In the past, court cases initiated by interns caused a lot of companies to shift away from giving college students an opportunity to learn and get credit for their time instead of a pay check. Many firms were cited with violating the Federal Fair Standards Act (FLSA), facing unexpected costs as a result.
Recently, the DOL published new guidelines after federal court objections to its prior policies. These new benchmarks make it easier for companies to engage unpaid interns without reprisal concerns. Basically, the new criterion seeks to determine if the intern benefits more from the relationship than the company they support.
The new guidelines consider seven factors, including: expectation, training, integration, timing, duration, effect on paid employees and entitlement.
In short, the expectation and entitlement issues call for mutual understanding between the employer and intern that compensation is not part of the package nor is a guaranteed paid job after the internship ends.
Training and integration speaks to the value the intern is getting from the experience. Is it comparable to what they might get in an academic setting with clinical and hands-on training? Does it include academic credit that aligns with the student’s major?
Timing and duration pertain to the convenience of the student. Does the job correspond with the academic calendar and allow him or her to meet his other class demands? Is related learning and experiences occurring during a reasonable amount of time (usually within an academic period such as a semester or quarter)?
The effect on paid employees can be a critical factor. If a student is selling, the DOL will likely interpret this as displacing the work of paid employees. Employers should seek to define intern roles that compliment paid employee tasks rather than compete with them.
Your safest approach is to document everything in a way that demonstrates you’re complying with the DOL expectations. This includes wording your postings to indicate compensation and a paid job offer later is not included. Make the intern confirm on their application form that they understand both these points. Create a syllabus for the student before they start that includes the activities they’ll participate in, how these align with education objectives and indicate how they’ll earn academic credit. Document your meetings with the intern to address the training and duration items. Are their study and learning objectives being met?
While it’s become easier to engage unpaid interns this year than during most of the last decade, you still need to be careful about how you handle such arrangements. Setting up a standardized policy for student learning opportunities from announcement through time served is a smart way to ensure you stay compliant with DOL concerns.