Intern or Employee? Legal issues

Dear Ask Harriete,

I've been thinking about finding an intern to help me with my small business. They could get valuable experience.  However, are there any legal restrictions or implications?  Can you help?
Signed,

Internship in need

 

Windows of Memory
Installation Dimensions:
75"height x 108"width x 19" depth
Photo Credit: Philip Cohen

 Dear Internship,

With this slow economy, many students and people are looking for a new career and may be looking for internships to gain experience in a particular field.  Many people, especially students, may be willing to work for little or no money to gain such experience. The flip side is that many small businesses (such as artists and craftspeople) may consider having an intern because they don't have a budget for hiring an employee.

The issue boils down to a simple principle;  An intern is not free labor.   An internship must be a learning experience for the intern.

Quoting Jay Zweig, a labor lawyer at Bryan Cave in Phoenix, AZ;  "An internship, to be unpaid and legal, needs primarily to be a learning experience for the intern and not something where the intern is expected to produce work product that is going to benefit the employer."  Continuing, Zweig said. "All it takes is one disgruntled intern, or their parent or spouse or friend , to call the U.S.Department of Labor, and the company who follows this type of exploitative advice is toast," he said.   "The government is becoming increasingly aggressive in hunting down these situation.”

“The bottom line: You can’t just call people interns to avoid paying them..”.

The U.S. Department of Labor (DOL) has developed six criteria for differentiating between an employee entitled to minimum wage or above and a learner/trainee who may be unpaid. The criteria for learner/trainee are:

   1. The training, even though it includes actual operations of the facilities of the employers, is similar to that which would be given in a vocational school.
   2. The training is for the benefit of the student.
   3. The student does not displace a regular employee but works under the close observation of a regular employee or supervisor.
   4. The employer provides the training and derives no immediate advantage from the activities of the student; and on occasion, the operations may actually be impeded by the training.
   5. The student is not necessarily entitled to a job at the conclusion of the training period.
   6. The employer and the student understand that the student is not entitled to wages for the time spent training.

Not all six factors have to be present in order for the individual to be considered a trainee. The experience, however, should look more like a training/learning experience than a job.

 

Windows of Memory (close-up view)
Photo Credit: Philip Cohen

Employers often question the fourth criterion -- that the employer derives no immediate benefit from the student's activities. This seems to contradict the contemporary practice of the use of internships by employers and colleges. To make the experience educationally valid, the same way that a student working in a college laboratory is expected to become actively involved in the work at hand, an intern is expected to participate actively in the work of the company. Several DOL rulings, while not directly addressing the criterion, seem to suggest that as long as the internship is a prescribed part of the curriculum, is part of the school's educational process, and is predominately for the benefit of the student, the fact that the employer receives some benefit for the student's services does not make the student an employee for purposes of wage and hour law.

For a valid internship position, you should be able to answer "yes" to at least half the following questions if an unpaid internship is being contemplated:

   1. Is the work that you are offering an integral part of the student's course of study?
   2. Will the student receive credit for the work or is the internship required for graduation?
   3. Does the student have to prepare a report of his/her experience and submit it to a faculty supervisor?
   4. Have you received a letter or some other form of written documentation from the school stating that the internship is approved/sponsored by the school as educationally relevant?
   5. Will the student perform work that other employees also perform, with the student doing the work for the purpose of learning and not necessarily performing a task for the employer?
   6. Is the student working and providing benefit to you less than 50 percent of the time and/or is the student in a shadowing/learning mode?
   7. Will you provide an opportunity for the individual to learn a skill, process, or other business function, or operate equipment?
   8. Is there educational value to the work performed, that is, is it related to the courses the person is taking in school?
   9. Is the individual supervised by one of your staff members?
  10. Is it clear that a job is not guaranteed upon completion of the training or completion of the person's schooling?

Source: Rochelle K. Kaplan, Legal Counsel, National Association of Colleges and Employers, 62 Highland Ave., Bethlehem, PA

 

Windows of Memory (close-up view)
Photo Credit: Philip Cohen

I hope this is enough to answer your question.  I am an advocate of internship programs that provide a learning experience for people, young or old.  I believe that an internship is a situation in which you are giving at least as much, if not more than you are receiving.

For more information and personal perspective about internships, read the next two blog posts about internships. The first is about my experiences with my summer intern, Elliot Gaskin, and the second is Elliot's feedback about the internship.   

Harriete

This post was updated on December 23, 2021.