Summer internships: paid or not?

Unpaid summer internships are growing in popularity, and it’s easy to see why.

Businesses can increase their labor force without increasing their labor costs. And college students struggling to find work in the worst employment market in a generation increasingly settle for on-the-job experience that comes without a paycheck.

But a couple of Long Island employment lawyers are sounding a note of caution to companies about unpaid internships.

“While hiring unpaid interns may sound like a great idea for employers - free labor by an enthusiastic and willing participant - extreme caution must be exercised,” write lawyers Jeffrey Schlossberg and Kimberly Malerba in an employment law alert for their firm, Ruskin Moscou Faltischek, a Uniondale law firm that primarily represents employers.

“Both the federal and New York State Departments of Labor are cracking down on companies that fail to properly compensate interns.”

Not paying interns is acceptable in certain limited circumstances, the lawyers say. And they note that the U.S. Department of Labor has developed a six-factor test to determine whether an individual is legally an unpaid intern, as opposed to an employee, who must be paid.

Those criteria are:
1. The training, even though it involves working at the employer’s facilities, is similar to that in a vocational school or in academic instruction.
2. The training is for the student’s benefit.
3. The student does not displace regular employees, but works under their close observation.
4. The employer providing the training derives no immediate advantage from the activities of the student; and, on occasion, the employer's operations may actually be impeded.
5. The student is not necessarily entitled to a job at the conclusion of the training period.
6. The employer and the student understand that the student is not entitled to wages for the time spent during training.

“Not all of the factors necessarily need to be present for a student to be a lawful unpaid intern,” the lawyers say.

But the “central focus” should be on whether the student is the primary beneficiary of the arrangement, they say. “If the company is considered the primary beneficiary, it is likely the student will be an ‘employee’ and covered by the wage and hour laws.”