Recruiters: Critical Requirements for Unpaid Internships

By DEBBIE FLEDDERJOHANN, President of Top Echelon Contracting

Summer is here, at least unofficially, and with it comes the start of many summer internship programs.  These programs can be great for students AND for the companies that utilize their services.  Students, of course, gain useful experience and can “get their foot in the door” at a company.  And for companies, internships are a way to get summer help at a reasonable price.

But there is a difference between “reasonable” and free, and the latter could land your clients in trouble.  The Department of Labor (DOL) has been looking closely at unpaid internships to determine if they comply with the Fair Labor Standards Act (FLSA).  In order to be legal, they must meet six criteria as stated on the DOL’s Fact Sheet on Internships:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment.
2. The internship experience is for the benefit of the intern.
3. The intern does not displace regular employees, but works under close supervision of existing staff.
4. The employer that provides the training /internship derives no immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded.
5.  The intern is not necessarily entitled to a job at the conclusion of the internship.
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

The DOL is not the only thing employers have to fear, though.  If unpaid interns believe they have been treated unfairly, they can file class action lawsuits, as the former interns of the Black Swan film did against Fox Searchlight Pictures.  Companies targeted these lawsuits could have to pay back wages, in addition to damages and fines.

Considering that nearly half of all interns are unpaid, there’s a good chance that a number of internships are not compliant with the FLSA.  You may want to encourage your clients to take a close look at their programs to make sure they are legal.  That doesn’t mean they need to abandon their internship programs, which can be a great way to identify and groom potential talent.  Nor do they need to hire interns as traditional employees, which comes with a lot of additional costs and legal liability.

Instead, you can offer to convert their interns to contractors who will become W-2 employees of a contract staffing back-office.  The back-office retains the employment responsibility and liability.  Meanwhile, you gain a valuable additional source of summer income.  How’s that for a happy summer?

(Editor’s note: This article is intended for informational purposes only and should NOT in any way be construed as legal advice.)