With the summer internship season set to begin soon, are you ready to welcome interns into your company with full-confidence that you are complying with all employment laws? Including compensating them appropriately?
Don’t find out the hard way: it is important that you have a good understanding of the requirements for hiring interns.
In recent news, Condé Nast (a company that publishes Vanity Fair, The New Yorker and a number of other well-known titles) paid $5.8 million to settle a class action lawsuit brought on by unpaid interns. These interns claimed that their job did not meet the requirements to be considered an unpaid internship and therefore the company should have paid them minimum wage for all hours worked.
Although it can be difficult to determine if an individual is exempt from being treated as an employee in the event of an internship, the U.S. Department of Labor (DOL) has six guidelines for defining their role within your business.
DOL Rules for defining an internship:
- The experience, or training, of the internship must be similar to that which would be given in a vocational school.
- The work is for the benefit of the intern.
- The interns do not displace regular employees, but work under close observation.
- The employer that provides the training/experience derives no immediate advantage from the activities of the intern and on occasion the employer’s operations may actually be impeded.
- The interns are not necessarily entitled to a job at the completion of the training period.
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
It is important thing to keep in mind that the internship must meet all six of the requirements above in order for it to be unpaid. See the DOL Fact Sheet here for more details.
To keep you in the clear of handling the intern situation incorrectly, we offer the following:
5 Internship Best Practices
1. Audit your intern program to see if it complies with all 6 DOL guidelines. Some good self-audit questions are:
- Does your internship program have an appropriate educational purpose?
- Are the benefits of the program in favor of the intern, rather than your company?
- Are the duties of the intern different from duties of other employees?
When in doubt, or if all 6 DOL guidelines are not met, you should consider paying state minimum wage to the intern. In lieu of minimum wage, work with the intern’s school to set up course credit.
- Understand how to best utilize an intern
- Prevent expansions of responsibilities that may jeopardize the intern’s classification as an employee
- Have the time and dedication to spend with the intern
3. Write a Memorandum of Understanding that is presented to and signed by the intern. The memo should state the following:
- The internship is unpaid
- A job offer is not guaranteed upon completion
- The educational purpose of the internship and the intent to benefit the intern
- Limited scope of activities that the intern will perform
- Intern’s obligation to promptly and accurately report any assignment of duties that are outside of the identified scope
4. Keep in mind that paid and unpaid interns alike should be protected from any form of discrimination, just as any other employee.
This is not only a best practice from an ethical standpoint, but also the preemptive result of a wave of proposed city and state laws providing this protection to interns. For example, Illinois recently passed legislation to amend the Illinois Human Rights Act to protect unpaid interns against workplace sexual harassment. The amendment went into effect on January 1, 2015.
5. Don’t forget to check your state’s Child Labor Laws.
Federal and state laws dictate how to pay minors, when they are allowed to work, at what age they are allowed to work, the type of work they are allowed to do and in some states, they require employers to obtain proof of age documentation. It is important to ensure that you are abiding by all Child Labor laws when employing interns who are minors.
That should cover it. Knowing these DOL guidelines and following our best practices should put you on solid ground to neutralize that menacing intern threat.