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Employers Need To Be Careful When Classifying Individuals As Unpaid Interns

Students of all ages seek out desirable unpaid internships.  An internship gives the individual valuable experience in a potential chosen field of employment and could possibly lead to a job offer.  Recently, a movie production company and a magazine publisher have been sued by  unpaid interns, who allege that the companies violated State and Federal wage and hour laws, by not paying them for their services provided.

Generally, an employer is required to pay their employees at least the minimum wage for all hours worked along with overtime for any time worked over forty hours per week pursuant to the Federal Fair Labor Standards Act (“FLSA”).  The U.S. Department of Labor (“DOL”) has provided some guidance for an exclusion from the FLSA for unpaid internship programs.  The DOL has indicated that the following six criteria must be fulfilled in order for the services to qualify as an unpaid internship program:  (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; and (6) the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.  

The criteria for the exception from the FLSA is narrowly drawn to protect individuals from being exploited as unpaid employees.  Unfortunately, the criteria can often times be difficult in both application and interpretation in regard to typical internship programs.  It is highly recommended that companies consult with experienced counsel in the drafting of a written unpaid internship policy, along with appropriate training of its employees, prior to the implementation of such a program.

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About this Author

Steven A. Rowe, Poyner Spruill Law firm, Employment Matters Attorney

Steve represents employers in a wide variety of employment matters in state and federal court and before the North Carolina Industrial Commission, United States Equal Employment Opportunity Commission, North Carolina Employment Security Commission, State of North Carolina Office of Administrative Hearings, United States Department of Labor, and the North Carolina Department of Labor. In addition, Steve represents business, insurance and housing authority clients in a wide range of matters in state and federal court. Steve regularly advises clients on employment issues and matters and...

David L. Woodard, Employment Litigation Attorney, Poyner Spruill, Law firm

David practices in the area of employment litigation.  He regularly advises and defends clients in race, age, disability and sex discrimination and harassment cases; reviews handbooks and termination issues; and provides compliance advice on matters of employment law.

Representative Experience

McNeil v. Scotland County - Obtained summary judgment for employer where plaintiff alleged race discrimination and retaliation in violation of Title VII of the Civil Rights Act as well as violation of the Americans with Disabilities Act. Successfully defended the judgment in the Fourth Circuit Court of Appeals.

Williams v. City of Fayetteville - Obtained summary judgment on former employee’s claims of retaliation for exercising First Amendment rights, violations of due process, and intentional infliction of emotional distress.