Requirements for Unpaid Interns: Internships are a part of the work force and there are certainly circumstances where individuals perform job responsibilities for “for profit” companies without compensation. Essentially, for a company to have a legitimate (legal) unpaid intern, the intern has to be considered a “trainee” as opposed to an “employee” under the Fair Labor Standards Act (FSLA). The U.S. Department of Labor developed six factors to evaluate whether a worker is a trainee or an employee for purposes of the FLSA:
1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in an educational environment.
Essentially, the internship should be mutually beneficial to both the intern and the employer. Although the intern will be conducting work, he/she will also become educated in the field and develop a skill that is transferable to other positions in the industry. Employers may have interns observe a variety of departments and educate them in a classroom setting while also having them perform tasks related to the business. Often times with college internships where an individual is receiving credit, there are university supervisors who will monitor the setting and the type of work required of the intern. This type of supervision will demand that the experience is in line with the requirements of the Department of Labor. With post-collegiate internships, you have to be more diligent about accepting positions.
2. The internship experience is for the benefit of the intern.
This is a relatively easy requirement for an employer to meet – as most interns won’t accept work unless they feel it would be beneficial (and generally, performing actual work in a real business setting is valuable experience for the “real world”).
3. The intern does not displace regular employees, but works under close supervision of existing staff.
This is a very important factor. An employer cannot hire an intern to perform work a paid employee would otherwise perform. For example, some businesses have busy seasons that require additional employees. An employer cannot hire you as an “intern” during those peak seasons without paying minimum wage if it does so to avoid paying a real employee. The second prong of this test is self-evident: an intern needs to have regular supervision of existing employees. Many legitimate, unpaid internships will simply have the individual shadow a regular employee to understand the day-to-day dealings without conducting any actual business or performing tasks on his/her own.
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.
This is a difficult hurdle for employers. The Department of Labor’s position is fairly straightforward: “[I]f the interns are engaged in the operations of the employer or are performing productive work (for example, filing, performing other clerical work, or assisting customers), then the fact they may be receiving some benefits in the form of a new skill or improved work habits will not exclude them from the FLSA’s minimum wage and overtime requirements because the employer benefits from the intern’s work.”
5. The intern is not necessarily entitled to a job at the conclusion of the internship.
This factor is essential to ensure employers don’t take advantage of training periods for employees it intends to hire. If an employer knew it would hire you, without this factor, it may be able to avoid paying you during training.
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
An understanding of the nature of the employment relationship at the outset of the internship is a must. Employers should put all terms in writing and have the intern sign off.
If all of the factors listed above are met, then the worker is considered a “trainee” under the law, and an employer is not required to pay minimum wage, overtime, and an assortment of other requirements under FLSA.
Tip if You’re Considering an Unpaid Internship: While the guidelines regarding interns are clear, in practice, there is little to stop an employer from taking advantage of unpaid interns. There is little oversight in this area and there are limited recourses available for enforcement (not to mention that interns are hesitant to report employers for fear of retribution in their respective field). That being said, there are some practical steps you can take to make sure you get the most out of your experience. First, try to lock the internship into a fixed duration and establish this prior to starting your internship. Second, try to get a good idea of the detail of the job (educational training, shadowing, performing actual tasks, supervision). There are enough resources available on the web to determine the legitimacy of the program.
For additional information on internships and the law, visit the Department of Labor’s Wage and Hour Division website at http://www.wagehour.dol.gov.
Adam Barnosky is a Boston-based attorney and writer. For music industry news, entertainment law updates, or to suggest an upcoming Legal Pad topic, find him on Twitter @adambarnosky.
Disclaimer: The information contained in this column is general legal information only. Consult your attorney for all specific considerations.