Tuesday, June 11, 2019

Are Employers Allowed to Have Unpaid Interns Anymore?

Gone are the days when an employer could just hire a college student for the summer, have that student perform the same work as other employees and not pay him or her. The Obama Administration cracked down on the use of unpaid interns, implementing regulations that made many previously legal internships a violation of the Fair Labor Standards Act, which requires employers to pay a minimum wage.

We discussed these rules in years past, but they essentially required unpaid internships to be primarily for the benefit of the intern and not the employer. These rules basically prohibited employers from using unpaid interns for tasks that paid employees would generally perform.

The Trump Administration has issued new guidelines on what unpaid interns are permitted to do. While they give employers more flexibility, they still require the intern to be the primary beneficiary of the relationship and prohibit the intern from being a substitute for a paid employee. President Trump’s Department of Labor has issued the following seven factors that should be used to determine whether an internship can be unpaid:
  • The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee-and vice versa.
  • The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  • The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  • The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  • The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  • The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  • The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.
The bottom line for employers is that unpaid internships should be used to facilitate a student’s learning. Simply replacing employees with unpaid interns could lead to fines and lawsuits. Contact me if you have questions about your unpaid internship program.