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Q: In this down economy, we have had a lot of inquiries from students seeking an “unpaid internship” in our office this summer. While we see many “unpaid internships” posted on job sites, a colleague of mine suggested that we cannot bring on unpaid interns since the interns will be working for our business full-time (40 hours per week), performing work that would otherwise be performed by our regular employees. Is this accurate? Is it legal to hire unpaid interns?

A: Many employers take on students or recent graduates as unpaid interns or trainees in the hope of discovering good workers whom they can add to their paid workforce at the end of the training period. The students may be glad to participate in the training program without pay (and even work their heads off) because of the job experience they will gain, as well as the possibility of being asked to stay on as full-time, paid employees after the training program is over.

Since the students have no expectation of being paid and are happy to be in a training program, many employers assume that the Fair Labor Standards Act (FLSA) is not relevant to this arrangement. That assumption is not necessarily correct.

Before trying to get too much of a good thing, employers should make certain that their unpaid interns and trainees will not be considered “employees” under FLSA. If they are, the employer will be subject to liability under FLSA unless it has complied with FLSA’s minimum wage and overtime requirements.

The Fair Labor Standards Act (FLSA) never mentions interns, or defines what an intern is. But the law does distinguish between an employee and a “trainee.” Many interns qualify as trainees, and therefore aren’t covered by the FLSA. But not all of them qualify. The Department of Labor uses a six-factor test to determine who can legally be considered a trainee. All of the following criteria must be met, according to the DOL:

• The training is similar to what would be offered in a vocational school;


• The primary benefit of the program is for the trainees;


• The trainees don’t displace regular employees;


• The employer gets no “immediate advantage” from the trainees’ activities (and, on occasion, the employer’s operations may actually be impeded);


• The trainees aren’t guaranteed a permanent job at the end of the program; and


• Trainees understand beforehand that they aren’t entitled to wages.

Simply put, if the employer does not receive any immediate benefit from the work done, and it is the intern that benefits from the arrangement, the intern can legally be considered a volunteer rather than a paid employee. To keep compliant, the focus of an internship program should be on mentoring and exposing interns to real-life experience, rather than on getting them to produce a certain amount of work.

In sum, even though a so-called “intern” or “trainee” may not be expecting to get paid and may be glad to work just for the experience and possibility of future full-time work, there could be a situation where they are deemed “employees” under FLSA if the employer derives “immediate advantage” from their activities – such as when an intern performs work that would otherwise be performed by the employer’s regular employees.

While it’s certainly admirable to mentor the next generation of workers, it is wise to err on the side of caution and first make sure that your internships do not run afoul of the legal requirements meant to protect employees and employers alike.

Jonathan Shapiro is the regional managing partner of the Portland, ME office of Fisher & Phillips LLP. Shapiro is a leading voice in employment law, having been ranked by Chambers & Partners as a top labor and employment attorney for management in Maine since 2003, twice named a New England SuperLawyer in Employment law, and repeatedly named among the Best Lawyers in America for his expertise in Labor & Employment Law.

Disclaimer: The materials in this column are provided for informational purposes only, do not constitute legal advice, and do not necessarily reflect the opinions of Fisher & Phillips LLP or any of its attorneys or clients. Neither this column nor the information contained herein is intended to create an attorney-client relationship between the viewer, reader, recipient, or user and Fisher & Phillips LLP.