Hiring Unpaid Interns

This Controversial Practice Is Coming Under Intense Scrutiny

By AMELIA J. HOLMSTROM, Esq.

Summer is here, and as the temperature rises, so do the number of job applications and résumés found in an employer’s mailbox. It isn’t any secret that college students nationwide are aggressively applying for summer jobs or internships that will provide them with the experience they need after graduation. In addition, because of the downturn in the economy, employers are doing more with less and do not have extra money available to hire and pay these individuals.

In response, more employers have been striking the balance between work and resources by classifying workers as unpaid interns instead of hiring them as employees. The increase in unpaid internships has not gone unnoticed by the Department of Labor (DOL) and the courts.

Unpaid internships have come under increasing scrutiny in the past few years. Wage-and-hour lawsuits filed by unpaid interns are receiving national news coverage more and more frequently.

Just last year, a federal court judge found that unpaid interns at Fox Searchlight Pictures who worked on the movie Black Swan were entitled to wages as employees. The unpaid interns in that case performed tasks such as photocopying, taking lunch orders, and answering the phones, all tasks that had previously been performed by paid employees.

Fox Searchlight Pictures was not the only company in the news. There have been others: Warner Music Group, Charlie Nash, and publishers Conde Nast and the Hearst Corporation have also been sued by former interns.

With employers under the microscope, now is the time for companies to carefully review when a for-profit company can legitimately classify a worker as an unpaid intern without setting themselves up for a costly lawsuit. Private-sector internship programs may offer unpaid internships only under very specific criteria. The six criteria that must be met in order to properly classify a worker as an unpaid intern are as follows:

• The internship must provide training similar to training the individual would receive in an educational environment;
• The intern must benefit from the experience;
• The intern does not displace other employees and works under the close supervision of already-existing staff;
• The employer derives no immediate advantage from the work of the intern;
• The intern is not necessarily entitled to a job after the internship; and
• The intern and employer both understand that the intern is not entitled to wages for the hours worked.

An employer must carefully consider all of the facts and circumstances when determining whether interns must be paid. If all six criteria are not met, then an employment relationship exists between the business and the intern, and, consequently, the intern must be paid at least the minimum wage, plus overtime if the intern works more than 40 hours in a workweek. For employers in Massachusetts, misclassification of interns can lead to mandatory treble damages plus payment of their attorneys’ fees under the state’s wage-and-hour laws.

Internships can be extremely valuable to both the intern and the employer, but can lead to legal risks if an unpaid intern position does not meet all of the six criteria. There are some things employers can do to limit their risk:

• Draft a written agreement confirming that no wages will be paid for the time spent performing work and that the intern is not entitled to employment at the completion of the internship, and have the intern sign it;
• Do not use interns to cover vacations or as temporary employees while a position is vacant;
• Establish a specific duration for the internship and stick to it;
• Provide close supervision to the intern by existing staff;
• Ensure that the internship is for the benefit and experience of the intern, rather than the employer; and
• Make the internship as academic an experience as possible.

Given the recent attention directed toward internships, employers need to be vigilant about their unpaid internships. To do so, employers must carefully examine every internship they want to offer and ensure that it is in compliance with state and federal wage-and-hour laws. To be sure that you are making the right choices, you should consult with your labor and employment counsel before hiring an unpaid intern.

Amelia J. Holstrom joined Skoler, Abbott & Presser in 2012 after serving as a judicial law clerk to the judges of Connecticut Superior Court, where she assisted with complex matters at all stages of litigation. She is a 2011 graduate of Western New England University School of Law, where she was the managing editor of the Western New England Law Review. Her practice is focused in labor law and employment litigation; (413) 737-4753; skoler-abbott.com