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Internships: To Pay or Not to Pay?

    The issue of unpaid internships has been in the media lately with a number of high-profile lawsuits alleging that the named companies did not pay interns when they should have.  Potential damages can be high, and the company’s image takes a hit as well.

    The Department of Labor (DOL) has six tests that must all be met for an internship to be legitimately considered as unpaid.  The tests are available on a recent fact sheet on the DOL website at http://www.dol.gov/whd/regs/compliance/whdfs71.htm.

    If you prefer a more informal version, try this one from John E. Thompson of Fisher & Phillips LLP

    … Ask yourself this: If there is a later [Fair Labor Standards Act] claim, will the circumstances clearly, provably, and readily show (i) that the relationship was for the purpose of providing education, instruction, and training that imparted significant, substantive, transferable knowledge of a broadly-applicable kind; and (ii) that what actually occurred was consistent with and carried out this purpose?

    While there are some exceptions granted (individuals who volunteer for public agencies or certain non-profits, for instance), the legal pitfalls of offering unpaid internships may far outweigh the cost of paying your interns and sidestepping those pitfalls.  As an added bonus, you will be able to provide your interns will a wider range of tasks and meatier assignments as a paid intern.  As the employer, you will benefit from being able to better evaluate the intern’s capabilities relative to a potential hire post-graduation if they are doing actual work as an intern.  And one more benefit:  an internship program that provides a robust experience will develop its own legs in the student community, making your future recruiting efforts a breeze!

    Stevens Point Area Human Resources Association

    March 31, 2013