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July 06. 2014 10:04PM

Is employing summer interns risky business?


Parent 

Every time I turn around, interns are suing companies to collect unpaid wages, claiming they are employees. With our summer interns getting ready to start, is my company at risk to be sued?

A former intern for the LA Clippers just recently brought suit against the team and its owners, the Sterling Family Trust, for unpaid wages. The ex-intern claims he worked 40-50 hours a week in the fan relations department for two months in 2012. It is alleged that he performed the same work as regular, paid employees and therefore deserves to be paid.

This recent case follows a wave of class-action lawsuits filed by interns. Just last year, 3,000 former Warner Music Group interns brought a class action for wages, two ex-interns sued Fox Studios for work on the film “Black Swan,” and a former intern of Diddy’s Bad Boy Entertainment claimed getting coffee and answering phones required payment.

Student internships can provide a valuable benefit to both the intern and the employer. Not only does it provide a student with real-life experiences in a field of interest, it allows employers to evaluate a potential future hire. But this latest court activity has resulted in some employers ending their internship programs all together.

Before approving unpaid interns at your company this summer, here is what you should know. The Fair Labor Standards Act (FLSA) defines the term “employ” broadly as including to “suffer or permit to work.” Those considered “employed” must be compensated for services performed for the employer, including payment of minimum wage and overtime.

Interns are not employees and not subject to FLSA requirements. However, the internship exclusion is narrow. To be found an intern, all six of the following criteria must be met:

• Internship is similar to training that would be given in an educational environment;

• Internship experience is for the intern’s benefit;

• Intern does not displace regular employees, but works under close supervision of existing staff;

• Employers that provide the training derives no immediate advantage from the activities of the intern (and on occasion its operations may actually be impeded);

• Intern is not necessarily entitled to a job at the conclusion; and

• Employer and intern understand that the intern is not entitled to wages for the time spent in the internship. (see dol.gov/whd/regs/compliance/whdfs71.htm for more information).

New Hampshire law is similar to federal law in the restrictions it places on unpaid internships at for-profit businesses. For more school-to-work facts, go to nh.gov/labor/faq/school-to-work.htm.

Recent lawsuits and government monitoring present potential wage and hour risks for employers. Employers should carefully review any internship program to determine whether it complies with federal and state laws.

Jennifer Parent can be reached at jennifer.parent@mclane.com.

Know the Law is a bi-weekly column sponsored by The McLane Law Firm. We invite your questions of business law. Questions and ideas for future columns should be addressed to: Know the Law, The McLane Law Firm, P.O. Box 888, Manchester, NH 03101 or emailed to knowthelaw@mclane.com. Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.



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