In a troubled economy, an unpaid internship may sound like a good idea to both the job applicant, who is looking to build up his or her resume, and the employer, who is looking to cut costs. However, if an unpaid internship sounds too good to be true for the employer, it just may be.
Generally, student interns are not considered employees where educational or training intern programs are designed to further their education. However, under the Fair Labor Standards Act of 1938 (“FLSA”), an “intern” may actually be deemed to be an employee. If so, the employer must follow the minimum wage requirements. The Department of Labor will generally consider 6 factors to determine whether a person qualifies as an intern. If a person’s job does not meet all of the following factors, the person may be considered an employee:
1) The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school; 2) The training is for the benefit of the trainee; 3) The trainees do not displace regular employees, but work under close supervision; 4) The employer that provides the training derives no immediate advantage from the activities of the trainees and on occasion the employer’s operations may actually be impeded; 5) The trainees are not necessarily entitled to a job at the completion of the training period; and 6) The employer and the trainee understand that the trainees are not entitled to wages for the time spent in training.
An employer should give careful consideration to numbers 3 and 4 above as these may be especially difficult to meet. If you have any question as to whether someone you hired or are considering hiring could qualify as an intern or should be considered an employee, please call Mark Filipp or Gloria Chon.