With this being the time of year, when college students and employers are considering internships, it is important for companies to do thorough planning before they start recruiting potential intern candidates. There are many criteria to consider and probably the two most critical Employers must ask are:
1) Can we provide meaningful work?
2) Are we going to compensate for the work done?
With more lawsuits are being filed by unpaid interns under the Fair Labor Standards Act (FLSA) arguing that they must be treated as employees and paid the minimum wage and overtime when applicable, Employers need to be prepared. So what planning steps should an employer take?
Understand What Interns Want
It is true student interns want to build their resume and demonstrate they have work experience. It is not just any work experience that will entice top talent and strong contributors. With the world of knowledge at our young people’s fingertips, they are well educated on what a solid internship program should include. Here are a few items to answer from the intern point of view:
1) Does the internship match my college major and career goals? (My purpose is to gain insights into my field.)
2) What will I learn about the industry in general or to improve my skills? Will I have the opportunity to actually do practical work versus “gopher” or “grunt” work for others in the office? (My goal is to learn and have real experience to take to my job after graduation.)
3) Who will I be working with? Will I be part of a team and have others to ask questions of? Will my boss be available to answer questions and provide guidance? (I do not want to be forgotten, left alone and not knowing what to do.)
4) Will there be a plan for the internship – how long, what hours, clear directions, expected outcomes, and an evaluation? (I want feedback; I like to know what I am doing right and what I did wrong.)
5) Are there any plusses for working for this Employer? (I will be working for an established, respected company. They will pay me for my internship. They offer company perks such as attendance at company events, access to seminars/webinars, free meals, half day every other Friday.)
Understand What the DOL Expects
The Department of Labor (DOL) has complied a Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act
This fact sheet provides informal guidance providing that an employment relationship (is the intern an employee and entitled to pay) does not exist if all of the following six criteria must are applied when making this determination:
- 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 all of the factors listed above are met, an employment relationship does not exist under the FLSA, and the Act’s minimum wage and overtime provisions do not apply to the intern. This exclusion from the definition of employment is necessarily quite narrow because the FLSA’s definition of “employ” is very broad.
Review What Courts are Ruling
With the definition of an employee under the FLSA as an “individual employed by an employer” as unhelpful and the existence of Employers who exploit unpaid interns by using their free labor without benefit of education or experience In deciding if an Intern should be paid, some clarity is being provided in the courts. In the case involving interns working for Fox Searchlight and Fox Entertainment Group on the film Black Swan, the court said the DOL’s six criteria listed above – requiring that all six criteria be present for a worker to be properly classified as an intern – was too rigid. The court said the proper question is “whether the intern or the employer is the primary beneficiary of the relationship.” In place of the DOL’s criteria, the court announced an alternative test governing unpaid internships: the “primary beneficiary” test. The topic becomes more complicated as the test is viewed as fitting awkwardly with the rest of the FLSA with the question of compensation being most important. You can learn more about the court rulings via this article published by the Harvard Law Review. The U.S. Supreme Court may ultimately have the final word on the future of unpaid internships in the private sector as titled in this Bloomberg article.
Take the time, to plan and document a solid program for Interns. Our recommendation is to invest in our youg people, pay your interns and provide them with a worthwhile experience. They will be a vocal reference for your Employer Brand, whether good or bad. Let’s make it good!