Featured Contributor

Should You Be Paying Your ‘Unpaid Intern’? by @kaileegoold

by Kailee Goold | Featured Contributor  

stopwatch in the caseIt’s officially spring. And that means college students are looking to build their resumes through summer internships. So I thought I would touch upon a hot topic in wage and hour law: the unpaid intern.

Clients often ask if and when they can hire unpaid interns. If the company is for-profit and benefits from the intern’s work, my answer is “usually never.” While each internship must be analyzed individually, an internship in the for-profit private sector will most often be viewed as employment.

Why should you care?

If classified as employment as opposed to a true internship, the interns must be paid minimum wage and overtime where applicable. So just because they are in college and willing to work 50 hours a week without pay, doesn’t mean it’s legal.

And it should be no surprise that wage and hour lawsuits can get really expensive. Minimum wage and overtime (time and a half for hours worked over 40) adds up over the course of a summer, especially if you have more than one intern. In addition to paying the unpaid wages, this total amount of backpay can be doubled as a penalty. Not to mention that you have to hire an attorney and could be on the hook for the intern’s attorneys’ fees. So it’s easy to see how these costs add up quickly.

And unpaid intern lawsuits are so hot right now.

Over the last year or so, unpaid interns filed lawsuits against several heavy hitters including Condé Nast Publications, Warner Music Group, Atlantic Recording, Gawker Media, Fox Entertainment Group, NBC Universal, Viacom, Sony, Universal Music Group, Bad Boy Entertainment and Donna Karen. But smaller companies face similar risks too.

How to know if the job qualifies as a true internship?

There are situations under which individuals who participate in for-profit private sector internships or training programs may do so without compensation. When determining if a position qualifies as a true internship or training program (not requiring payment of wages), focus on two main questions:

Is the primary benefit of the internship for the intern or the company? 

The closer the internship is to an educational setting, the more it benefits the intern – and the more likely the interns may go unpaid. Generally, the more an internship program is structured around a classroom or academic experience as opposed to the company’s actual operations, the more likely the internship will be viewed as an extension of the individual’s educational experience. In addition, the more the internship provides the individual with skills that can be used in multiple employment settings, as opposed to skills particular to one company’s operation, the more likely the intern would be viewed as receiving educational training.

On the other hand, if the interns are engaged in the operations of the company or are performing productive work, the fact that they may be receiving some benefits in the form of resume builders or improved work habits will not exclude them from applicable wage and hour laws because the employer is the one benefitting from the interns’ work.

Does your company use the intern as a substitute for regular workers or to augment its existing workforce during specific time periods? 

If yes, the intern should be paid.

In other words, if your company would have hired additional employees or required existing staff to work additional hours had the interns not performed the work, then the interns will likely be viewed as employees and will be entitled to compensation. In contrast, if your company is providing job shadowing opportunities that allow an intern to learn certain functions under the close supervision of regular employees and the intern performs minimum work, the activity is more akin to an educational experience.

What you can do.

As recent events show, an unpaid intern lawsuit is no longer a theoretical risk. To be clear: this does not mean you must pay your interns and you have no other option. Instead, you should reassess your program to decide if changes can or should be made. For example, to have a true unpaid internship, you may have to implement policies and practices geared toward training and supervising the interns. If you don’t have any procedures in place, now is the perfect time to create them.

The bottom line: Avoid the mistakes made by so many companies and evaluate what you want from an intern before hiring. Then make sure you have the appropriate procedures in place to avoid a costly and distracting wage and hour lawsuit.

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Kailee Goold – problem solver – practical employee relations counselor + litigator – frequent presenter – social media advocate

kailee GooldKailee Goold is an employment law attorney by trade but her passion for practical-minded problem solving extends beyond the law. Starting at Kegler Brown Hill + Ritter in 2012, Kailee quickly developed a niche for providing legal and industry insights in a more modern way. Establishing the first blog at Kegler Brown, Kailee translates legal developments and experiences into content her clients find valuable. She is also known for her engaging presentations ranging from substantive legal topics to teaching attorneys how to utilize Twitter to build their practice. She continues to shape relationships and redefine the role of “attorney” through her use of social media platforms.

A graduate of The Ohio State University Moritz College of Law, Kailee contributes to the Central Ohio community as the social media chair of the Women Lawyers of Franklin County, and is a member of both the Young Lawyers Section Council for the Ohio State Bar Association and the Ohio Women’s Bar Association.

You can connect with Kailee on LinkedIn or follow her on Twitter (@kaileegoold).

One Reply to “Should You Be Paying Your ‘Unpaid Intern’? by @kaileegoold”

  1. Juliemarg

    Perhaps the best solution would be to ban the term intern.

    Without internships …

    The person is applying for a job that they want to be paid for. It’s either a temporary job or a permanent job. The company hires the person best qualified for the job.

    There should be no discriminatory practice that gives students an advantage over others in hiring.

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