ARE YOUR COMPANY’S INTERNS ACTUALLY EMPLOYEES?
Not Compensating Summer Interns May Lead to Lawsuits
Everyone loves a good summer intern, but are you unknowingly taking advantage of their efforts by not paying them when you should be?
According to the National Association of Colleges and Employers, approximately 96.9 percent of employers are expected to hire interns and/or co-op students this year. And although there are no official records regarding the number of paid versus unpaid interns, it is likely many students will be “working” this summer in unpaid internships. Companies currently offering such opportunities to students would be wise to review the internship requirements published by the U.S. Department of Labor (DOL) and evaluate such programs carefully, given that the number of lawsuits claiming unpaid wages being brought against employers is sharply on the rise. One of the most visible of these was the 2012 lawsuit against The Charlie Rose Show on PBS in which interns claimed they should have been classified as employees. As a result, about 189 interns recovered approximately $250,000 in claimed back pay losses. Following that lawsuit, at least 30 large corporations were sued by former interns making similar arguments.
“Unpaid internship programs should be structured and operated to benefit the intern, not the employer,” said Michael V. Abcarian, managing partner in the Dallas office of labor and employment law firm Fisher & Phillips. “It is important for employers to keep in mind that such programs should not displace or be a substitute for regular employee work. The purpose of the program must generally have a training objective in mind, whether the intern ever becomes employed by you or not. Failure to abide these requirements can expose an employer to costly consequences.”
The Intern Test
To help clarify this area, employers must be mindful of a six-factor test, developed by the DOL, which is used to determine whether interns are actually employees who should be paid for their work. In doing so, it is important to note that generally all six criteria must be met in order to validate an unpaid internship program.
- The training is similar to vocational school, containing a significant educational component.
- The training is primarily for the benefit of the intern.
- Interns do not displace regular employees, but instead work under their close supervision.
- The company derives no immediate advantage from the intern's activities.
- Interns are not necessarily entitled to a job at the conclusion of training.
- Interns understand they are not entitled to wages.
The Results
If even one box remains unchecked, you might have to pony up in a claim for unpaid wages. The consequences of a non-compliance finding by the DOL could be considerable, as your company may end up owing back wages, including possible overtime pay, to past and present interns.
About Fisher & Phillips LLP (www.laborlawyers.com)
Fisher & Phillips LLP is a law firm committed to taking a practical, businesslike approach to solving labor and employment problems for employers. Labor and employment law is all the firm does, offering deep and broad knowledge and experience in the area of the law the attorneys know best. Fisher & Phillips attorneys help clients avoid legal problems, are dedicated to providing exceptional client service, and are there when you need them. The firm has 300 attorneys in 31 offices. In addition to Dallas, the offices are in Atlanta, Baltimore, Charlotte, Chicago, Cleveland, Columbia, Columbus, Dallas, Denver, Fort Lauderdale, Gulfport, Houston, Irvine, Kansas City, Las Vegas, Los Angeles, Louisville, Memphis, New England, New Jersey, New Orleans, Orlando, Philadelphia, Phoenix, Portland, San Antonio, San Diego, San Francisco, Tampa, and Washington, D.C.