a qualified employment attorney to evaluate your company’s internship program and its exposure to the minimum wage-related claims.
This article is intended to serve as a general summary of the issues outlined therein. While this article may include general guidance, it is not intended as, nor is it a substitute for, a qualified legal advice. Your receipt of this article from Lexern Law Group, Ltd. (the “LLG”) or any of its attorneys does not create an attorney-client relationship between you and the LLG. The opinions expressed in this articles are those of the authors of the article and does not reflect the opinion of the LLG.