You’re Damned if You Do … Employ Unpaid Interns

Posted: May 11, 2011 in Hiring and Firing, Overzealous Government Regulators, Wages, Overtime, Commissions and Pay Issues

If you are a for-profit business, you generally cannot have volunteer workers who work for no pay, whether you call them interns, clerks, angels or unicorns. In most cases, they are really employees, in spite of what you call them. Companies make this mistake all of the time. Surprisingly, even law firms make this mistake. They think that they can get away with having a student or new graduate work for free for the summer or for some other time period. And sometimes they might get away with it, but if your “intern” decides to sue, you could be liable for at least minimum wage for all hours worked, time and half for any overtime, and possibly triple damages and attorneys’ fees under Massachusetts law and other damages, such as benefits not provided. Your quest for cheap labor could backfire. In spades.

A genuine internship for a for-profit might actually exist, but so might Bigfoot. Both are, at best, rare, elusive, and hard to prove. The U.S. Dept. of Labor has put out a bulletin with specific factors, which can be found here:

As provided by the DOL, “[t]he following six criteria must be applied when making this determination:

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.”

Any company being honest with itself will find these standards extremely hard to meet. The factors describe something that is burdensome to the company, not a benefit. Which begs the question, why the company would want to do this in the first place. Sure, some large corporations may have some legitimate intern programs. But your smaller or mid-size employer or law firm, not so much. And don’t think that paying a “stipend” will make things okay, unless the stipend happens to be at least minimum wage and paid weekly or biweekly.

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