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Is Your Business’s Internship Program Legal?

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As summer approaches, you may be considering offering internships to high school or college students. While interns can be great part-time staff additions for a variety of reasons, before you go through the interviewing process, you should know that several states have begun investigating unpaid internship programs for potential violations of U.S. Department of Labor guidelines.

The New York Times reports that California and Oregon are among the states cracking down on internship programs that run afoul of minimum wage laws; some employers have even received fines.

Why the crackdown now? Recent economic conditions see employers trying to cut costs in many ways, and one method, unfortunately, may be hiring unpaid labor — which is perfectly legal in some instances.

In order to determine whether an internship program is legal under federal law, the U.S. Department of Labor’s Wage and Hour Division considers the following factors:

1.    The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational instruction;
2.    The training is for the benefit of the trainees;
3.    The trainees do not displace regular employees, but work under their close observation;
4.    The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded;
5.    The trainees are not necessarily entitled to a job at the conclusion of the training period; and
6.    The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

If an employer’s internship program fails to meet these requirements, it is considered in violation of the Fair Labor Standards Act, and the employer can be punished by the federal government.

Nancy J. Leppink, Acting Director of the Wage and Hour Division, stated the situation quite plainly in the NY Times piece: “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.”

Be sure to analyze your internship program carefully!

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April 6th, 2010 at 11:35 am