By Kara M. Craig
Not so fast! If you are considering implementing an internship program, or have one underway, be aware that without certain safeguards in place, your “interns” may in fact be “employees” under the Fair Labor Standards Act (FLSA). This means that you’ve gotten more than you bargained for – employees who are entitled to receive minimum wage and overtime, plus an obligation to pay taxes and unemployment insurance. Not to mention the added bonus of potential liability for administrative penalties, back wages, interest on those wages, liquidated damages and attorneys’ fees.
Although it seems reasonable to assume that wage and hour laws may be kinder to nonprofit employers with religious, charitable, civic or humanitarian purposes, the law doesn’t necessarily say so. There is no blanket rule exempting nonprofit organizations or their interns from state and federal wage and hour laws, such as the FLSA. You should assume that your internship program may be closely scrutinized by government agencies, particularly in light of recent class-action wage lawsuits filed byinterns, which have drawn media attention.
Who is an employee under the FLSA?
“Employ” is broadly defined under the FLSA as “to suffer or permit to work.” Under the Act, covered, non-exempt individuals who are “suffered or permitted” to work must be compensated for the work they perform for their employer. It doesn’t matter what you call them, if “interns” are doing work for you just like your regular employees, they must be compensated for it.
Who is an intern under the FLSA?
The Department of Labor has stated that in order to determine whether an individual is an intern oremployee, the following six criteria should be applied:
- The internship is similar to training which would be given in an educational environment;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees, but works under close supervision of existing staff;
- 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;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
If all of the factors are met, an employment relationship does not exist and the intern is not entitled to
For a nonprofit, the FLSA issue is whether all of the circumstances together demonstrate that the internship is for the purpose of generalized learning, education, and training that imparts significant, broadly applicable knowledge to your intern. Or, is the internship really an effort to “get some help around here?” If you just want some help, look to your volunteers, in which case, other FLSA considerations come into play – we can talk about that later.
What’s a nonprofit employer to do?
- If you have interns, apply the six-factor test to each of them to evaluate their status under the FLSA. If an individual fails to meet the test, then you must treat the intern as an employee for purposes of state and federal wage and hour laws.
- Develop a policy that defines the purpose and scope of your internship program, carving out the tasks that interns are not to perform and what specific education and training your staff will be offering the interns.
- Adopt and follow a clear written policy with respect to recruiting, interviewing, taking on and managing interns, highlighting the goals and standards deemed acceptable for non-FLSA treatment by the Department of Labor.
- Try to focus on students who will receive academic credit for the internship or students whose studies align with the nature of the internship so that the knowledge, training and experience they gain is useful and “broadly applicable” in their career search.
- Be clear from the outset that the program is unpaid and will not necessarily lead to a job with your organization.
- Explain the parameters of the internship to staff, especially supervisors and managers, and consistently apply those parameters.
- Ensure that interns are not performing anything but nominal work for the organization and they are not “displacing” employees.
NOTE: This article is strictly informational and is not intended to be or convey legal advice or guidance. Readers should discuss particular situations with legal counsel before relying or acting upon any information in this article.
About the Author
Kara M. Craig is an employment attorney with Washington Employers, and counsels and represents employers and management in all aspects of employee relations and legal compliance. Washington Employers is a member-based professional association for businesses and organizations that provides consultative and comprehensive services for human resources and workplace solutions. Visit Washington Employers at www.wa-emp.com.