New York City is brimming with young professionals looking to gain experience, sharpen their professional skills and build their resumes. But, can you legally hire interns to work free? They get the experience and you get the benefit of another set of hands in the office, right? WRONG! Under federal law, interns must be paid for their services unless they qualify as a “learner/trainee” under the Fair Labor Standards Act. In light of recent, and highly publicized, lawsuits brought by interns seeking compensation for unpaid wages and overtime, how do you ensure that your company complies with the law?
Generally, employees must be paid according to federal and state wage and hour laws. However, according to the U.S Department of Labor, those who participate in for-profit, private sector internships need not be compensated if the internship serves only the interns’ interests. To help determine whether an internship meets the learner/trainee exemption, the U.S. Department of Labor has devised a 6 factor test:
If all 6 factors are met, the intern is not considered an employee and federal wage and overtime provisions do not apply.
New York State Regulations
In addition to the federal test above, New York State requires that 5 additional factors be met:
What can I do?
There are some precautions that companies can take to ensure that their internship program is being carried out properly. Consider taking these steps:
Satisfying the requirements of unpaid internships seems to be an ongoing issue for companies, no matter the size or how established they are. Conde Nast recently settled a lawsuit with interns who claimed they were not compensated enough for their work. In June 2013, the U.S. District Court for the Southern District of New York ruled that Fox Searchlight’s use of interns in the productions, “Black Swan” and “500 Days of Summer” violated the labor laws.
If in doubt, you may consider simply paying your interns (at least) the minimum wage. Companies that offer paid internships generally do not need to limit the responsibilities and tasks of interns to those outlined above. If your interns are being paid, you may avoid employment lawsuits or claims related to unpaid wages or overtime in the future. It may also allow more flexibility for your company to both (i) provide interns with an educational experience and (ii) derive a more direct benefit from their services.
Does your company have an internship program? What kind of tasks are the interns asked to complete?