Beware of the unpaid intern trap! With fewer entry-level jobs in the economy, more companies are turning to unpaid interns to complete work. Recently, the Charlie Rose Show settled a class-action lawsuit, agreeing to pay back wages to its unpaid interns. The lead plaintiff claimed she worked 25 hours a week in the summer of 2007 and her duties included doing background research on guests, making press packets, escorting guests through the studio, and cleaning the green room.
For-profit companies can only legally hire unpaid interns if they meet six criteria set forth by the Fair Labor Standards Act. Some states have additional criteria as well. The U.S. Department of Labor, which has stepped up its enforcement efforts concerning unpaid interns, lays out the criteria for unpaid interns in a Fact Sheet:
- 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;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees, but works under close supervision of existing staff;
- 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;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
If the internship meets all six criteria, an employment relationship does not exist. Some employers take proactive steps to further evidence the “educational environment” of the internship, such as formalizing a mentor-mentee relationship or organizing educational lunches for unpaid interns. Other employers lay out the terms of the internship in a letter that includes the six criteria. What is your advice for clients with unpaid interns?