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Interns: To Pay or Not to Pay?

It’s summertime and many businesses are taking advantage of unpaid interns, mostly college students fulfilling academic requirements or looking for real-world experience to bolster their resumes. Unpaid internships are a win-win for both the employer and the student, right?  Not so fast.

Joining a growing trend of lawsuits filed by unpaid interns, two of Fox Searchlight Pictures’ unpaid interns sued Fox for compensation for the work they performed during the production of the film “Black Swan.” A federal judge recently ruled in favor of the interns, holding that Fox should have paid the interns and by not classifying the interns as “employees,” Fox violated the Fair Labor Standard Act (FLSA).  (Fox plans to appeal the decision.)

Consequently, before welcoming that unpaid intern, businesses must understand the following criteria for an internship to qualify as unpaid:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

ALL of these requirements must be met to exclude an intern from the definition of an “employee” under the FLSA. Failure to properly classify an intern could result in costly consequences for businesses. An intern not properly paid may be awarded two times their back wages along with attorney’s fees.

For questions regarding whether or not to pay your interns and to ensure that your company is FLSA-compliant on this matter, please contact Carrie Roelle at (812) 423-3183 or CRoelle@KDDK.com, or contact any member of the KDDK Labor and Employment Law Practice Team.   

About the Author

Carrie Roelle

Carrie Roelle, an attorney at Kahn, Dees, Donovan & Kahn, LLP, in Evansville, Indiana, is a member of the KDDK Labor and Employment Law Practice Team and the Litigation and Trial Services Practice Team. Carrie defends employers before state and federal courts, as well as various administrative agencies, in matters involving allegations of discrimination, harassment, interference, and retaliation. In addition to litigation, she participates in counseling employers on employment issues they face each day, including wage and hour compliance, disability issues, workplace policies, and litigation avoidance.

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