U.S. Department Of Labor Adopts New Wage & Hour Rules Applicable To Interns

Students looking to explore a career interest or to gain experience have long been willing to provide their services as unpaid interns in situations in which the students either cannot locate a paid position or are able to make financial ends meet while working in an unpaid position. In recent years, prospective employers have begun to regard internships as a “must” on a resume, placing more pressure on students to accept internships. The benefit to the business offering the internship has been that an eager worker has arrived on the scene to perform whatever services are requested – usually without complaint. As a consequence, interns have begun to be viewed by some as an unpaid labor force rather than as people who are in the workplace to explore a particular profession. During the current recession, internships have been particularly attractive to businesses because of the temptation to use a “free” intern to perform services that the business would otherwise have to pay an employee to perform.

Recognizing the potential for exploitation, in April 2010 the U.S. Department of Labor’s Wage & Hour Division issued guidelines regarding the use of interns by “for profit” businesses. (The Wage & Hour Division is still evaluating potential rules governing the use of interns in the public and non-profit sectors. A future article will address these rules once they are published.)
To be classified as an unpaid intern, the intern must accept the position primarily for his or her own educational benefit, in essence treating the internship as a course of study. The business must regard the internship as one primarily designed to provide training to the intern, and not for the financial benefit of the business. Regular employees must not be displaced by the intern; the internship should be for an agreed length of time; and there must be no promise that the intern will be offered paid employment with the business at the end of the internship. At the beginning of the internship, the business and the intern must agree that the intern will not be entitled to the payment of wages during the internship.

In practice, these criteria require that the intern either participate in the internship as part of a course of study – perhaps for college credit – or actually be paid at least minimum wage (including overtime when earned) for the services provided during the internship.

The analysis set forth in this article is provided for general understanding only and should not be considered legal advice. Counsel should always be consulted for advice regarding a specific situation.

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