Legal Issues Surrounding Unpaid Internships

Unpaid internships provide students with the opportunity to explore their chosen career paths and gain job experience to include in their resumes. Internships also provide networking and mentoring opportunities. On the employer side, interns can help with work tasks and provide employers the ability to screen potential future employees. However, this mutually beneficial arrangement is not without its drawbacks.

Unpaid Internships and Lawsuits

Lawsuits have been filed by unpaid interns against former purported employers, highlighting the importance of understanding the legal requirements of unpaid internship programs. If the intern is incorrectly classified, and should be classified as an employee, the employer may be sued.

Federal Law

The Fair Labor Standards Act (FLSA) requires employees to be paid at least minimum wage, with overtime paid for hours worked in excess of 40 hours per week. Unpaid internships fall within a limited exception to the employee wage requirement but must comply with the Department of Labor’s criteria:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is intended to benefit the intern;
3. The intern does not displace regular employees and 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 that the intern is not entitled to wages for the time spent in the internship.

State Law

Employers must also comply with state wage laws. If a state uses additional criteria to determine whether an intern is an employee, the intern is entitled to any additional benefits or protections provided by the state law. New Jersey, for example, requires the unpaid intern’s training to be in a cognizable skill that will be applicable in other job contexts.

Legal Challenges of an Unpaid Internship Program

To avoid lawsuits concerning misclassification of unpaid interns which claim they should have been classified as employees, employers should follow the criteria in the federal and state statutes.

Employers should partner with colleges to structure internships, provide supervision, and offer college credit and oversight. That will help ensure that the internship tracks the educational environment and is for the benefit of the intern. The activities performed by the unpaid intern should not benefit the employer.

When bringing an unpaid intern into the company, employers should ensure that no paid employee is displaced and that existing staff members supervise the intern.

It is important to ensure the intern knows he or she will not receive any wages during the course of the internship. In addition, employers should consider requiring unpaid interns to sign an acknowledgement that the internship is not a gateway to a full-time job.

Perhaps the safest approach to avoid legal challenges is to pay minimum wage to interns. However, not every company can afford to offer paid internships. If a company wants to offer unpaid internships, it should be sure to follow the FLSA criteria as well as state wage and hour laws.

Red Bank Employment Lawyers at McOmber McOmber & Luber, P.C. Offer Experienced Guidance on Classification of Employees

If you have questions about your unpaid internship program, our experienced Red Bank employment lawyers are prepared to help. Contact us at McOmber McOmber & Luber, P.C. by calling our Red Bank office at 732-842-6500, our Marlton office at 856-985-9800, our Newark office at 973-878-9040, or by reaching out online.