Are Unpaid Interns Legal?

If your company uses interns, then you need to think through your policies on how (or whether) you pay them. Failure to do so could expose you to a potential lawsuit.

Let’s say that you bring in a college student as an unpaid marketing intern for the summer. She is eager to gain professional experience and is willing to work for free. Even better, there is an open marketing position that you don’t have to fill for the summer, because you can use the intern. You put her right to work. Do you have a problem?

There is no restriction on hiring paid interns. However, if they are unpaid, they must qualify as “learners” or “trainees.” Under federal law, there are six criteria for determining unpaid trainee status, all of which you must meet. Unpaid interns cannot displace regular employees; are not guaranteed a job at the end of the internship (though you may decide to hire them at the conclusion of the experience); not entitled to wages during the internship; must receive training from your organization, even if it somewhat impedes the work; must get hands-on experience with equipment and processes used in your industry; training must primarily benefit them, not the organization.

In other words, companies may not use internships as “free labor.” When in doubt, it may be wise to offer at least the minimum wage to interns. This avoids possible liability for back pay and taxes plus fines if the unpaid intern later claims they should have been paid.

You should also have a written agreement with the intern (paid or unpaid) outlining beginning and ending dates of employment, compensation, duties, company policies and confidentiality.

Interested in handling legal compliance issues without the added stress?  Schedule a free consultation with Aspire HR today.

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