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Are Unpaid Internships Legal?

With the down economy, many companies are looking to “hire” unpaid interns as a way to save money. I recently came across this article which explains the “do’s and don’t’s” of unpaid internships, which includes a link to the new federal criteria so I thought I’d share:

http://www.nytimes.com/2010/04/03/business/03intern.html

From the Article:

“If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law,” said Nancy J. Leppink, the acting director of the department’s wage and hour division.

Ms. Leppink said many employers failed to pay even though their internships did not comply with the six federal legal criteria that must be satisfied for internships to be unpaid. Among those criteria are that the internship should be similar to the training given in a vocational school or academic institution, that the intern does not displace regular paid workers and that the employer “derives no immediate advantage” from the intern’s activities — in other words, it’s largely a benevolent contribution to the intern.”

The 6 Criteria:

• The training given in the internship must be similar to what would be given in an educational setting, or vocational school

• The training should be for the benefit of the trainee

• The trainee’s work not replace workers who are regularly paid

• The employer receives no immediate advantage from the trainees’ activities, and the employer’s operations may actually be impeded on occasion

• At the end of the training, the trainees are not necessarily entitled to a job

• Both the trainee and the employer understand that the trainee is not entitled to wages during the training period.

See Also: Compliance Assistance – Fair Labor Standards Act (FLSA)

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