Summer Internships — And The Living Is Easy, Or Is It?


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It’s that time of year again!  The days are getting longer (thank goodness!).  Things are beginning to bloom again, and our thoughts are slowly turning to the outdoors.  Shorts, flip flops, long lazy days, vacations, afternoon naps, brilliantly warm weather, and of course, summer internships!

Now, don’t get me wrong – Internships are a wonderful thing.  They give an inquiring young mind the opportunity to experience a working environment, and they give the company access to fresh talent.  But take a beat, because if your internships are unpaid – well then, you’re limited in how, and under what circumstances, you can utilize that talent.

The Dept. of Labor frowns on anyone doing a task for free that would normally be part of a paid job.  Is your unpaid intern answering phones, filing letters, running errands, sorting mail, working on a company project?  If the answer is yes, you may unintentionally be in violation of wage and hour laws.

So, let’s break all this down.  There are guidelines at the federal level – those are managed by the Department of Labor – and for my California employers, there are guidelines at the state level – those are managed by the DLSE (Division of Labor Standards Enforcement).

Now the DOL has a set of 7 tests, that help determine if an internship can actually, legally, be unpaid.

#1 – the intern and employer have to clearly understand that there is no expectation of any type of payment.  You know, actually I think this one is the easiest on the list)

#2 – the intern has to get training that would be similar to what they would get in a purely educational environment – so no empty, busy work.  They have to gain knowledge and/or experience that has value.

#3 – integrated coursework or academic credit.  That means the internship should be associated with the intern’s formal education program.

#4 – you have to accommodate the intern’s academic commitments, so make sure the internship and hours required correspond to their academic calendar.

#5 – the internship should be limited to a period that provides the intern with beneficial learning.  So no 5 year unpaid internships.

#6 – the intern’s work can’t displace the work of an actual employee.  The intern’s work might complement it – but they aren’t a free labor replacement option.

and #7 – both the intern and employer have to clearly understand that the internship isn’t guaranteeing or entitling anyone to a paid job once the internship is over.  And while they might actually be offered a job, they might not.  The company is in no way obligated.

…The Dept. of Labor frowns on anyone doing a task for free that would normally be part of a paid job…. you may unintentionally be in violation of wage and hour laws.

These 7 factors are referred to as the Primary Beneficiary Test.  And while they seem to be fairly specific, no one factor makes the determination.  You have to consider all factors and the specifics of the case. So (let’s say it altogether here), check with your counsel first.

Now in California – you have an extra special hoop to jump through if you want to take on an unpaid intern.  You have to apply to the state DLSE for approval.  You’ll have to submit an application that outlines the proposed internship, and secure their thumbs up – before you engage an unpaid intern.

And before you start thinking – well, that’s a lot of stuff to do and evaluate.  I’ll just get the intern, and worry about all that is a problem comes up.

Well, not so fast.  If that unpaid intern doesn’t pass an audit sniff test, and it’s determined they were misclassified – well then they can file a claim.  Think, unpaid wages, lack of benefits (things like unemployment and workers comp coverage), penalties – and let’s not forget attorneys’ fees.  And since a misclassified intern, would likely fall in the non exempt category – that would also mean unpaid overtime, compensation and penalties for missed meal and rest breaks….do you want me to go on?

Yeah – I didn’t think so.

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So, if you want to be sure you’re on the safe side, do one of two things:

#1 Bring on an unpaid intern, and make sure that the internship meets the DOL guidelines.

or #2 – pay the intern, at least minimum wage.

That way, you’re covered from a compliance standpoint; you can have them work on actual work, oh yeah – and it’s the right thing to do.

Now, there’s no law against interns stuffing direct mail envelopes, taking lunch orders, performing administrative tasks etc.  You’re simply required to pay at least the minimum wage and any overtime they work.

We often hear “well, I don’t have to do any of that because it’s a formal internship, established by University of Pluto”.  Unfortunately, even though the University has a formal internship program, if the internship doesn’t meet the required factors, you may find yourself on very thin ice.  So be sure to carefully evaluate your internship program and requirements before you get the program going.

The DOL has a great Fact Sheet on Internships – I’ll leave the link in the show notes.

So, go ahead – take on an intern, just be clear on how you can use their talent.

Now, could someone please pass the lemonade?

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