The Potential Cost of Unpaid Summer Interns

Author: Ronald E. Lyons Date: 06/27/2013

Categories: Employment Law & Litigation

Summer has turned into the season of the unpaid internship. Job-hungry students with little or no hope of a paid position agree to take their “compensation” in the form of practical job experience. It sounds too good to be true, and it probably is now that the Department of Labor (DOL) is focusing on the practice. The DOL is paying particular attention to construction, hospitality, janitorial services, warehousing and staffing companies, but all industries are subject to scrutiny.

If you have hired or are thinking of hiring a “free” intern, you need to spend a little time with the innocent-sounding Fact Sheet #71 on the DOL site. The chances are very good that you are in violation of the Fair Labor Standards Act. The penalties for violation can be significant.

A little careful legwork and planning is the way to go. Fact Sheet #71 outlines the strict litmus test to determine if a student-worker properly qualifies as an unpaid intern. Here are the criteria that the government takes into consideration:

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

Even if your business has already committed to an unpaid intern, it is wise to take a second look at how you have described your program. We can help you review (or create) a written intern policy. It is possible to hire uncompensated interns, but the cost of that “free” staff member is in understanding and carefully complying with the regulations.

For more information regarding this matter, feel free to contact Ron Lyons at (301) 251-1180, ext. 306 or by e-mail at