Summer is fast approaching and along with the dog days of
pool time, family vacations, and outdoor activities, comes summer break for
students. For many companies, this means an influx of potential interns anxious
to learn the ins-and-outs of an industry and willing to do so without pay. As
we have mentioned in past updates (see here
the Department of Labor has been stepping up enforcement efforts and closely
scrutinizing the use of non-employee workers, such as independent
contractors. However, many employers are not aware that this uptick in
audits of employee misclassification extends to unpaid interns. In fact, the
DOL has issued a fact
sheet specifically addressing the use of unpaid interns.
The DOL applies a six-part test to decide whether a
worker is properly classified as an unpaid intern as opposed to an employee.
First, the internship must be similar to training the intern would receive from
an educational institution. This means that the internship should be structured
around a classroom or educational environment. Second, the internship should
benefit the intern as opposed to the employer. A red flag is raised in a
situation where the employer relies on the intern to do the company's work.
Third, the intern must not displace existing employees. Thus, employers should
be careful about bringing in interns on the heels of a layoff, and should not
use interns to augment the workforce. Fourth, the employer should not receive
any advantage from using the intern and, in fact, a showing that the employer's
operations are sometimes impeded by training the intern is good evidence of a
true internship. Fifth, the intern should not be entitled to a job at the end
of the internship. This means that using internships as trial periods for
employment is risky. Finally, the employer and the intern must understand that
the intern is not entitled to wages.
With this test in mind, there are several important
practice pointers to follow when using unpaid interns:
Use of interns should be closely monitored to ensure
compliance with the DOL's test and to help avoid liability for
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