Spring is in bloom across much of the country, but many employers have turned their attention to summer and this year’s crop of interns.
Employers that take on summer interns usually do so to fill vacation-reduced staffs. For students, such programs allow them to gain first-hand business knowledge. In general, internships give employers the opportunity to train students in their trade and to identify prospective hires.
The benefits of internships were explored in the 2015 movie “The Intern,” which starred Robert De Niro and Anne Hathaway. De Niro played Ben Wittaker, a 70-year-old retiree and widower who participated in an intern program at an e-commerce clothing startup owned by Jules, played by Hathaway. Ben was part of a community outreach program for seniors; he offered experience and wisdom and she benefitted from his advice in matters of business and life. Ben’s internship was unpaid, however, even though his duties included serving as Jules’ on-call driver.
In recent years there has been an increase in class action lawsuits claiming that employers are classifying employees as interns to avoid paying wages under federal and state laws. If an employer benefits from the interns' work, then interns deriving benefits from new skills or enhanced work habits would not be enough to exclude them from coverage under the Fair Labor Standards Act.
Interns may work in paid or unpaid positions and generally are subject to FLSA wage and overtime requirements, but employers may treat interns as exempt employees if they fulfill certain criteria.
A Labor Department fact sheet narrowly frames the exclusion for those in internships or training programs in the for-profit private sector. Workers may participate in such programs without compensation only under these circumstances:
• The internship, even though it takes place at the employer's facilities, is similar to training that would be given in an educational environment.
• The internship experience is for the benefit of the intern.
• The intern works under close supervision of existing staff but does not displace regular employees.
• The employer providing the training derives no immediate advantage from intern activities, and its operations may be impeded.
• The intern is not necessarily entitled to a job after the internship.
• The employer and the intern understand that the intern is not entitled to wages during the internship.
“If all of the factors listed above are met, an employment relationship does not exist under the FLSA,” the fact sheet said.
Views against unpaid internships seem to be intensifying, as indicated by interns who have sued several major companies, including Fox Searchlight Pictures Inc., Hearst Corp., NBC Universal Media LLC, Conde Nast Publications, Gawker and Viacom Inc.
“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,” the Labor Department fact sheet said.
For employers, familiarity with federal and state rules is critical to staying in compliance with labor laws. In short, the more productive work an intern performs at a for-profit business, the more likely payment is necessary.
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