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Think Again: Summer workers begging for unpaid opportunities may not equal free labor

It’s that time of year again: the time when businesses big and small are flooded with interns, summer help and students on break looking for ways to keep busy and gain “real world” experience. Given the down job market and the especially high unemployment rate among the under-25 crowd (a rate twice that of the rest of the population), many young workers are willing to do just about anything to get a foot in the door of your business – including working for free. But buyer beware. An unpaid intern may not be as “free” as you think.

Several years ago, the Department of Labor issued guidance on this issue and clearly stated that interns in the for-profit private sector will usually be viewed as employees under the Fair Labor Standards Act (FLSA). That means that such interns must be paid minimum wage and overtime for hours worked over 40. Only if the internship meets all of the following criteria will the intern be excluded from FLSA coverage:

  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.

In addition, state law should be consulted to determine if there are any other requirements. In general, if your business has interns performing the same work that regular employees perform and under the same type of supervision, or your business has expectations for the intern’s production, or, assuming they do a good job this summer, you plan to hire interns after graduation, you should consult legal counsel to determine if your plan complies with the law or exposes your business to substantial potential liability.

Failure to pay employees pursuant to the FLSA can result in back pay damages, liquidated (double) damages, and payment of reasonable attorneys’ fees and costs of the party suing you. In short, your unpaid internship program may not be quite as free as you think.

To learn more about Attorney and her practice, visit her profile.

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