Guest Column - September 2010
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Internships & the Law

By Susan Foster and Gil Fried

Some internship organizations meet some of the criteria, but the DOL makes it very clear that all six criteria must be met in order for a non-employee situation to exist. The DOL also states, " the more an internship program is structured around a classroom or academic experience as opposed to the employer's actual operations, the more likely the internship will be viewed as an extension of the individual's educational experience." Thus, many tasks that are typical of interns, like stuffing ticket envelopes, preparing mass mailings, preparing birthday kits, working a concession stand, game day operations crew, and performing sales functions or other services that benefit the employer are technically illegal under many internship agreements if the intern is not paid according to FLSA requirements.

A recent trend involves "credit" only internships where sport organizations will only allow someone to work as a "free" intern if they receive college credit. We analogize this to the trend some employers had in naming workers as independent contractors. Just because an employer calls someone an independent contractor does not mean the government cannot find the employer to be mistaken and then assess significant penalties for failing to pay taxes, not having the employee covered by workers' compensation insurance and related issues. This is the case even if both the employer and the worker agree the relationship is an independent contractor relationship.

Some students who partake in unpaid internships receive college credit in exchange for their experience. In a 2004 DOL opinion letter, it was stated that students participating in an internship program must be enrolled for college credit. Interns receiving college credit are supposed to perform tasks and activities that build upon one another, increase in complexity and help the intern learn and master basic skills. The intern also should be exposed to all aspects of their chosen industry. As with the FLSA, these interns cannot displace a regular employee, but rather close supervision of an intern by an individual who is skilled and regularly performs the same task would be expected.

Several non-sport related DOL rulings seem to suggest that as long as the internship is a prescribed part of the curriculum, is part of the school's educational process and is predominantly for the benefit of the student, the fact the employer receives some benefit for the student's services does not make the student an employee for purposes of wage and hour law. This would seem to indicate that a student from a college of business would need to engage in business-related activities such as selling tickets, developing marketing plans and developing potential budgets. However, serving hot dogs at a concession stand or dressing up as a mascot to make a birthday appearance would not count. This is not to say that such tasks are not important and everyone should learn such skills, but interns should be paid for such activities.

An internship site should be able to answer "yes" to most of the following questions if an unpaid internship exists or is being considered for implementation:

  1. Is the work that you are offering an integral part of the student's course of study?
  2. Does the student have to prepare a report of his/her experience and submit it to a faculty supervisor?
  3. Have you received a letter or some other form of written documentation from the school stating the internship is approved/sponsored by the school as educationally relevant and the student is enrolled for course credit?
  4. Will the student perform work that other employees also perform with the student for the purpose of learning and not necessarily performing a task for the employer?
  5. Is the student assigned to a full-time employee, shadowing that individual, and have the opportunity to learn a specific skill, process or other business function?
  6. Is there educational value to the work performed, that is, is it related to the courses the person has taken or is taking in school (i.e., not just engaged in mundane/repetitive tasks)?
  7. Is it clear that a job is not guaranteed upon completion of the training or completion of the person's schooling?
  8. Is there a regular employee doing the work alongside the unpaid intern and assisting them in learning the business?
  9. Is the intern part of a team doing a job, or are they working in an area by themselves?
  10. Would you normally have to pay someone to perform tasks, but, by placing an intern there, you do not need to hire a paid employee?