Should You Be Paying Your Summer Interns?

To many of us, summer means vacations, backyard barbeques and afternoons at the local swimming pool. For many businesses, summer means summer interns. Students who are eager to gain professional experience and looking for resume builders as they start out their careers are often eager to accept any sort of summer internship position, even if it is unpaid. Many businesses see summer interns as an opportunity to get more work done for little money (or even no money).

Unfortunately, the rules surrounding whether or not interns must be paid continue to grow murky. Although the U.S. Department of Labor issued guidance in April 2010, the criteria may be changing as the Second Circuit recently declined to defer to the U.S. DOL’s 6-factor test in ruling on Glatt v. Fox Search Light Pictures, Inc., a case involving unpaid interns on the set of the movie Black Swan who allege they should have been paid for their work.

Instead, the Second Circuit determined that the following factors should be considered:

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands‐on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

The Court stated that no one factor was determinative and instead the factors should be balanced. Further, the list is not exhaustive and additional factors may be considered. The primary question to be answered is whether the intern or the employer is the primary beneficiary of the relationship.

So what does this mean for your business? How can you avoid a lawsuit if you can’t afford to pay your interns?

One great way to help ensure you are not violating labor laws by hiring unpaid interns is to participate in programs that allow your interns to get college credit for their internship.

Another good approach is to have an internship agreement where it is made clear to the intern that there is no expectation of full-time employment at the end of the internship and that no compensation of any kind will be provided.

Providing mentoring and coaching, in addition to the internship, is another great way to help ensure the internship provides strong benefits to the intern.

Unfortunately, there’s no way to be 100% percent certain to avoid a wage claims if you are hiring unpaid interns. However, there are many possibilities for tailoring your internships so that you can minimize the risk to your business.