Unpaid and low-paid interns are protected by law

If your business or organization is planning on using unpaid or low-paid student interns this summer, here's an important rule to follow: Make sure the interns' work is mostly about training.

For employers, offering student internships often involves bringing in unpaid or low-cost help (below minimum wage) during summer months when many employees are taking vacations. The advantage to the employer is obvious: Free or cheap labor.

For students, the internship means on-the-job training that could bring them job opportunities and recommendations in the future.

But before bringing unpaid interns (or those paid below minimum wage) into the workplace, consider the implications and obligations. If most of the interns' workplace activity is actually training experience rather than contributing to the employer's purposes, then the U.S. Department of Labor (DOL) rules allow non-payment or less-than-minimum-wage to the interns.

However, just because the Labor Department and the federal Wage and Hour Law exempt employers from treating interns (or trainees) as employees, other federal and state laws may consider them as employees. For example, interns usually are protected by discrimination and harassment laws.

And depending on state laws and specific circumstances, unpaid interns may be protected by state Workers' Compensation laws. Even if an unpaid intern in a specific case is not covered by a state's workers comp law, the injured worker could sue the employer for medical costs and damages.

Labor Department Intern Rules

In today's economy, some organizations might want to use unpaid or less-than-minimum-wage interns to fill the void left from laid-off employees. But make sure interns aren't replacing employees and don't hinder opportunities for prospective employees. The federal Fair Labor Standards Act (FLSA) bans both practices and many states impose additional restrictions.

The employer must pay an intern at least the minimum wage unless the internship experience passes these six rules:

1. The work performed (the DOL uses the word "training") is an extension of a trade studied by the student or similar to the intern's school training.

2. The work (or training) is for the benefit of the student intern.

3. The intern does not replace regular employees, but works under their close observation.

4. The employer derives no immediate advantage from the student intern's activities. (The intern's activity is primarily an educational experience and doesn't significantly benefit the employer.)

5. The intern is not necessarily entitled to a job at the conclusion of the internship. The employer holds out no promise of future employment.

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

Advantages of Paying Interns 

As you can see, unpaid interns are not a good idea for most employers in most situations. For example, unpaid interns can't replace paid employees who are on vacation. And they can't do any work that significantly benefits or profits the employer, which is a difficult hurdle to clear.

So what should employers do? Use interns...but pay them. Talented, well-educated, and highly motivated students are typically eager to gain real-world experience in the career fields they are studying. So they're willing to work for less than seasoned individuals. By hiring a few interns for summer replacements, you can gain enthusiastic, productive employees at reasonable pay levels.

There are benefits for employers to pay fair wages to interns. Paid interns are more likely to:

• Feel more appreciated and, therefore, be more productive.
• Be more enthusiastic in supporting and promoting the business or organization after the internship is over.

Plus, using interns can be a good recruitment tool. The most talented might return to your organization in a paid capacity someday.

[NOTE: Information and guidance in this article provide helpful and interesting information on the subjects covered. It is not intended to provide a legal service for readers' individual needs. For legal guidance in your specific situations, always consult with an attorney who is familiar with employment law and labor issues.]

Need help with your recruiting activities?
Susan is available to assist you! Please contact her via email at skaplan@daszkalbolton.com

Susan Kaplan is our in-house Recruiting Manager. A former business owner in the retail industry, she has 20 years of management experience, recruiting top notch team members, building and leading teams, developing strategic plans and putting them into action. Susan utilizes her wealth of contacts, intimate knowledge of business strategy and personal communication skills to help clients and firm associates achieve success. Her dynamic personality combined with her business expertise has made her an invaluable source for recruitment, public relations and problem solving.