Dear Workforce How Do New Regulations on Internship Affect Our For-Profit Organization

Dear Proceeding With Caution:

Your question is a timely one, as the Labor Department is stepping up its enforcement efforts concerning student intern programs. Although media reports may focus on the use of unpaid interns at large, for-profit companies, the regulations in this area apply to all employers—whether for-profit or not-for-profit companies. The purpose of the regulations is to ensure that employers are not using the “intern” label to avoid paying their workers the minimum wage and overtime.

The Labor Department applies a six-part test to determine whether an intern program is exempt from the minimum wage and overtime requirements of the wage-and-hour laws. To pass that test, you need to understand what a qualifying intern program is, and just as important, what a qualifying program is not. A student intern program is not a source of free or low-paid labor for your organization. If the intern is doing the same type of work that a paid employee would have been performing, then your program is unlikely to pass the test. For example, if the intern is spending all or most of his or her time answering phones, opening mail, making copies and performing other administrative tasks, this probably would result in a finding that the intern is an employee.

A qualifying intern program primarily should be about providing an educational benefit for the intern. Although the intern can perform tasks for your company, it should be in the context of offering training in your field or industry. Factors the regulators will look for include whether you are allowing the intern to shadow one of your employees (to learn more about your organization or your field generally), and whether you are providing your interns with periodic seminars and/or training for their benefit. In this regard, it is helpful, although not essential, if the intern is receiving course credit from a school for the internship experience. You should know, however, that course credit alone will not be enough if the internship is not of educational benefit to the intern.

Finally, your organization should spell out in writing what its internship program consists of, with an emphasis upon the educational benefit to the participants. The writing also should make clear that the internship is unpaid; it could, perhaps, include a stipend to cover certain expenses.

If you keep the above concepts in mind and adhere to them, it will go a long way toward ensuring that your internship program qualifies under the federal test. Please be aware, however, that states are free to impose even stricter regulations, and these may vary from state to state. Seek the advice of a knowledgeable employment attorney as you review your intern program.

SOURCE: Joel W. Rice, Fisher & Phillips, Chicago, July 12, 2010

LEARN MORE: Please read about the DOL internship regulations in greater detail.

Workforce Management Online, October 2010 — Register Now!

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.