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What business owners need to know about unpaid internships

With Memorial Day weekend upon us, it means college students will now be taking a long break from the rigors of their academic schedule and, of course, looking for something to do during their three-month respite.

Many will undoubtedly be looking for paid work in such reliable sectors as retail, hospitality, landscaping and, of course, food service. Still others, however, will be looking for ways to secure some real-life professional experience in a profession they plan to pursue post-graduation, perhaps via a paid or unpaid internship.

For employers, the latter option is understandably the more appealing of the two.

Many experts indicate, however, that that this can sometimes prove to be a risky proposition from a legal perspective, opening up the employer to potential liability should a court later decide that the position in question did not fit the parameters of an unpaid internship. Indeed, it's for this reason that many advise employers to simply pay their interns minimum wage and limit their hours accordingly.

All of this naturally begs the question as to how exactly an unpaid internship is defined in the eyes of the law.

According to the U.S. Department of Labor, an unpaid internship must satisfy the following six factors:

  • Training received at the internship is similar to what would be provided in an academic setting
  • The experience is for the intern's benefit
  • Regular employees are not displaced by the intern and their work is closely supervised by current staff
  • No immediate advantage is gained by the employer from the intern's services and their operations may even be occasionally hampered by having these services
  • A job is not promised to the intern at the end of their program
  • There is a mutual understanding that the internship is unpaid

We'll continue this discussion in our next post, exploring why some courts have moved away from the DOL's six-factor test and what those employers eager to pursue an unpaid internship program can do to try to protect themselves.

Consider speaking with a skilled legal professional if you are a business owner with questions or concerns relating to an employment law matter.

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