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Hiring Illegal Interns: Are You in Hot Water?

When it comes to hiring interns, are you breaking the law? Are you sure? For-profit organizations like Austin’s own SXSW are coming under fire for dancing the line on fair labor laws when it comes to hiring volunteers, low-paid and unpaid interns. Before your company sets out to find an intern, let’s head back to school on the subject to find out if your intern program a recipe for disaster.The U.S. Department of Labor (DOL) provides six criteria that each must be met in order for an unpaid internship (in the for-profit sector) to pass the Fair Labor Standards Act (FLSA) test. The six criteria are:

  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 providing the training 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 the intern is not entitled to wages for the time spent in the internship.

Government and non-profit organizations do not necessarily need to follow these same rules (check with your attorney if you are in either of those categories).

What it comes down to is this: Relying on interns to perform essential duties, particularly below minimum wage and avoiding overtime laws, will not work. One indication you may be dancing the line of an illegal intern program? Your company benefits more than the unpaid intern learns.

This can be a hard line to judge so for added assurance that your program passes the test, consider partnering with local colleges and universities. According to a survey by the National Association of Colleges and Employers, receiving academic credit or some level of recognition from the college or university is one indicator the DOL uses to “legitimize” unpaid internships in the for-profit sector.

According to St. Edward’s University in Austin, more than 70 percent of the internships posted through its program are unpaid, including internships for radio stations, marketing and public relations agencies, political organizations, and more.  And while The University of Texas at Austin’s College of Liberal Arts prefers all students receive compensation for internships, it’s not required. Internships are allowed if they comply with the FLSA and either pay a fair wage, a legal stipend or meet each of the six criteria outlined by the DOL for an unpaid internship.

It’s important to remember that if you do choose to pay interns, the amount matters. They are subject to the same rules as other employees. For for-profits that means meeting minimum wage, paying overtime when applicable and following all other rules according to the FLSA.

Have you been treating your internship programs with as much respect as your other hiring practices? A little due diligence now may save you from being burned later.


Copyright:  grafvision / 123RF Stock Photo