No Free Ride for Employers Who Ignore the Rules

With an economy continuing to sputter, a company may be more keen to take on unpaid summer interns to share the workload.  Yet, if a business fails to fulfill detailed laws and regulations for such training programs, this supposed “cost-cutting” measure could become an expensive litigation nightmare. Boiled down, internship programs must predominately be for the benefit of the participants rather than a profit-yielding venture for the sponsoring company.

Our January 7, 2011 article “Employer’s Guide to New 2011 Laws, Part III” addressed new Division of Labor Standards Enforcement (DLSE) guidelines for unpaid internship programs.  Among the key provisions, interns may be exempt from minimum wage laws only if:

1) The intern’s training actions are similar to those of a vocational school student;

2) The training is for the benefit of the trainee;

3) The trainee does not displace regular employees, but works under close observation;

4) The company derives no immediate advantage from the activities of the trainee and on occasion its operations may actually be impeded;

5) The trainee is not necessarily entitled to a job at the completion of the training period; and

6) The employer and the trainee understand that the trainee is not entitled to wages for the time spent in training.

The DLSE directs that if a company’s intern program does not meet all of these conditions for any individual, that person is an employee subject to state and federal wage and hour laws.

For assistance in setting up a lawful, written summer internship program for your business and accompanying forms for participants, contact a knowledgeable labor law attorney.