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Are your unpaid interns actually employees protected by wage and antidiscrimination laws?

May 11th, 2012  |  Pamela Wolf

Employers should take a closer look at whether “interns” working in exchange for experience or to meet educational or licensing requirements are actually “employees” — there is a world of difference between the two. If interns are really employees, they may be protected by labor and antidiscrimination laws and employers may be at risk for violating those and other laws.

A lawsuit filed by New York plaintiffs’ firm Outten & Golden underscores what has become a growing problem in a down economy. In February, the firm filed a suit in the Southern District of New York asserting that the Hearst Corporation illegally employed hundreds of unpaid interns in violation of federal and state wage law (Wang v The Hearst Corporation, No. 12 Civ. 0793). The putative class action was filed on behalf of a former intern at Harper’s Bazaar, who alleged that she regularly worked more than 40 hours per week, and sometimes as many as 55 hours per week, without compensation while working at the magazine last year. According to the complaint, the publisher’s unpaid interns were not paid minimum wages or overtime for the work they performed, in violation of the Fair Labor Standard Act and New York Labor Law. The suit also alleged recordkeeping violations.

FLSA coverage. The status of unpaid interns, and their proper classification under the FLSA and other labor laws, has been the focus of Department of Labor (DOL) enforcement and compliance assistance efforts in recent years. The DOL’s Wage and Hour Division has issued Fact Sheet #71, laying out six criteria to guide employers in determining whether private sector interns must be paid minimum wage and overtime under the FLSA. An FLSA exception may apply to interns who receive training for their own educational benefit if the training meets certain criteria. The determination of whether an internship or training program meets this exclusion depends on the facts and circumstances of each program.

FLSA checklist. Employers with unpaid interns in the workplace should consider the following questions to determine whether the FLSA applies to a particular intern:

 Is the internship, even though it includes actual operation of the facilities of the employer, similar to training which would be given in an educational environment?

 Is the internship experience for the benefit of the intern?

 Does the intern work under close supervision of existing staff without causing displacement of regular employees?

 Is there a lack of immediate advantage to the employer providing the training; are its operations occasionally actually impeded?

 Is it understood that the intern is not necessarily entitled to a job at the conclusion of the internship?

 Do the employer and the intern both understand that the intern is not entitled to wages for the time spent in the internship?

If the answer is “yes” to all of the questions above, the factors set forth by the DOL are likely met and an employment relationship would not exist under the FLSA. Therefore, the FLSA minimum wage and overtime provisions would not apply to the unpaid intern.

Federal antidiscrimination laws. Whether an unpaid intern is protected from discrimination by Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Equal Pay Act, or the Genetic Information Nondiscrimination Act, likely turns on the question of whether the intern receives “significant remuneration” in some form, according to a recently released EEOC informal discussion letter. Interns who receive significant remuneration are likely covered by federal antidiscrimination laws.

Discrimination checklist. Employers with unpaid interns should consider the following questions to determine whether an intern receives significant remuneration or is otherwise protected by federal antidiscrimination laws:

 Does the intern receive significant remuneration in any form, including pension, group life insurance, workers’ compensation, or access to professional certifications?

 Does the intern receive significant benefits from an educational institution because of her volunteer work with the employer (not including academic credit, practical experience, or scholarly research)?

 Is the work done by the intern required for regular employment or does it usually lead to paid employment with the same employer?

If the answer is “yes” to either of the first two questions, the intern likely receives significant remuneration as characterized in the EEOC letter, and is thus likely protected by federal antidiscrimination laws. An affirmative answer to the last question likewise means that the intern is covered by federal antidiscrimination laws regardless of whether the intern receives significant remuneration. Employers should also keep in mind that applicants and participants in training and apprenticeship programs are protected from discrimination related to the selection and participation process.

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