With Memorial Day weekend, the unofficial start to summer, just a few weeks away, employers may be preparing to welcome summer interns into the workplace. What are the legal requirements that may impact the hiring or engagement of summer interns? What training and new hire obligations may exist? And how might employers define the goals and strategy for their particular internship program? These are key questions employers should be […]
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With Memorial Day weekend, the unofficial start to summer, just a few weeks away, employers may be preparing to welcome summer interns into the workplace.
What are the legal requirements that may impact the hiring or engagement of summer interns? What training and new hire obligations may exist? And how might employers define the goals and strategy for their particular internship program?
These are key questions employers should be asking. Here are some answers.
First, companies should clarify whether interns are paid, meaning they are employed by the company, or unpaid, similar to volunteers. As most employers know, under federal law and many state laws, non-exempt employees must be paid minimum wage for all hours worked, and overtime for all hours worked over 40 hours in a workweek.
Individuals employed by for-profit companies generally must be paid and cannot waive their right to receive legally-required wages.
Employees who are hired as paid interns for the summer, or for a brief period of time, can be classified the same as “employees” for purposes of applicable laws, but the position can be referred to as an “intern” position.
That being said, individuals who have a relationship with a company, wherein they are the “primary beneficiary” of the relationship, can be characterized as unpaid interns rather than employees.
Under federal law, courts examine the “economic reality” of the relationship between an intern and a for-profit employer in determining which party is the primary beneficiary.
Courts consider a number of factors in this determination, including the extent to which:
- The intern and employer clearly understand there is no expectation of compensation;
- The internship provides training similar to that which would be given in an educational environment;
- The internship is tied to the intern’s formal education program by integrated coursework, or receipt of academic credit;
- The internship accommodates the intern’s academic commitment by corresponding to the academic calendar;
- The internship’s duration is limited to the period in which it provides the intern with beneficiary learning;
- The intern’s work complements (rather than displaces) the work of paid employees, while providing significant educational benefits to the intern;
- The intern and employer understand there is no entitlement to a paid job at the internship’s conclusion.
No single factor is determinative, but this analysis should be conducted thoroughly before individuals are classified as “unpaid interns.” The risk of misclassification can be significant and involve payment of all back pay that may be owed, among other monies, fines or penalties.
Second, employers should keep in mind that they are required to follow all applicable employment laws for employees, including paid interns, and any laws that may impact unpaid interns.
This includes ensuring paid interns complete new-hire paperwork, are paid properly, record their time worked if they are non-exempt, receive any legally-required training (e.g., sexual harassment prevention training), understand the policies and expectations of the company, among other requirements.
This also means that supervisors and managers should understand how individuals are classified and the impact that this classification may have on their employment or engagement with the company.
Lastly, when creating an internship program, consider what the objectives are and how the work given to interns aligns with the company or department’s goals.
For example, a company may implement an internship program as an employment pipeline, with the internship serving as a trial period, or it may view the internship program as a means to connect with the community.
Regardless of the strategy, it is important to have a well-managed internship program that supports the company’s particular initiative or goal and is consistent with applicable employment laws.
Abby Warren is a partner and Sapna Jain is an associate in law firm Robinson+Cole’s labor and employment group.
