Should my company hire unpaid student interns?

What criteria determine if an internship can be unpaid?
First, governmental agencies and non-profit entities can almost always hire student and professional interns or employees without the obligation to pay those employees a minimum wage. Second, once students have graduated from their school of choice with a degree in their field, they may elect to volunteer their time with any employer they so choose. This is true for lawyers, doctors, accountants, and even teachers. Third, if a student intern receives school credit for an internship, it is almost never in violation of the law.

In the case of student interns, they must be paid a fair wage under the Fair Labor Standards Act (FLSA) unless the position can be properly designated as that of “trainee”. In order to be considered a trainee under the FLSA, six criterion must be met:

1. The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school.
2. The training is for the benefit of the trainees.
3. The trainees do not displace regular employees, but work under close observation.
4. The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion his operations may actually be impeded.
5. The trainees are not necessarily entitled to a job at the completion of the training period.
6. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

Thus the vast majority of student internships do not meet the standards for “trainees” under the FLSA.

What are the risks to the employer if they do not adhere to these criteria?
If an employer does not adhere to these criteria, they may find themselves faced with complaints filed with the Department of Labor (DOL) by their intern/employees. The DOL will then investigate and make a ruling, and if it determines that the employer owes the employee back wages, it may enforce the ruling by a variety of methods:
· conciliation - if the DOL can persuade an employer to cooperate, it may supervise a settlement of the claim between the employee and employer, in which case the employer may be able to escape with only liability for back pay (Section 216(c);
· civil action for back pay and damages - the DOL may sue on an employee's behalf to recover back wages and liquidated damages (Section 216(c);
· injunction - the DOL may apply for an injunction to restrain further violations by the employer or to restrain the sale or transfer of goods produced with labor that was compensated in a way that violated the FLSA (Section 217);
· criminal action - under 29 U.S.C. 216(a), the U.S. Department of Justice may bring a criminal action against an employer in the case of a willful violation of the FLSA; and
· civil actions by employees - employees have the right to file suit in a court of competent jurisdiction to protect their rights under the FLSA (29 U.S.C. 216(c)).
The employer may also face additional penalties under their relevant state’s laws.

Do you have examples of unpaid internships that clearly should be paid internships?

Any time an employer hires an unpaid student to do a job that would otherwise be performed by a paid employee they run a risk of violating the law. These types of illegal unpaid internships are widespread in certain industries such as fashion, publishing, and journalism. http://fashionista.com/2010/04/will-prohibiting-unpaid-internships-kill-the-fashion-industry/ If the purported “trainee” is doing nothing more than menial labor, it is very likely that there is a violation of the FLSA.

What recommendations do you have for employers that want to offer unpaid internships?

Adhere to the six criteria above! First, provide your interns with valuable training. In the legal industry this can mean critiques of interns’ work product and tips on how to be better writers. Second, don’t rely on unpaid interns to run your business. If a certain task is critical to your business, it should be performed by a paid employee or a licensed volunteer. Third, have your interns sign an internship agreement that explicitly states that they will not be paid for their time.

What recommendations do you have for those seeking them?

Come to your unpaid internship with an open mind, but also know what you want to get out of the position. Ask questions of your employer, and let them know if you feel like you’re not receiving valuable training. If you’re only taking the job to expand your contacts within your chosen field, you probably don’t want to rock the boat for fear of long term repercussions. If your employer has made it clear that they are not interested in paying you and will not provide you anything of value in exchange, quit that position and move on.