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As summer approaches, many college students and graduates are gearing up for the traditional right of passage known as the summer internship. These internships can be a win-win for both the students and the companies utilizing their services. While the students gain experience and try to get their foot in the door for future career opportunities, companies can get manpower at a reasonable price.

The problem is when “reasonable” becomes free. While common, unpaid internships are increasingly coming under fire by the Department of Labor (DOL). If your clients are utilizing unpaid summer interns, it is important they understand the rules and potential implications of this arrangement. In order to be legal, unpaid internships must meet six criteria established under the Fair Labor Standards Act (FLSA) as stated on the DOL’s fact sheet on Internships:

  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 /internship 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.
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

The DOL has been cracking down on illegal unpaid internships over the past few years. But the DOL is not the only thing employers have to fear. Interns who believe they have been treated unfairly are proactively filing class action lawsuits. A famous example is the ongoing lawsuit between former interns for the film “Black Swan” and Fox Searchlight Pictures.  Companies targeted in unpaid internship lawsuits could have to pay back wages in addition to damages and fines.

Statistics show that nearly half of all interns are unpaid.  That means there is a good chance your clients are utilizing unpaid interns, quite possibly illegally. You may want to warn your clients of the potential pitfalls of unpaid internships and encourage them to take a close look at their programs to make sure they are being implemented in accordance with the FLSA.

This does not mean that companies should abandon their internship programs, which can be a great way to identify and groom potential talent.  It also does not mean they have to hire them as traditional employees, taking on all the risk, liability, administration, and additional costs that come with employees.  Instead, you can offer to convert their interns to contractors who will become W-2 employees of a contract staffing back-office.  The back-office will then retain all of the employment responsibility and liability. Plus, this can provide a great source of additional summer income for you as a recruiter.

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

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