Hidden costs of interns
Summertime at the workplace is usually marked by the arrival of eager students willing to work for free in exchange for valuable hands-on work experience and maybe future job references. The offer is enticing, but employers should think carefully. It could cost in the long run.
Here’s why: Structure that position incorrectly, and that unpaid intern can claim she was really an employee who should have been paid at least minimum wage under the Fair Labor Standards Act, or FLSA, and was entitled to overtime. While the FLSA does not cover individuals who work without promise of expectation of compensation, but solely for their personal purpose or pleasure, it does provide protection to workers engaged in an employer-employee relationship. Determining whether a worker is an intern or actually an employee can be complex and depends on the economic realities.
True interns are not employees. The Department of Labor has said students involved in education or training programs are not employees if they are gaining practical work experience and are substantially supervised. Put even more clearly, interns are more likely not to be deemed employees where the purpose of the internship is not to perform productive work.
In situations where interns are not part of a properly supervised learning experience, the likelihood rises that they will be considered by the DOL to be an employee of the company. This will be especially true in cases where an intern is asked to perform the work of paid employees, whether to fill in gaps in the workforce or to prevent a regular employee from working overtime.
Essentially, a true internship is for the intern’s benefit, and the intern understands he or she is not entitled to wages for the internship. Where the employer benefits more from the worker’s labor, that intern is actually an employee entitled to compensation.
While the FLSA protects the worker, it also protects the public interest by preventing workers from being exploited. So before you think of asking your unpaid intern who is performing the work of an employee to waive his right to compensation, think again. The courts won’t allow it.
The number of FLSA lawsuits has been increasing in recent years. Don’t find yourself on the wrong side of one.