Q. After three years of low consumer demand, my company is finally showing signs of economic recovery. However, I am hesitant to hire new employees in case it proves to be more a temporary blip than a permanent trend. Can I hire summer interns to help me temporarily increase production?
A. Historically, summer internships have been a rewarding way for students to gain real life experience in a field of their interest. Internships also provided employers the valuable opportunity to evaluate interns for potential future employment positions.
In the challenging economy of the past few years, however, individuals with no immediate job prospects are turning to internships as a way to simply keep their skills sharp or to get their “foot in the door.” While this sounds like a win-win situation, internship programs can mean risky business for companies. Alarmingly, a number of interns have recently brought class action lawsuits against their former employers claiming that they should have been classified as employees rather than interns and seeking unpaid wages and overtime for their services. Employers considering internships should know the potential risks.
The Fair Labor Standards Act (“FLSA”) defines a company’s responsibilities regarding compensation to its employees. While interns are not employees and not subject to FLSA requirements, the U.S. Department of Labor has warned employers that the internship exclusion is narrow, and has stepped up monitoring of internship programs.
The test for determining whether individuals are interns includes meeting the following six criteria:
1.Internship is similar to training which would be given in an educational environment
2.Internship experience is for the intern’s benefit;
3.Intern does not displace regular employees, but works under close supervision of existing staff;
4.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.Intern is not necessarily entitled to a job at the conclusion; and
6.Employer and intern understand that the intern is not entitled to wages for the time spent in the internship.
New Hampshire state law is similar to federal law in the restrictions it places on unpaid internships at for-profit businesses.
In this case, even if an intern is willing to help fill a production gap, you would be wise to either create a program that complies with federal and state laws or look elsewhere for a solution.