DOL Eyeing Employers' Internship Programs
HR Advisor feature article | July 2010
Continuing to face a slow economy, many small businesses have tightened their budgets while many students (as well as individuals considering new careers) may look towards internships to gain experience for little or no pay.
The U.S. Department of Labor (DOL), however, has been increasing its wage and hour enforcement efforts and is expected to do more so this summer. Last April, the DOL issued new regulations to remind employers of the difference between interns and employees (who are unlawfully not being paid). Simply put, employers cannot avoid the requirements of federal law by simply labeling employees as “interns” or “trainees” to minimize costs.
To discourage employers from taking advantage of inappropriately classifying interns, the DOL has set 6 criteria to qualify a job position as a legitimate unpaid internship. They point out that an internship should (1) offer training similar to that in an educational environment, (2) benefit the intern, (3) not displace your regular employees, (4) provide no immediate benefit to the employer, (5) not necessarily entitle the intern to a paid position, and (6) set clear expectations that the internship is of an educational nature and that the intern is not to be paid. That said, not all six factors must be completely met in order for the individual to be considered an intern or trainee. Still, the experience should reflect a true learning / training experience as opposed to a job. For more information, please refer to the "Employee vs. Intern" Guide under the Essentials section of this HR Support Center.
In addition, to help determine further whether or not you have a valid and properly classified internship position, consider the following questions:
- Is the work a key part of the individual’s course of study?
- Does the individual receive educational credit for the work?
- Do you have written documentation stating that the internship is approved/sponsored by the school as educationally relevant?
- Does the individual get the opportunity to learn a skill, process, or other business function?
- Does the individual work for the purpose of learning and not solely performing a task for the employer?
- Does one of your staff members supervise the individual?
- Does the individual provide any benefit to you less than 50 percent of the time?
- Does the individual understand that a job is not guaranteed upon completion of the internship?
The more you can answer "yes" to the above questions, the more likely you are in compliance with having a properly classified intern, and the less likely the DOL will have a case against your business that the individual should be owed wages and overtime. So, if your company is considering some form of internship opportunity, keep the following general points in mind:
- Develop a clear program that fits the specific needs of the business and of the intern.
- Make sure Day One defines the role and expectations of the intern.
- Consult with an HR Professional for compliance of your company’s internship programs.