Thinking of Hiring Interns This Summer? Beware.
May 2010
(Livingston, NJ) The US Department of Labor (DOL) has released a new fact sheet providing guidance on Internship Programs under the Fair Labor Standards Act (FLSA). The fact sheet outlines six-criteria that must be applied when determining if an individual is an intern verses an employee in a “for-profit” private sector atmosphere. If all of the criteria are met, the employer may consider the individual an intern and there will be no requirement to pay minimum wage or overtime.
While the six-criteria listed in the fact-sheet are nothing new (they are rooted in a 1947 Supreme Court decision regarding trainees), the timing of the release, as we begin to enter into the summer months when employers typically begin to hire their interns, should serve as a warning to employers – unpaid internships are on the DOL’s enforcement radar. The acting director of the Wage and Hour Division, Nancy J. Leppink, recently told the New York Times, “If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law.”
The determination of whether an individual qualifies will depend on all of the facts and circumstances, but the criteria which must be applied are as follows:
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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;
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The internship experience is for the benefit of the intern;
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The intern does not displace regular employees, but works under close supervision of existing staff;
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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;
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The intern is not necessarily entitled to a job at the conclusion of the internship; and
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The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
“In short, the burden of having an intern should outweigh the benefit” says John Sarno, president of the Employers Association of New Jersey (EANJ). “The intern should not displace regular workers or be involved with performing productive work for the organization. The program should be arranged so that it serves as an extension of their educational experience and they should be receiving constant and ongoing supervision,” he says.
Non-profit and other charitable organizations have more flexibility with regards to interns because of the DOL’s position that individuals can donate their time and serve as a volunteer, usually on a part-time basis. However, the NJDOL has advised that current employees should not be serving as a volunteer to the agency to which they are employed.
Additionally, New Jersey employers also should be aware of NJ Wage and Hour requirements for interns. Interns in NJ must be part of a formal school-to-work program, whether they are working at a for-profit or a not-for-profit organization. While many of NJ’s criteria are similar to the federal listed above, there are some additions:
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The student shall be at least 16 years of age;
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The activity must be related to a formal school-to-work transition plan for a student learner;
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There is collaboration and planning between worksite staff and school staff resulting in clearly identified learning objectives related to the non-paid activities;
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Any productive work is incidental to achieving learning objectives;
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The student learner receives credit for time spent at the worksite and the student is expected to achieve the learning objectives;
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The student learner is supervised by a school official and a workplace mentor;
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The non-paid activity is of a limited duration, related to an educational purpose and there is no guarantee or expectation that the activity will result in employment; and
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The student learner does not replace an employee.
So while internships may appear at face value to be a mutually advantageous arrangement, there will be very limited circumstances where an employer can implement a program and not be responsible for paying the intern at least minimum wage and overtime.
