This post is part of Priori’s blog series “From Our Network,” where we feature lawyers in our network discussing important issues small businesses face. In today’s post, employment lawyer Evan White helps small businesses understand how they can hire unpaid interns without running afoul of the law.
As we discussed in our previous post, generally accepted ideas about the roles and functions of an “unpaid intern” have changed dramatically in light of recent lawsuits brought by unpaid interns against their former internship providers for the payment of minimum wage and overtime under the Fair Labor Standards Act. As a result, it seems that the days of the “coffee runner” intern may be numbered—but employers and interns alike can still benefit from a well-run unpaid internship program. Our goal here is to help make sure that your internship program complies with the necessary standards.
While employers nationwide must comply with six U.S. Department of Labor ("USDOL") factors when establishing and running an unpaid internship program, the bar is raised even further for companies doing business in New York State. The New York State Department of Labor ("NYSDOL") adds an additional five factors on top of the USDOL’s six, for a total of eleven criteria that must be met in order to run an unpaid internship program without risking a lawsuit.
These five New York State factors build upon the requirements set forth by the six U.S. Department of Labor criteria. They serve to further distinguish unpaid interns from employees and also ensure that the experience and knowledge gained through the internship is both valuable and transferrable.
The Five NY Factors & Recommended Practices
1. In New York, internship training must be administered by knowledgeable and experienced staff. This means that interns should be trained by experienced professionals, and not merely junior employees or support staff who are “cheaper” to assign to train or oversee interns.
- Recommended Practice: Pair interns with experienced mentors who can supervise them, critique their work, and provide them with guidance.
2. Interns must not receive employee benefits. Interns may receive benefits as a result of their internship, but these benefits must not be the same benefits that employees of the company would receive. Additionally, intern benefits should not be of the type that employees typically receive, such as pensions, long-term health and dental insurance, or employee discounts.
- Recommended Practice: Don't offer benefits to interns! But if you must offer some benefits, such as travel or housing, ensure that employee and intern benefit programs are administered separately, offer different types of benefits, and/or have demonstrably different terms and requirements. Be aware of this factor’s broad scope. It does not just cover health, dental and pension programs; the NYSDOL extends this the definition of “benefits” to include employee perks such as employer-sponsored trips or parties held for or designed to benefit employees, as well as free employer-provided goods and services.
3. Intern Training must be general, not specific to the employer. In other words, an “internship program” cannot function as an unpaid training program that provides skills that are only useful to a specific employer; the skills that interns acquire must be useful for other companies or in other industries.
- Recommended Practice: Similar to the second USDOL factor, it is important to ensure interns develop transferrable skills that can apply to multiple settings, making the intern marketable for future employment elsewhere.
4. The intern selection process must be different than the employee hiring process. This ensures that interns are not merely employees on a “trial period” or applicants who did not qualify for actual employment at the time they applied but were brought on as “interns.”
- Recommended Practice: When designing the intern selection process, ensure that all phases of intern selection are distinct and different from employee hiring. This can include, for example, different internship postings and requirements, a different application and interview process, and different selection qualifications. Moreover, each aspect of the intern selection process should be tailored to reflect a program that is developmental, academic, and benefits the intern. The goal here is to ensure that the intern selection process, which emphasizes education and learning that benefits the intern, differs dramatically from the hiring process, which emphasizes service-related qualities that benefit the employer.
5. Finally, advertisements and postings for internship programs must clearly discuss education and training rather than employment (although employers can indicate that qualified graduates of the internship program may be considered for employment). This ensures that interns understand that an internship program is designed to train and teach, rather than act as a trial or training period.
- Recommended Practice: All postings must be clear and conspicuous that the position being offered is for academic or training purposes rather than employment. The NYSDOL also recommends that postings do not include program descriptions that sound like employment opportunities.
Although the New York State Department of Labor adds even more requirements to the already onerous test that employers must follow, it is still possible to run a useful and rewarding internship program so long as it has been carefully crafted and designed to comply with these eleven requirements.
Questions about unpaid interns? You're in luck! Submit them in the comments section below, twitter, facebook or to hello@priorilegal.com before Wednesday 3/26 at 11:59pm and Evan will pick 1-2 to answer. We will post his answers to the blog later this week.