How Not to Get Sued Over Unpaid Interns

Unpaid interns can play a huge supporting role for your small business. But depending on what tasks you've scripted for them, you may be setting the scene for a lawsuit.

A Hollywood studio is learning that the hard way. As has been widely reported, two former interns are suing Fox Searchlight Pictures for failing to follow state and federal guidelines regarding unpaid internships.

The interns complain they were made to brew coffee, take out the trash, and get people to sign paperwork -- tasks they say should have earned them a paycheck.

Fox Searchlight insists it complied with labor laws. Though the interns weren't paid, they did get valuable experience, the studio told NPR in a statement.

Adding unpaid interns to the cast of your small business is a widely accepted practice. The U.S. Supreme Court has upheld the use of unpaid interns -- but only for training purposes.

If you're concerned about the law, look to the Labor Department. The agency issues and enforces rules for using unpaid interns, and updated its guidelines last year.

Labor's guidelines state:

• The internship must be similar to training that would be given in an educational environment.
• The internship must be for the intern's benefit.
• The intern cannot displace regular employees.
• The employer cannot derive immediate advantage from the intern's activities.
• All parties understand the internship may not result in a job.
• All parties understand the internship will be unpaid.

Written agreements should clearly state the terms and tasks of an unpaid internship.

You may also want to think about putting yourself in your interns' shoes, to make sure they're getting a blockbuster experience -- and to ensure your small business isn't the prelude to a legal drama.

Related Resources

• Interns, Unpaid by a Studio, File Suit (The New York Times)
• 'Black Swan' Unpaid Interns File Lawsuit Against Fox Searchlight (ABC News)
• So, You Want To Hire An Unpaid Intern? (FindLaw's Strategist)
• Offering Unpaid Internships? Tread Carefully! (FindLaw's Free Enterprise)