With summer around the corner, the labor market is about to be flooded by students looking for internships to gain some hands-on experience in their chosen fields. Internships can be a great experience for both interns and employers; however, employers should look closely at the nature of the work an intern will do before advertising an unpaid internship.
This is because the Fair Labor Standards Act (FLSA) requires employers to compensate anyone they “employ,” and the FLSA defines term “employ” very broadly – namely, to “suffer or permit to work.” Lawsuits by interns alleging their employers violated the Fair Labor Standards Act (FLSA) are on the rise. This trend is due largely to the U.S. Department of Labor’s issuance in 2010 of Fact Sheet #71, which lays out the six factors that an unpaid internship should meet, based on a 1947 U.S. Supreme Court case. At least three recent court cases (Glatt v. Fox, Pfunk v. Cohere, and Grant v. Warner Music Group) have used the DOL’s six factors to find that unpaid interns should have been paid.
No Maine court has ruled on the issue of when an intern must be paid. However, based on U.S. Supreme Court precedent, the DOL’s guidance, and the increase in lawsuits by interns, a business should try to meet as many of the following six factors as possible, if not all of them. As the DOL guidance explains, if all six factors are met, no employment relationship will be found, and a business may safely take on an unpaid intern:
1. Is the internship – even though it involves the actual operations of the employer’s facilities – similar to training which would be given in a vocational school or academic setting?
Unpaid internships should provide something beyond on-the-job training that typical employees receive, and the intern should learn new skills aside from those specific to the organization.
2. Is the internship experience for the benefit of the intern?
The more centered around education and vocational training the internship, the less likely an employment relationship will be found.
3. Does the intern work under close supervision of other employees, without doing their work for them?
The unpaid intern should not perform tasks that paid employees would perform if not for the intern’s presence, and should work under close supervision.
4. Does the employer gain no immediate advantage from the intern’s work, and on occasion are its operations actually impeded?
The intern’s work should not directly benefit the business, and on the contrary, the time required to educate and train the intern may even hinder employees in their work.
5. Is the intern not necessarily entitled to a job at the end of the internship?
This factor suggests that unpaid “tryouts” for a job should be avoided.
6. Do the employer and the intern understand that the intern is not entitled to pay?
Both intern and employer should agree that the internship will be unpaid.
The DOL explains that these factors should be considered based on the whole picture; so it may be possible to have an unpaid internship that doesn’t meet all six factors. However, if an internship doesn’t meet all of the factors, it becomes more likely that a court would find the intern is an employee who should be paid. In the event you are sure your internship meets the requirements, it may be a good idea to draft an internship agreement that spells out why – and a plan for how – each of the six factors will be met, and to ensure employees stick to that plan.
If you have any questions about this subject, feel free to contact the attorneys at Tucker Law Group.