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To pay or not to pay interns? The DOL is cracking down

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in Discrimination and Harassment,Employment Law,Human Resources

Two factors have fueled a sharp rise in unpaid internships: Employers’ continuing need to hold down costs and the drop in the number of paying jobs for young people.

Fact: Employers posted 643 unpaid internships on Stanford University’s job board this academic year, more than triple the 174 posted two years ago.

But before you get too excited about using that free labor source, take note: The U.S. Department of Labor (DOL) and many state labor departments say they are stepping up enforcement and fines against employers that illegally don’t pay their interns.

The Fair Labor Standards Act (FLSA) “learner/trainee” rules govern this issue. They say the following six criteria must be satisfied for an internship to be legitimately unpaid:

  1. The training must be comparable to that given at a vocational school or academic institution.
  2. The training must benefit the student.
  3. The intern would not replace a regular employee.
  4. The employer “derives no immediate advantage” from the intern’s activities.
  5. There is no promise of a job following the training.
  6. Both the employer and intern understand that no wages will be given for the training period.

Even if an intern receives school credit, that doesn’t necessarily free your organization from paying interns. If you profit too much from the arrangement, federal law says this would suggest an employment relationship, meaning your intern must be paid.

“If you’re a for-profit employer … there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law,” Nancy Leppink, acting director of DOL’s wage-and-hour division told The New York Times last month. 

In addition to more enforcement, the DOL is expanding efforts to teach companies, colleges and students about the intern-pay rules.

The pay rules are not as strict for nonprofits, such as charities. Reason: People are allowed to do volunteer work for nonprofits.

Other intern issues

Manage interns as closely as employees, if not more so. And apply your workplace policies to them.

Reason: Your organization can be held responsible for the actions of anybody, including unpaid interns, while they perform work for you.

Also, some courts have ruled that employment-discrimination laws don’t apply to unpaid interns. But that doesn’t mean you can allow harassment of interns. In fact, interns may be able to pursue claims under Title IX, which bans sex bias in education programs.

Also, if your intern program reaches out to high school students, follow federal child labor laws. Visit www.dol.gov/dol/topic/youthlabor and check your state’s child labor laws.

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