Unpaid Internship Agreement Shrm

However, federal guidelines released by the U.S. Department of Labor (DOL) in April 2010 raise concerns that employers may decide to offer fewer internship opportunities. The guidelines that apply to „for-profit“ private sector employers define what makes an intern an „employee“ rather than an „intern.“ If a court or government agency decides that the interns` work qualifies them as employees, the company could face penalties that include retroactive payment; taxes not withheld; social security; unemployment benefits; interest; lawyers` fees; plus lump sum damages, which are defined in federal law as double the unpaid wage. „If they`re on a formal education program, find out if they can get credit for the internship,“ Olson agreed. „If the person gets academic recognition for the internship, it`s very favorable to the internship, which mainly benefits the intern.“ The internship program must be similar to training provided in an educational environment such as a college, university or business school. Litigation can be costly for employers, even if a court ultimately decides that the unpaid internship program was valid. By the time an employer receives the court order that the program was valid, the company will typically have paid more legal fees and wasted time in the human resources department than it would have done by simply paying a minimum wage, Aragon said. In addition, she encouraged employers to offer „a lot of interaction and learning“ during an unpaid internship, including, if resources permit, mentoring, training opportunities, and even a certificate at the end. Note that unpaid internships for public sector employers and non-profit organizations are generally allowed if the intern volunteers and does not expect to be paid. He observed that unpaid internships emerged after the Great Recession, when employers cut wages and benefits to survive. This was followed by increased regulation and enforcement of the RSA on behalf of interns. Companies that relied on unpaid interns who should have been paid had to change their practices, he noted, and „many of the changes to internship programs are now part of the corporate culture.“ For example, she said, it`s highly unlikely that companies will assume the risks, costs, and inconveniences of an internship program without taking advantage of it — so it`s hard to answer the fourth point of the test. HR professionals and lawyers can be helpful for companies to keep written records of what an intern expects from an unpaid program.

Attorney Oscar Michelen of Sandback & Michelen in New York suggests keeping memos, emails, and other records about what each intern does, attending scheduled training and lunch meetings with regular staff.B, and knowing what kind of training and supervision is offered. Lawless suggested that employers create a one- or two-page internship plan. „It doesn`t have to be a curriculum, just a plan,“ he said. Employers should identify the types of experiences they expect interns to have and meet with interns every two weeks to ensure they achieve the goals of the program. A new Test from the Ministry of Labour (DOL) to determine when interns are employees who must be paid under the Fair Labour Standards Act (FSL) is prompting employers to consider whether there could be a resurgence of unpaid internships. If an employer isn`t sure if the internship meets federal, state, and local requirements for unpaid internships, it`s safer to pay interns the applicable minimum wage, Sobaski said. Working with an educational institution can be particularly beneficial because the school will likely have a list of criteria for the content of the internship and the skills that interns should master during the program, said Rebecca Aragon, an attorney at Littler in Los Angeles. Schools will want to maintain program integrity and measure outcomes. If employers still want to pursue an unpaid internship program, they must ensure that it has a strong educational component. „The new test is designed to eliminate confusion by aligning the DOL`s position with that of the trend in case law and giving DOL companies and investigators more flexibility in reviewing internship programs,“ said Camille Olson, an attorney at Seyfarth Shaw in Chicago, Los Angeles and San Francisco. „It must also be taken into account that, in the context of an internship relationship, non-monetary benefits often accrue to the trainees.“ But Charles Krugel, Esq., a lawyer in Chicago, said, „I don`t think unpaid internships will see a resurgence.“ „The new test offers more flexibility in employers` approaches to providing unpaid opportunities, but each possibility should be looked at to determine what the employer wants with it and what the intern wants to do with it,“ Olson said.

Despite the change, unpaid internship programs must still benefit the intern in the first place. Determine if the tangible and intangible benefits to the articling student are greater than the intern`s contribution to the employer`s operations, said Donald Lawless, an attorney at Barnes & Thornburg in Grand Rapids, Michigan. „Does the intern exercise a skill in a professional environment or does the employer use unpaid work?“ On January 5, the DOL introduced a „Principal Recipient Test“ to determine if interns are employees. The ministry abandoned a rigorous test, all six parts of which had to be met in order for someone to be considered an unpaid intern rather than an employee. The student intern and the company should sign agreements that include the same language, he added. „In this way, a clear understanding of the relationship can be demonstrated without challenge or potential liability,“ he explained. With so many stakes, now is the right time for HR professionals to review their company`s internship policies to ensure they meet legal requirements. The school is back in session, and students may be looking for internships to complete their classroom learning.

So now is a good time for employers to review their internship programs, especially since the U.S. Department of Labor (DOL) adopted new rules this year. Here are some tips for creating a solid program. If an employer decides to offer unpaid internships, there must be clear communication and documentation indicating that the intern and the employer have agreed that the internship will not be remunerated. The courts have described the PRINCIPAL RECIPIENT of the LOOL test as flexible, and no factor is decisive. „Therefore, it necessarily depends on the unique circumstances of each case whether an intern or student is an employee after the FLSA,“ says its internship fact sheet. „This test is more employer-friendly than the DOL test and focuses more on the extent to which the internship program is related to further education,“ Olson said. Olson said many employers review their internship programs and find that they do not meet the legal criteria for unpaid internships and therefore convert these programs into paid internships.

The company must not derive any direct benefit from the internship and can effectively determine that its operation is disrupted by the training effort. „Because the new primary beneficiary test is based on a `totality of circumstances` approach to the previous six-factor test, unpaid internships may increase in prevalence compared to previous years,“ predicted Franklin Wolf, an attorney at Fisher Phillips in Chicago. Some observers predict that unpaid internships could increase after the U.S. Department of Labor (DOL) relaxes its compensation standards for interns, but there are many questions employers need to answer before taking the unpaid path. Under the Fair Labour Standards Act (FSL), businesses must pay their employees at least the minimum wage, unless their professional duties fall within one of the many exceptions to the rule. This means that companies can only legally hire unpaid interns if the internship meets certain criteria. The revised rules are intended to take into account the fact that trainees may receive non-monetary benefits. In the previous test, an unpaid intern couldn`t do productive work, Olson explained. „It wasn`t beneficial for the intern at all. Unpaid interns literally had to be spectators in the workplace. Think of someone working on their journalism degree and ending up at the end of an unpaid internship at a media company with a series of clips. .