Unpaid Internships May Ultimately Cost the Employer

Posted Jan 26, 2013

As colleges and universities are winding up their school year, employers are beginning to recruit summer interns for various positions within their company. However, employers must tread cautiously in this arena as wage and hour litigation, including litigation over the proper classification of summer interns, is on the rise. In some scenarios, unpaid interns, meant to be of little or no cost to the company, end up costing the company considerable attorneys’ fees and court costs in defending against claims brought by unpaid interns

The United States Department of Labor has issued a Fact Sheet (Fact Sheet #71) to provide guidance to “for-profit” private sector employers on the use of unpaid interns. As set forth in the Fact Sheet, interns will be considered employees, and therefore must be paid minimum wage and overtime (where applicable), unless the intern qualifies as a trainee. The Department of Labor has identified six criteria to determine whether an intern is a trainee:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

  2. The internship experience is for the benefit of the intern;

  3. The intern does not displace regular employees, but works under close supervision of existing staff;

  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;

  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and

  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship

Labeling a person an intern is not always appropriate and does not relieve the employer from paying minimum wage and overtime in all scenarios. Each internship program should be evaluated by legal counsel to help employers reduce their risk of liability and avoid costly and distracting claims.

For assistance applying the six criteria set forth by the Department of Labor, evaluating your intern program and/or guidance on any other employment law inquiries, Messerli & Kramer’s experienced litigation attorneys are ready and able to help. Because an ounce of prevention is worth a pound of litigation, please contact Messerli & Kramer’s Business Litigation Department for further inquiries on these or other litigation-related topics.

This communication does not constitute legal advice or create an attorney-client relationship. Please consult an attorney if you have questions

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