Overview: Internships and other training programs can benefit employers in several ways. The most significant perhaps is the chance to observe the intern in action, which can help the employer to evaluate an intern's job fitness more deeply than a résumé, references and interviews ever could. Also, the experience that interns and trainees gain can help ready them to contribute immediately once they are hired, unlike other hires who may require on-the-job training.
Trainees and interns should be paid the minimum wage and overtime, as required for all employees under the Fair Labor Standards Act (FLSA), unless very strict criteria are met. Employers that wish to establish unpaid internships or training programs should carefully follow guidance from the U.S. Department of Labor and be sure they are following any relevant state requirements, as well.
Trends: A prominent lawsuit involving unpaid interns who worked for the Fox Searchlight movie studio has brought national attention to the issue. Such litigation can sometimes inspire copycat lawsuits, so employers that engage unpaid interns or trainees should be prepared for the possibility of a court challenge.
Author: Michael Cardman, Legal Editor
Unpaid internships or training programs can result in a lawsuit for back wages and overtime under the Fair Labor Standards Act (FLSA) unless specific criteria are satisfied. This Legal Insight analyzes standards established by the US Department of Labor and by the federal courts in an effort to guide employers that may wish to establish unpaid internships or training programs.
In Glatt v. Fox Searchlight Pictures, Inc., the 2nd Circuit Court of Appeals adopted the "primary beneficiary" standard for determining whether an intern should be considered an employee entitled to the minimum wage and overtime under the Fair Labor Standards Act (FLSA).
The 2nd Circuit Court of Appeals has established an employer-friendly standard for determining whether an intern should be considered an employee entitled to the minimum wage and overtime under the Fair Labor Standards Act (FLSA) in Glatt v. Fox Searchlight Pictures, Inc.
The 8th Circuit Court of Appeals left the door open for future cases in which the facts might weigh in favor of an employer under a Supreme Court standard but not under the US Department of Labor's six-factor test for determining whether a trainee or intern is an employee.
When school is out, many students and new graduates look to gain real-world experience through internships. However, an employer hoping to take advantage of these interns as a source of free labor should think twice. Unless an internship satisfies strict criteria, interns must be treated like employees, meaning they must be paid the minimum wage and overtime.
Protections against workplace sexual harassment provided by the New York City Human Rights Law (NYCHRL) and the New York State Human Rights Law (NYSHRL) do not apply to unpaid interns, a federal court has ruled in Wang v. Phoenix Satellite Television US, 2013 U.S. Dist. LEXIS 143627 (S.D.N.Y. October 3, 2013).
Glatt v. Fox Searchlight Pictures, Inc., known as the "Black Swan" case, is attracting public attention to the legality of unpaid interns.
A new Legal Insight and a new How To about unpaid internships under the Fair Labor Standards Act have been added to XpertHR.
This How To details the steps a prudent employer should take to increase the likelihood that interns or trainees are not employees.
HR guidance on complying with the FLSA requirements for interns and trainees.