Intern Arrangements Under Federal Scrutiny

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Employers should be aware that the U.S. Department of Labor (DOL) is carefully scrutinizing unpaid intern policies of companies that might be taking advantage of extremely high unemployment among 20 to 24 year olds.

According to Nancy J. Leppink, the acting director of the DOL’s Wage and Hour Division, “If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t many circumstances which allow for unpaid internships and still be in compliance with the law.

Non-profit organizations can continue to utilize unpaid interns without any fear of breaking the law; however, for-profit companies can be cited and forced to pay significant penalties if their unpaid intern policies don’t comply with a six-step test from the Department’s Wage and Hour Division.

  • The training, even though it includes actual operation of the facilities of the employer, is similar to what a student would learn in a vocational school or academic educational instruction.
  • The training is for the benefit of the trainees (rather than the employer).
  • Trainees do not displace regular employees, but work under their close observation.
  • The employer that provides the training receives no immediate advantage from the activities of the interns, and, on occasion, the employer’s operations may actually be impeded.
  • Interns are not necessarily entitled to a job at the conclusion of the training period.
  • Employers and trainees understand that the trainees are not entitled to wages for their training.

Employers should consider talking with their attorneys about DOL’s new perspective on this issue. It is also a smart strategy to create an internship agreement that includes all these details and make it a section in employee handbooks.

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