intern nametagExams are ending (have already ended at UM and MSU), students are moving out, and the season of the summer internships is upon us.

Internships allow young people the opportunity to have hands-on learning in a particular business which does not cost the intern granter money and adds experience to a student’s resume. While many employers want to mentor and provide this valuable experience, it is imperative that everybody educate themselves as to the rules regarding the usage of unpaid interns.

The federal Fair Labor Stands Act defines many of the regulations regarding what constitutes an internship and when it is fair to utilize an unpaid internship. However, contravening these rules means endangering your business and opening yourself up to litigation. The conditions set forth by the FLSA must exist for the intern to receive no money for their internship. If these conditions are not met, then the intern is an employee and the employer is required to properly compensate him or her. If the internship is with a non-profit agency or a governmental entity, the rules are loosened somewhat.

The six conditions for internship are:

  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;and
  6. The employer and the intern understand (preferably in writing) that the intern is not entitled to wages for the time spent in the internship.

It is easy to see from these rules where misunderstandings could occur. Under these strictures, it would be hard for an intern in many ways to do meaningful work without benefiting the company. Furthermore, limiting the intern’s workload would lessen the importance and value of the internship. On the other hand , young people seeking jobs encounter a tight job market, along with a plethora of unpaid internships, which hold the promise of obtaining experience, but at financial cost to the intern.

Several large companies have now ended their internship programs as a result of lawsuits that previous interns filed, claiming that they were actual unpaid employees, providing benefits to the company that far exceeded the educational benefits they accrued.

Providing internships is not impossible. It requires planning and written documentation. Preparation of intern agreements, as well as a written description of the internship program, complete with the education that will be provided and differentiating it from employment are all necessary for creating and managing an appropriate internship program. In addition, decisions about how interns should be supported and supervised should be clarified long before the first intern walks in the door.

As in all employment matters, discussing your internship program with an employment lawyer is a wise decision and could shield you from adverse litigation down the road.

 FLSA information on interns