Well, the Golden Globes were Sunday night and all of Hollywood tuned it to celebrate the best of film and television. One movie that was noticeably absent from the nominations (at least in my opinion) was The Intern, a heartwarming film starring Robert DeNiro and Anne Hathaway, that tells the story of a lovable retiree who interns at an e-commerce fashion company when its CEO agrees to participate in a community outreach program that places senior citizens in internships. Although the movie highlights the benefit of internships (both for the intern and the company), in recent years the U.S. Department of Labor (DOL) has taken a dim view of companies that use unpaid interns to augment their workforce.

Approximately half a million Americans hold unpaid internships every year, with about 40 percent of those working in the private sector for for-profit companies. Under the Fair Labor Standards Act (FLSA), the DOL (and courts) consider six criteria for determining whether an internship can be unpaid:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in an educational environment;
  2. The internship experience is for the intern’s benefit;
  3. The intern does not displace regular employees but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the intern’s activities, and on occasion its operations may actually be impeded;
  5. The intern isn’t necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern isn’t entitled to wages for the time spent in the internship.

The DOL has found a violation when only one or two of the six factors are met, while courts usually weigh the factors more evenly. As a general rule of thumb, however, the more an internship is used to benefit the employer, and the employee performs productive work, the more likely it is that the intern is an employee and therefore entitled to be paid properly. Conversely, the more an unpaid internship program is structured around a classroom or academic experience (instead of the employer’s actual operations), the less likely the internship will be viewed as employment.

The bottom line is that if you are a for-profit employer and have unpaid interns, there is a very good chance you may be violating the FLSA. To be on the safe side, you should talk to an employment attorney about your company’s internship program or pay the interns at least minimum wage (plus overtime for any hours worked over 40 in a workweek). Oh, and while you’re at it, go see The Intern. It’s a great movie!