“Let’s Just Hire An Intern… .” Employers, It’s Not That Simple

Few unpaid internships comply with the Fair Labor Standards Act (FLSA), yet they seem to be ubiquitous.

One study cited one million unpaid internships per year, according to an estimate from the Center for Research on College-Workforce Transitions at the University of Wisconsin-Madison.

“First, there’s the baseline expectation of paying your dues, rather than being paid for work you do,” read the recent New York Times article that quoted the study.

It seems that employers frequently misunderstand their ability to “give a kid some experience” in exchange for free labor.

When is it OK not to pay an “intern” for work?

To start, the internship must be affiliated with the intern’s university. Most important is that the primary beneficiary of the relationship must be the intern, not the company.

Hallmarks indicating a valid unpaid internship include:

  •         The intern and the employer both understand there is no expectation for compensation;
  •         the internship provides training that is similar to that which might be given in an educational setting;
  •         the internship is tied to the intern’s formal education program;
  •         the internship accommodates the intern’s academic commitments;
  •         the internship duration is limited to the period during which the intern gains beneficial learning;
  •         the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern; and
  •         the intern and employer understand the internship does not entitle the intern to a paid job.

The U.S. Department of Labor (DOL), whose Wage and Hour division enforces the FLSA, even expands on these factors in a handy fact sheet.

Memorialize The Internship With A Written Agreement.

Employers should consider having interns sign an unpaid internship agreement, otherwise known as a learning contract, which defines how the internship arrangement complies with those requirements.

Photo by Brooke Cagle on Unsplash

Aspects of such an agreement might include:

  • defining the requisite educational environment;
  • articulating the learning objectives;
  • providing detail (in writing) about how the internship will function and specifying the benefits, if any, that will inure to the intern;
  • specifically listing the DOL terms and conditions and requiring that the intern acknowledge those terms (I mean, how much trouble can an employer get in if it lists—and does—exactly what DOL requires);
  • the length of the internship program; and
  • the nature of the services to be performed by interns and the level of responsibility (if any) they will be given.        

Any such agreement should set parameters like the nature of the services to be performed by and the level of responsibility (if any) the intern will be given; work schedules; and, employers should provide intern(s) with a copy of the EEO provisions in the employee handbook if the intern works in a state that has on its books state or local anti-discrimination, -harassment, and -retaliation laws that protect interns like they do employees.

For example, California specifically protects unpaid interns and volunteers from harassment under its state Fair Employment and Housing Act. Under the New York State Human Rights Law, interns are protected from discrimination. Maryland, Massachusetts, and Washington, D.C. boast similar laws on their books protecting interns from discrimination, harassment, and retaliation in the same manner as those laws protect employees.

Employer Takeaway

Employers can avoid some of these concerns by paying their interns minimum wage and overtime pay as employees under the FLSA or applicable state or local law. Otherwise, check with the DOL factors as well as state law guidance (or your lawyer!) to ensure your internship program is above-board.

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Amy Epstein Gluck

Amy Epstein Gluck has represented individuals and corporate clients in Virginia, Washington, D.C., and various federal district courts for more than twenty years. Ms. Epstein Gluck’s current practice areas include employment law—advising on and drafting employment agreements; handling employment negotiations, severance agreements, noncompete and nondisclosure agreements, “wrongful terminations” and other EEO matters; representation at the EEOC level; advising employers about discrimination laws and how to remain in compliance, and employment negotiations.