Understanding Unpaid Internships

internships

With the fall semester approaching, I’ve been hearing a lot of discussion recently in the fitness community about hiring unpaid interns to work at Boxes or small fitness companies.

Many of us participated in internships in college – they’re a great way to gain valuable experience and get a close up look at what it’s like to work in a certain industry. And from an employer’s perspective, an internship can be the starting point for developing a great relationship with a student that is interested in their field of expertise.

Although unpaid internships in many ways can be a win-win, business owners should navigate these relationships with caution. There are very specific state and federal laws that set out the circumstances under which interns who are working at a “for profit,” private-sector internship may do so without being paid.

For example, the U.S. Department of Labor Standards has established six criteria that must be considered when determining if an individual qualifies as an unpaid intern:

  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. This means the structure of the internship must model the type of training an intern/student would receive in an educational course setting.
  2. The internship experience is for the benefit of the intern. It should be clear that the intern, and not the employer, is the “primary beneficiary” of the training activities and other services that are part of the internship program — and not the other way around.
  3. The intern does not displace regular employees, but works under close supervision of existing staff. The interns must be closely supervised by the employer, and can’t perform substantial independent work that could be performed by employees of the company.
  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. A company receives an “immediate advantage” if the intern starts to perform work that could be performed by a paid employee. Although an employer can derive some limited benefits from the work, the time and costs the business incurs in training and teaching the intern should “counter-balance” those advantages.
  5. The intern is not necessarily entitled to a job at the conclusion of the internship. The company should make it clear, in writing, that participating in the internship does not automatically entitle the intern to a paid position when the internship is over.
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship. Similar to No. 5, a company must ensure – preferably in writing – that the intern understands the internship is unpaid, and that the student is not going to be receiving wages in exchange for participation.

Although this is the general test applied at the federal level, employers must also comply with any state laws that outline the requirements for unpaid internships.

So what are some things to consider if you’re thinking about adopting an unpaid internship program? Here are three tips:

  1. Make concerted efforts to understand and properly apply your state’s intern rules. This one goes without saying. An employment attorney in your jurisdiction is a good place to start.
  2. Seek out resources and guidelines that may be offered by your state. California, for example, offers employers a Student Internship Program Guide to facilitate onboarding and training interns.
  3. Consider paying your interns. If you’re on the fence about whether you want to navigate the rules around an unpaid internship program, think about whether it makes sense to hire and pay your interns. A paid position may motivate them to do a better job, and could lead to a better experience for everyone involved.

 

NOTE: None of the information in this article is intended to create an attorney-client relationship. This article has been prepared for informational purposes only, does NOT constitute legal advice and is not a substitute for seeking legal counsel from an attorney.

Drew Amoroso
Drew is the owner of Move Strategy, a consulting and education based company focused on helping fitness business owners grow and build their business. You can find him on Twitter and Instagram @fitlawdrew.