The end of school and the start of summer can provide students a rare opportunity to experience life in the workplace. Many students have traded summer jobs like lifeguard or ice cream scooper for more educational experiences, like internships. The idea of having a young man or woman around your workplace to learn the operation may sound attractive, but companies need to beware of possible implications under the federal Fair Labor Standards Act.
Several industries have been hit with recent lawsuits by interns claiming they were misclassified. These interns claim they were actually employees, subject to minimum wage and overtime restrictions. Although the vast majority of internships would never lead to litigation, all businesses should evaluate their programs to ensure they comply with the applicable federal law.
The U.S. Department of Labor identifies six criteria that will be applied in deciding whether an individual should be classified as an employee or an unpaid intern. First, is the internship similar to training which would be given in an educational environment? Second, is the internship experience primarily for the benefit of the intern? Third, does the intern replace regular employees? Fourth, does the employer obtain any immediate advantage from the activities of the intern? Fifth, is the intern entitled to a job at the conclusion of the internship? Sixth, do both the company and intern understand that the intern is not entitled to wages as part of the internship?
The Second Circuit, one of the most prominent federal courts in the country, recently considered these issues in a case brought by interns of the Fox Searchlight movie production company. The Court concluded that the key question is whether the intern or the employer is the primary beneficiary of the relationship.
If your company cannot answer that question with an emphatic answer that the intern is the beneficiary, it may be time to reevaluate your internship program.