Should You be Paying Your Interns?

With the economic downturn and competitive job market, there is increasing  discussion about unpaid interns in both the local and national workforce. See Internships: Low-Paid, Unpaid Or Just Plain Illegal?, NPR, May 18, 2013..  The North Coast Journal recently published an article suggesting that a growing number of Humboldt State University students are working without pay locally to gain experience.  However, not paying interns an hourly wage plus overtime may be illegal in some circumstances.  Some regulators and university officials are working to limit and prevent students from participating in unlawfully unpaid internships, including some stipend-funded internships. See Intern Unrest, Grant Scott Goforth, May 31, 2013.
Humboldt County employers should be aware that calling a work opportunity an “internship” does not release employers from the requirement to pay someone who is legally an “employee.”  While the nonprofit and public sectors may generally solicit and retain the assistance of unpaid interns, for-profit employers should consider the Department of Labor’s Wage and Hour Division six part test:
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.
If these factors are met, then no employment relationship exists and an employer has no obligation to pay hourly wages. 
Local businesses thinking about utilizing interns need to carefully weigh the advantages and costs of hosting interns since the proper engagement of an intern’s services could involve significant investment in an educational component.  Further, improperly employing interns without pay could lead to liability, as the Charlie Rose Show recently discovered when it paid $250,000 in settlement for back wages. Further information about the intern v. employee relationship may be found on the Department of Labor website.