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DOL Releases New Fact Sheet On Unpaid Internships

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in Human Resources,Office Management

According to the 2010 MonsterCollege Survey from Monster.com®, 81% of the 1,250 future graduates surveyed expect to graduate with at least one internship under their belt, up from 77% in 2009.  Combine a growing desire for real-world experience with tight workplace budgets and you've got all the makings for a wage-and-hour disaster.

 

Fearful that employers are taking advantage of students, the U.S. Department of Labor (DOL) released a new fact sheet designed to help employers determine whether interns must be paid minimum wage and overtime under the Fair Labor Standards Act (FLSA) for the services that they provide to for-profit, private-sector employers.

 

Under the FLSA, individuals who are "suffered or permitted" to work must be compensated for the services they perform.  The DOL most often views internships in the for-profit private sector as compensable employment, unless participants qualify as trainees, and not employees.

 

To determine whether an individual is a trainee, employers need to assess each situation according to a six-factor test, developed by the DOL.  Each factor must be satisfied in order for a for-profit, private-sector employer to legally offer an individual an unpaid internship.

 

Factor #1: The internship is similar to training that would be given in an educational environment, even though it includes the actual operation of the facilities of the employer.  

 

Said the DOL: The more an internship program is structured around a classroom or academic experience as opposed to the employer's actual operations, the more likely the internship will be viewed as an extension of the individual's educational experience (this often occurs where a college or university exercises oversight over the internship program and provides educational credit). 

 

Factor #2: The internship experience is for the benefit of the intern.

 

Said the DOL: The more the internship provides the individual with skills that can be used in multiple employment settings, as opposed to skills particular to one employer's operation, the more likely the intern would be viewed as receiving training.  

 

If the intern is engaged in the operations of the employer or is performing productive work (e.g., filing, performing other clerical work, or assisting customers), then the fact that they may be receiving some benefits in the form of a new skill or improved work habits will not exclude them from the FLSA's minimum wage and overtime requirements because the employer benefits from the intern's work.

 

Factor #3: The intern does not displace regular employees, but works under close supervision of existing staff.

 

Said the DOL: If an employer uses interns as substitutes for regular workers or to augment its existing workforce during specific time periods, these interns should be paid at least the minimum wage and overtime compensation for hours worked over 40 in a workweek.  In addition, if the employer would have hired additional employees or required existing staff to work additional hours had the interns not performed the work, then the interns will be viewed as employees and entitled to compensation under the FLSA. 

 

Conversely, if the employer is providing job shadowing opportunities that allow an intern to learn certain functions under the close and constant supervision of regular employees, but the intern performs no or minimal work, the activity is more likely to be viewed as a bona fide education experience.

 

If the intern receives the same level of supervision as the employer's regular workforce, this would suggest an employment relationship, rather than training.

 

Factor #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.

 

Said the DOL: The intern does not perform the routine work of the business on a regular and recurring basis, and the business is not dependent upon the work of the intern. 

 

Factor #5: The intern is not necessarily entitled to a job at the conclusion of the internship.

 

Said the DOL: The internship should be of a fixed duration, established prior to the outset of the internship.  Further, unpaid internships generally should not be used by the employer as a trial period for individuals seeking employment at the conclusion of the internship period. 

 

If an intern is placed with the employer for a trial period with the expectation that they will then be hired on a permanent basis, that individual generally would be considered an employee under the FLSA.

 

Factor #6: The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

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