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Can I “hire” an unpaid intern for my business?

I teach as an adjunct faculty member at the William & Mary Law School. I find this part-time teaching gig very stimulating intellectually because the law students at W&M are extremely intelligent, diligent, and driven. This past week a new class of first-year law students arrived with great expectations about their futures. The reality of the job market, though, is that the legal profession has not been immune from the effects of this difficult economy.

Some of my second-year law students have also arrived back into Williamsburg, and I have been surprised at the number of students who report they worked as an “unpaid intern.” Although this practice is permissible in certain situations, these working arrangements with private law firms probably violates federal labor laws, and it is particularly distressing that it occurs in the practice of law. This blog post provides some guidance for your small business when deciding whether to “hire” an unpaid intern.

The U.S. Department of Labor issued Fact Sheet #71 that provides a list of criteria that must be met in order for an internship to be unpaid and for the unpaid internship to comply with the Fair Labor Standards Act. These criteria only apply to “for profit” operations. Governmental organizations and not-for-profit entities are generally exempt from this analysis.

  • The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
  • The training is for the benefit of the trainee;
  • The trainees do not displace regular employees, but work under close observation;
  • 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;
  • The trainees are not necessarily entitled to a job at the completion of the training period; and
  • The employer and the trainee understand that the trainees are not entitled to wages for the time spent in training.

Therefore, if a student receives academic credit for their work, “the more likely the internship will be viewed as an extension of the individual’s educational experience” and an unpaid internship would be appropriate. Similarly, an unpaid internship would be appropriate if the business does not depend upon the unpaid intern who simply “shadows” the employer but does not regularly perform the organization’s routine work (like answering phones or filing).

Conversely, “if the interns are engaged in the operations of the employer or are performing productive work (for example, filing, performing other clerical work, or assisting customers), then the fact that they may be receiving some benefits in the form of a new skill or improved work habits will not exclude them from the Fair Labor Standards Act minimum wage and overtime requirements because the employer benefits from the unpaid intern’s work.”

In the legal field, this analysis is pretty straightforward. Generally speaking, law student “Interns” are given productive work to perform, such as legal research projects and document drafting, that benefits the law firm and the law firm’s clients. Regardless that the unpaid intern is learning new skills, this employment situation probably violates the FLSA.

Understandably, students are not willing to rock the boat. In a difficult economy, these hard-working “professionals-in-training” are willing to gain experience even if it means giving away their services. If you are concerned whether your small business is violating the FLSA by “employing” an unpaid intern, contact your business attorney to help you review the facts and provide you with guidance. Otherwise, you put yourself at risk for paying past wages, overtime pay, and other damages.

Tarley Robinson, PLC, Attorneys and Counsellors at Law

Williamsburg, Virginia

John Tarley

John Tarley

John Tarley

John Tarley

John is the firm's managing partner and chairs the firm's small business, zoning, and litigation practice areas.

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Filed under: Business Planning, Employment law, John Tarley, Merger & Acquisition, State & Federal Litigation by John Tarley

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