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June 4, 2012

What Are Some of the Legal Considerations for Summer Internships?

Filed under: General HR Buzz6:00 am

So you are hiring a summer intern.  You’ve gone through the due diligence of finding the right person and defining the program.  But what are some of the legal considerations you need to think about?

To avoid the risk of legal problems, there are several safeguards that need to be followed by employers sponsoring internships.  The problems surrounding the “hiring” of students or interns are increasing.  State and federal regulators are increasingly worried about employers illegally using free labor.  It’s believed that there is widespread, illegal use of students and the government is cracking down.

First, will this person be classified as an “employee”, a “student”, or an “intern”?  As you might expect, the line between an employee, student, or intern is not always clear.  Before acting, review federal and your state law.  Whether students are volunteers or actual employees (who must be paid) under the Fair Labor Standards Act (FLSA) depends upon the circumstances.  The FLSA acknowledges that there are some people who perform functions for an employer who are not employees and so need not be paid.

The federal Department of Labor (DOL) considers students not to be employees under the FLSA if all of the following are met:

1)     The training, although it might involve actual operations, is similar to training that might be found at a school.

2)     The training is for the benefit of the student.

3)     The student does not displace regular employees and works under close supervision of a regular employee.

4)     The employer receives no immediate advantage from the student and company operations may even be hampered.

5)     The student isn’t necessarily entitled to a job after the volunteer / training time.

6)     The employer and the student understand that he isn’t entitled to be paid during the training time.

While the courts certainly look to the DOL’s six factor test, they haven’t always found that all 6 must be met.  Instead they often focus on #2.  Who primarily benefits from the activities of the student/intern?  The issue is whether the student is exposed to his career field and has a chance for some practical experience.  It’s about opportunity for the student, not production for the organization.  It can’t be about free labor for an employer.  For more information, go to http://www.dol.gov/whd/regs/compliance/whdfs71.htm.

Obviously the shorter the internship, the less likely it would be viewed as an employment relationship.  Additionally, an individual could start out as an unpaid intern and over time, become an employee as he becomes more proficient and actually performs work duties. As with many things in HR, documentation can be helpful to clarify the student’s role, outline the tasks, and confirm that both parties understand that the internship is unpaid.

If a student doesn’t qualify as an unpaid intern is it possible that he could be considered an unpaid volunteer?  That’s not likely. Some states impose even stricter hurdles before a student can be unpaid.    The requirements are more stringent than many employers realize.  Therefore, when in doubt, pay the student at least minimum wage.  Remember also that if the student is a paid employee he must also be paid overtime, as applicable.  There aren’t many instances where a student could work for nothing at a for profit organization.  And…don’t forget to keep time records.

Other items you will want to review are your company’s liability insurance, health insurance, and workers’ compensation policies to determine whether they cover student interns.  Regardless if the individual is classified as an employee, student, or intern, they should receive appropriate safety training as required by the Occupational Safety and Health Act (OSHA).

Other information that is normally gathered for new employees, such as emergency contact information, should be completed by the intern. Check with your company’s HR and legal departments about the use of a formal, written internship agreement or the need for release forms.  Additionally, if any documents are supplied by the student’s college or university, they should be reviewed by the legal department.  HRN’s HR Suite has sample forms for internship applications, references, job description and other items.  Contact your HRN Client Services Specialist for more information.

In summary, a summer internship program can be a successful recruiting tool and benefit both the employer and the intern.  With an increasing number of audits being conducted by the Wage and Hour Department, please take into consideration the items listed above to ensure a successful, compliant program.

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