Your business is in dire need of help this season and you don’t have the money to hire someone new. You put up an online advertisement for unpaid interns and resumes flood your inbox. Score! Free labor!
Not so fast. Employing unpaid interns is only legal if you follow strict rules outlined by the U.S. Department of Labor. Fail to follow suit and your intern could sue you for worker misclassification.
To break down exactly what (for-profit) small business owners need to know to stay out of court, I enlisted the help of Joseph H. Harris and Evan J. White, founding partners at White Harris PLLC, an employment law practice in downtown Manhattan.
Take this six-question quiz to test the legality of your internship program.
1. Are you incorporating an educational component? A program needs to include training similar to that that would be offered in an educational environment, i.e. mentoring or coaching, says Harris. Check with your local college or university to see if your intern could get academic credit for the experience.
2. Is there a legitimate benefit for the intern? Answering phones and fetching coffee every morning doesn’t count. You program needs to offer real-life takeaways for the intern that relate to the area in which they are studying in school, adds Harris.
3. Did your intern replace a paid employee? This one is a major no-no. Harris remembers a gymnasium client who was using unpaid interns for tasks such as taking reservations, sweeping floors and staffing guest services.
“They were displacing regular employees with interns; you can’t just bring on free labor,” he says.
4. Does your company receive an advantage from having the intern around? This one is a little tricky. Of course you will want your intern to help out around the office, attend meetings with you and participate in projects, but (see to No. 1) there still needs to be an educational component to your program. White suggests having your intern record a diary on the work they do or to see if there are corresponding classroom assignments to pair with in-office experiences.
5. Is your intern entitled to a job upon completion of your program? The answer should be no, especially if your intern is unpaid.
“You are equipping them with job skills, not grooming them to take on a full-time position,” Harris points out. “Make sure this distinction is clear in the job description.”
6. Do you start each internship program by signing a contract? If not, start immediately. According to White, the contract needs to clearly indicate that both parties agree the intern will not receive wages or a guarantee of a job. Keep this piece of paper in a safe place; it will save you from future legal headaches.
“Lawsuits stemming from unpaid internships are happening all the time,” he adds. “Because of our current economic climate and the jobs crisis, more people are willing to work for free to get experience—a setup that can bite entrepreneurs if they aren’t careful.”
Are you sill not sure if your unpaid internship program is following all the rules? Contact the U.S. Department of Labor (look into state-specific requirements, too) or an employment attorney certified through the National Employment Lawyers Association.
What does your unpaid internship program look like?