Day 4: Finally Settling The Need To Pay “Unpaid” Interns?

Each day this week, we will “unwrap” one of five pressing employment law issues on the 2014 horizon for New York state and city employers. Previously, we covered the minimum wage hikenew city laws, and administrative updates. Today’s topic is the need to pay “unpaid” interns.

Later in 2014, the Second Circuit Court of Appeals will rule on dueling appeals regarding the use of unpaid interns in the workplace and what circumstances, if any, require employers to pay interns. In ruling, the Second Circuit should clarify whether and how much deference should be given to United States Department of Labor (DOL) regulations governing intern classification. According to the DOL, an intern must be classified as an employee unless the employment relationship meets each of the following six criteria: (1) the internship is similar to training given in an educational environment; (2) the internship experience is for the benefit of the intern; (3) the intern does not displace regular employees; (4) the employer derives no immediate advantage from the intern’s activities; (5) the intern is not necessarily entitled to a job at the conclusion of the internship; and (6) the employer and the intern understand that the intern is not entitled to wages.

The Second Circuit’s highly anticipated ruling should significantly impact the future structure and use of internship programs. Prudent employers, with counsel, need to examine the current DOL regulations to best ensure that their internships, both in policy and practice, satisfy the DOL requirements, and retool, as necessary, after the Second Circuit’s impending ruling.