Despite the midwinter snow, small businesses will soon be fielding requests for internship opportunities. The US Department of Labor recently revised its position regarding whether interns are paid or unpaid.
According to the recently updated Fact Sheet #71, the Department of Labor (DOL) will conform with the 7-part "primary beneficiary" test used by several appellate courts to determine whether an internship is paid or unpaid.
In brief, this means the DOL will look to which party is the primary beneficiary of the relationship. If the internship primarily benefits the employer, the intern must be paid. If the internship primarily benefits the intern, the employer and intern may agree to an unpaid internship.
Very broadly speaking, some factors evidencing an internship primarily benefits the intern are: the employer works around the intern's academic commitments, the intern will receive academic credit or fulfill graduation requirements, the internship teaches skills/subjects used in the intern's degree program, and the intern does not expect payment. This is a generalization and each case must be reviewed individually.
For small business owners and nonprofits, this means you must examine each intern's role individually to determine whether that particular intern should be paid. It is very important to use a consistent (and compliant) hiring/selection process for your interns.
Given the economic costs of inappropriate classification, I highly recommend you seek legal review of your intern positions to ensure compliance. An attorney can help you develop a complaint hiring/selection process, provide sample language for your offer letters, and review the work to be performed by the intern.
Christine Jarzab Kuntz is an attorney specializing in the life cycle of businesses and nonprofit organizations. She is enthusiastic to share her knowledge, tools, and tips with the business and nonprofit community. She enjoys the excitement of tutoring start-ups, tackling the challenges of established businesses, and counseling her clients' transitions through all stages of the business life cycle.