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Hiring Summer Interns? Make Sure You Do it Right

Corporate Counsel—Shannon Green

School’s out for summer, and there’s a rush of young students and recent graduates looking for internships. If they’re done correctly, these training programs can be beneficial for both companies and interns. But businesses that don’t compensate interns for the work they perform can end up paying a big price down the road.

In 2010, the Department of Labor released guidelines for employers in the for-profit sector to create internships that comply with the Fair Labor Standards Act. The fact sheet included a six-factor test for determining whether an unpaid internship is lawful:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training that 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 that provides 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 that the intern is not entitled to wages for the time spent in the internship.

Joel Rice, a partner in the Chicago office of Fisher & Phillips, says that in an instance where a company was facing a claim regarding an internship program, he wouldn’t rule out the possibility of court siding with an employer that demonstrated five of the six factors. “But you’re certainly much safer if you can show that you satisfy all six.”

Rice has been practicing labor and employment law for more than 20 years. He says that the recent publicity the DOL has given to unpaid internships and misclassification of employees may account for a recent increase in private lawsuits brought by unpaid interns.

One such case came up last year, when Charlie Rose and his production company agreed to pay as much as $250,000 to a class of interns.

Outten & Golden lawyer Rachel Bien represented plaintiff Lucy Bickerton in the lawsuit. She told The New York Times, “We are very pleased with this settlement, and hope that many former interns will come forward to claim the amounts they are due for their work.” The firm established a website to educate other interns about possible legal violations.

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