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Companies that use interns simply as free labor are officially on notice. According to a recent article in the New York Times, it appears unpaid internships are the newest enforcement target for the Department of Labor (DOL) and state employment agencies.

With many companies struggling in the slow economy to stay productive while keeping costs down, many state and federal regulators have noticed a marked increase in unpaid internships, causing them to wonder if employers are misusing those interns. Among the states cracking down is Oregon, which found many cases where interns simply took the place of paid workers with little to no supervison. The state forced one company to pay $3,350 in back pay to two interns that the state determined were wrongly treated.

Nancy J. Leppink, the acting director of the DOL’s Wage and Hour Division, is also putting employers on notice, saying that the agency will be looking for companies to meet the DOL’s six criteria for unpaid interns that were outlined in a 2004 Opinion Letter. Although the Opinion Letter is nearly six years old, FoxHire confirmed in a phone call to the Department of Labor’s Wage and Hour Division (WHD) that the information is still valid. In a nutshell, internships should provide training similar to what the intern would receive in college or a vocational school and should not be used displace regular, paid workers. So an employer who uses to interns to do menial, unskilled work will probably not meet the criteria.

If you are a contract recruiter, you may want to make your clients aware of this latest crackdown and suggest that they hire workers as contractors through a third-party employer such as FoxHire if they don’t want to take on the additional costs (benefits, employer taxes, etc.) associated with direct hiring.

This article is for informational purposes only and should not be considered legal advice.

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