IS IT REALLY OK TO UTILIZE AN UNPAID INTERNSHIP?
The weather is getting warmer and thoughts are turning to summer and summer employment. As part of the summer "gear up," a number of companies and non-profits will use summer interns, who may or may not be receiving college credit and payment.
The Wall Street Journal's April 2, 2010 edition included an article indicating that the United States Department of Labor ("DOL") was questioning the use of unpaid internships. This is not a new phenomenon and the existence of college credit(s) does not change the analysis. For years, the DOL has applied six criteria to its determination of whether or not interns must be paid. Our experience has been that a company may meet some, but generally cannot meet the six factor test. Numbers 1, 3 and 4 are especially problematic for most employers in office environments.
The six factors are:
- 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;
- The training is for the benefit of the trainee;
- The trainees do not displace regular employees, but work under close observation;
- The employer that provides the training derives no immediate advantage from the activities of the trainees and on occasion the employer's operations may actually be impeded;
- The trainees are not necessarily entitled to a job at the completion of the training period; and
- The employer and the trainee understand that the trainees are not entitled to wages for the time spent in training.
A DOL opinion letter on this topic appears at: http://www.dol.gov/whd/opinion/FLSANA/2004/2004_05_17_05FLSA_NA_internship.pdf. Generally, the Pennsylvania Department of Labor and Industry ("L&I") follows the lead of the DOL, unless state law contains a different twist.
As a result, we recommend that you pay all interns the minimum wage required under state and federal law (currently $7.25 in Pennsylvania) and limit work hours to forty (40) in any given week to avoid overtime concerns. Remember that interns are not going to meet "white collar" exemption test because of their limited use of independent discretion and judgment.
BOTTOM LINE: An internship can be an absolutely wonderful experience for students; however, that wonderful experience must be offered in accordance with DOL and L&I guidelines.
Skarlatos & Zonarich LLP is a full-service law firm with highly skilled professionals dedicated to providing clients with sound advice and aggressive advocacy. For more information, visit skarlatoszonarich.com.
