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Business owners considering starting (or continuing) internship programs have taken notice of recent lawsuits filed by interns who have argued they were really employees that were hired as free labor and who were not paid. Aside from meeting standards already established by states and the government, the bottom line is that internships benefit the intern rather than the employer. If the intern is doing actual work that is less educational than it is simply labor for the business owner, a court is likely to find that the intern should have been classified as an employee and paid accordingly. For more on this continue reading the following article from JDSupra.

“In recent months a number of interns have sued their former employers, claiming that they should have been classified as employees for purposes of state and federal wage and hour laws. The plaintiffs in these cases – who were not paid while serving as interns – are seeking to recover wages for all hours worked, as well as any overtime due.” (Internship Programs Present Potential Wage and Hour Risks for Employers by Littler)

Planning on hiring interns this summer? Make sure they’re not really employees.

Three recent lawsuits filed by interns claiming they were hired – but not paid – as entry-level employees should remind employers that poorly structured internships carry significant risks.

Does this mean employers should cancel their internship programs? Not unless they’re really “free labor in disguise” programs. For your reference, here are five ways tell the difference:

1. If interns are working, they’re employees:

“The lead plaintiff in the Hearst case alleged that she sometimes worked as many as 55 hours a week as the ‘Head Accessories Intern.’ Her duties included, among other things, coordinating pickups and deliveries of samples between Harper’s Bazaar and outside vendors, showrooms and PR firms; maintaining records of the contents of sample trunks and the fashion closet; managing corporate expense reports; and processing reimbursement requests – productive work for which she alleges she was not paid any wages.” (Unpaid Intern: The Unpaid Employee? by Mintz Levin)

2. True internships are strictly educational:

“The more a program resembles an academic experience, provides the intern with a variety of skills that can be used in different employment settings, and provides shadowing opportunities, the more likely it is that the employer may maintain the unpaid internship program.” (Interns Filing a New Wave of Class Actions Heading into Summer by Wilson Sonsini Goodrich & Rosati)

3. If it can’t pass the DOL test, it isn’t an internship:

“The DOL’s six-factor test can be difficult to satisfy, particularly where the intern provides some useful service to the employer that otherwise would have been provided by an employee. If an individual fails to meet the applicable tests for intern status, then the employer needs to treat the intern as an employee for purposes of state and federal wage and hour laws.” (Internship Programs Present Potential Wage and Hour Risks for Employers by Littler)

4. Internships are governed by state laws, too:

“[The California Division of Labor Standards Enforcement] has established an eleven-part test which must be fully satisfied to avoid an employment relationship and properly classify a worker as an unpaid intern… All eleven criteria must be met for the worker to qualify as an intern instead of being deemed an employee.” (The High Price of Unpaid Interns by K&L Gates LLP)

5. The bottom line: internships benefit the intern, not the employer:

“… every employer should ask itself one key question. Who is benefiting from this relationship? If the employer benefits, most likely the intern is doing work that the employer should be paying for. Internships are really for the student’s immediate benefit. Internships are not a clever way to save money. They are instead, an investment in the future. They take work and effort by the employer.” (Rite of Spring: Requests for Internships by Sands Anderson PC)

This article was republished with permission from JDSupra.