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Unpaid internships can be a boon for small businesses: you can train a whole new generations of employees and get a test run before committing to a full hire. But they can be a legal minefield as well.
Warner Music just had to pay $4.2 million to settle a lawsuit for underpaying interns, while Conde Nast, NBC, and Gawker Media were also targeted by former interns. (Not even law firms are immune from the summer intern lawsuit.) So what did these companies do wrong, and what do you need to do right to make sure you don't get sued by your interns?
Internships are designed to be learning experiences for the intern. And the first two of the Department of Labor's six factors in determining whether an internship is legal focus on education: the internship must be similar to training that you would give in an educational environment, and the internship experience must be for the benefit of the intern.
Running errands, cleaning up, answering phones, etc., aren't learning experiences and they aren't beneficial to an intern. Working with a local high school or university and offering mini courses or classes to interns can ensure that they get some educational benefit from the internship.
The best way to keep an intern program legal is to have clear rules and roles defined beforehand, so you probably want to set up a formal internship program. One of the most influential factors courts look at is whether your interns are displacing or doing the work of regular employees, so you can't treat interns like your regular staff.
Setting up an intern program will help delineate between interns and employees, and make sure your interns aren't handling any tasks they shouldn't.
You've got to be up front with your interns. Potential interns need to know about the unpaid status of the internship, which you can make clear during the application and interview stages. Interns also need to know that they are not guaranteed a job at the end of the internship.
The best way to formalize this understanding (and create a paper trail should the unpaid internship wind up in court) is to have a written internship agreement. The agreement can lay out the rules of the internship and the role the intern will play, as well as put the intern on notice that he or she is not entitled to wages during the internship or a job offer after. As long as the agreement complies with the Labor Department standards, you can make sure your summer interns aren't more legal trouble than they're worth.
The rules for unpaid internships can be tricky, but an experienced employment attorney can help keep your small business out of court this summer.
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