Unpaid Interns Can Cost a Lot of Money

College students often seek work experience by agreeing to unpaid internships. It seems like win-win for the student and employer. The students obtain work experience oftentimes in exchange for college credit and the employer receives assistance from an eager student. However, the Department of Labor takes a dim view of these arrangements.

NBC Universal Media was recently dinged for this very arrangement and agreed to pay $6.4 million for unpaid interns. This is one of the most high profile cases in a whole series of such investigations pending.

The DOL will look at six factors to determine if an intern is entitled to payment and the intern is given the benefit of the doubt on each of these factors. The following factors must be met so that the internship is not considered a job for which compensation should be provided:

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.

The bottom line is if the employer is benefiting from the intern’s work, it will more than likely be considered “work” under the Fair Labor Standards Act.

Kelly Schoening is a Partner in the law firm of Dressman Benzinger LaVelle, with offices in Cincinnati, Ohio, Crestview Hills, Kentucky, and Louisville, Kentucky.