Additional Guidance on Unpaid Internships

Last week on this blog, we warned of the latest Department of Labor (DOL) crackdown aimed at unpaid internships. As further evidence that the DOL is getting serious about illegally unpaid internships, they have released a new fact sheet that details when an internship can be unpaid. This fact sheet updates a six-year-old Opinion Letter that provided six criteria for legally unpaid internships. With the exception of some minor wording changes, those six criteria remain largely the same and are as follows:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

The fact sheet provides additional details and elaborates on the first two criteria. The point that seems to be stressed throughout the Fact Sheet is that the internship must benefit the intern, not the employer. Consider the following statement from the Fact Sheet:

“The more the internship provides the individual with skills that can be used in multiple employment settings, as opposed to skills particular to one employer’s operation, the more likely the intern would be viewed as receiving training. On the other hand, if the interns are engaged in the operations of the employer or are performing productive work (for example, filing, performing other clerical work, or assisting customers), then the fact that they may be receiving some benefits in the form of a new skill or improved work habits will not exclude them from the FLSA’s minimum wage and overtime requirements because the employer benefits from the interns’ work.”

Again, if you have clients who use unpaid interns to bolster their staff, you may want to make them aware of this latest crackdown and suggest that they hire workers as contractors through a third-party employer such as FoxHire as an alternative.This article is for informational purposes only and should not be considered legal advice.