We reported in 2010 about the U.S. Department of Labor guidelines on when "unpaid" interns had to be paid wages. Although employers have a fairly demanding standard to meet if they want to avoid payment, a decision earlier this year from the U.S. Court of Appeals for the Eleventh Circuit shows that it's not hopeless.
Essentially, if the interns are more or less worthless to your company, then you may not have to pay them.
In Kaplan v. Code Blue Billing & Coding, Inc., the court held that students doing unpaid "externships" met all six of the DOL's criteria for being "non-employees" and therefore were not entitled to wages under the Fair Labor Standards Act.
The students were in a medical billing and coding program and were required to complete the externships to graduate. The employers presented evidence that the students were not helpful to their operations and, to the contrary, actually caused the employers' regular employees to take time away from their normal duties, causing their "businesses to run less efficiently" and causing "at least some duplication of effort." This, coupled with the fact that the students received the benefit of "hands-on" work experience and the ability to graduate, meant that the students were not "employees."
Retailers using unpaid interns should make sure that they meet the six criteria in the DOL guidance, including a clear understanding that the interns are not going to be paid and are not entitled to a job when they complete the internships.