Do Companies Have To Register Unpaid Employees

Schoolhouse is back in session, and students may be seeking internships to supplement their classroom learning. So now is a skilful time for employers to review their internship programs—particularly since the U.Southward. Department of Labor (DOL) adopted new rules this year. Here are some tips for creating a solid programme.

1. Assign Meaningful Tasks

Under the Fair Labor Standards Act (FLSA), businesses must pay employees at to the lowest degree the minimum wage unless their job duties fall under i of several exceptions to the rule. That means businesses tin lawfully hire unpaid interns only if the internship meets sure criteria.

Earlier this year, the DOL replaced its rigid six-factor test with a seven-gene "primary-beneficiary test" for determining whether interns are employees. The new test is considered more flexible because not all seven criteria have to be met for an internship to exist unpaid. Rather, the DOL volition consider the "totality of the circumstances."

Despite the change, unpaid internship programs still must primarily benefit the intern. Consider whether the tangible and intangible benefits to the intern are greater than the intern's contribution to the employer'south operation, said Donald Lawless, an attorney with Barnes & Thornburg in 1000 Rapids, Mich. "Is the intern practicing a skill in a professional environs, or is the employer taking advantage of unpaid labor?"

2. Coordinate with a School Program

An unpaid intern doesn't have to receive school credit, but this is one factor that the DOL and courts volition generally consider when determining the legality of the program. "Bookish approving minimizes the run a risk," Lawless explained. He noted, however, that the content of the program is essential.

[SHRM members-only toolkit: Employing Interns ]

Working with an educational institution can be particularly beneficial because the school will probable have a list of internship content criteria and skills that interns should master during the program, said Rebecca Aragon, an attorney with Littler in Los Angeles. Schools volition want to maintain the integrity of the program and mensurate outcomes.

If an employer isn't partnering with an educational institution, working with a student'southward bookish schedule can exist helpful, said Lauren Sobaski, an attorney with Fisher Phillips in Kansas Urban center, Mo. One factor the DOL considers is the extent to which the program accommodates the intern's academic commitments by corresponding to the academic agenda.

3. Cheque State Laws

Many states have their own wage and hr laws, also as special exceptions that are applicable to interns and trainees. "These laws can vary dramatically," Aragon said. Some states still follow the sometime DOL examination, others take adopted the new test, and some have completely dissimilar criteria.

At the end of the day, multistate employers demand to understand the rules in all applicable jurisdictions, Lawless said. "Accept a look at the state labor agency'due south website and search for unpaid internships to find the right examination."

When rules differ, employers should follow the stricter requirement, Aragon said, though she noted that sometimes rules are merely different from 1 some other, and it can be hard to figure out which ane is stricter. Employers may want to seek legal counsel if they aren't certain.

4. Create an Acknowledgment

Employers should typhoon an acquittance that describes the nature of the work, the educational components and what the intern will gain from the experience, Sobaski said.

Lawless suggested that employers prepare a one- or two-folio internship plan. "It doesn't have to be a curriculum, but a programme," he said. Employers should identify the types of experiences they promise interns will accept and meet with interns every two weeks to make sure they are meeting the program's goals.

The DOL's test considers whether the intern clearly understood that in that location was no expectation of bounty during the program or entitlement to a paid job at the decision. So these expectations should also be put in writing and included in the acknowledgment, attorneys said.

5. Evaluate Each Instance

Courts have described the DOL'due south primary-casher test as flexible, and no one gene is determinative. "Accordingly, whether an intern or student is an employee nether the FLSA necessarily depends on the unique circumstances of each case," the DOL states in its fact sail on internships.

A for-profit business should start with the presumption that interns need to be paid and then build a case using the relevant factors: that the program is for the do good of the intern, that information technology is educational and that the business concern isn't getting an immediate gain from the program, Sobaski said.

Note that unpaid internships for public-sector employers and nonprofit charitable organizations are usually permissible if the intern volunteers and doesn't await to be paid.

6. Weigh the Cost

If an employer isn't sure whether the internship qualifies nether federal, state and local requirements for unpaid internships, it is safest to pay interns the applicative minimum wage, Sobaski said.

Litigation can be costly for employers, even if a courtroom ultimately rules that the unpaid internship program was valid. By the time an employer gets the court social club saying the program was valid, the business volition unremarkably take paid more in chaser fees and lost time for the 60 minutes department than it would accept past but paying minimum wage, Aragon said.