Posted by Melissa Fleischer, Esq. on May 2nd 2014

As summer approaches, you may be wondering whether your organization should hire an unpaid intern this summer. Sounds like a great idea. You get top notch talent at no cost. But beware of what this means for your organization with regard to potential legal liability. Most employers are unaware of the strict requirements under the Fair Labor Standards Act for using unpaid summer interns. The Fair Labor Standards Act, (“FLSA”) only applies to actual employees, not volunteers or interns. However, to qualify as an actual intern and not make it look like you are really hiring an employee and attempting to avoid payment of minimum wages and overtime, you must follow the strict requirements set forth in the Department of Labor regulations for compliance with the FLSA. These regulations make it clear that only individuals that meet this six-part test will be considered to be unpaid interns and for these individuals employers do not have to comply with the FLSA requirements for actual “employees” such as payment of minimum wage and overtime. In order to be considered an intern, an individual usually must meet all the factors set forth in the Department of Labor’s 6-part test, which are:

  • 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
  • The internship experience is for the benefit of the intern
  • The intern does not displace regular employees, but works under close supervision of existing staff
  • 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
  • The intern is not necessarily entitled to a job at the conclusion of the internship
  •   The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship

Each and every one of these requirements must be satisfied and proven in order for the Department of Labor to consider the worker to actually constitute an unpaid intern. Many employers are unaware of these regulations. Such was the case for Fox Searchlight Pictures who allegedly used unpaid interns on the movie set for the movie “Black Swan”. In this case, some student interns on the set of the movie brought a lawsuit against the producer of “Black Swan”, Fox Searchlight Pictures, alleging that they were not actually interns because they were not provided with the type of educational opportunities that an internship should have provided. They also alleged that they functioned as actual production assistants and bookkeepers and performed secretarial and janitorial work that benefited Fox Searchlight in violation of the requirement that the internship be primarily for the intern’s benefit and not be for the benefit of the employer. These interns claimed they should have been paid because they had to perform jobs that were not related to their internship such as getting coffee for people and cleaning up food for others. The court in New York agreed with the interns and held that Fox Searchlight Pictures violated the rule for interns that requires that an employer not receive any immediate advantage from the activities of the trainees or students since acting as a gofer who gets coffee and food for employees is a benefit for the employer. So clearly if you are using unpaid interns, make sure that you do not use them as gofers to get coffee and food and make sure that you are not receiving any immediate benefit from having them work for you. Basically, they should not be doing any work that benefits the employer such as janitorial work, getting food and coffee for people, filing, answering phones, etc.

Remember that if the interns are doing work normally performed by other employees and receive little supervision or training, or if the employer gets an immediate benefit from the interns work, they should be classified as employees and not interns. If they are not, the Department of Labor could allege that they should have been paid minimum wages for all the time they worked for you as well as overtime for all hours over 40. Remember that if you use interns, you should train your managers so that they understand that interns should not be going to get coffee for others and that they need to make sure that what they ask interns to do is in conformance with the Department of Labor rules. So yes, you can lawfully use unpaid interns this summer. But if you are not able to structure their internship in accordance with all the requirements set forth in the Department of Labor regulations, you would be better off hiring them as employees and ensuring compliance with the FLSA requirements of paying them minimum wage and overtime.