7 Questions to Consider Before Taking on an Unpaid Intern

As schools let out and the days get hotter, your company may be looking to take on a summer intern.

If you’re looking to have someone perform menial office tasks like stuffing envelopes or making photocopies, then you had better just hire them as an employee – and pay them at least the minimum wage and any overtime due. Otherwise, you’re inviting a lawsuit like the ones that have been filed against companies like Fox Searchlight, Condé Nast, Hearst, Warner Music Group and NBC Universal.

But if you’re looking to establish an unpaid internship, then be sure the intern – not your company – realizes most of the benefit. This doesn’t mean your organization will get no benefit out of the internship. After all, unpaid interns who show promise often can be converted to employees. Moreover, they can bring fresh ideas and an outsider’s perspective on how things can be done differently.

Still, under a test that has been adopted by several federal appellate courts and was recently adopted by the US Department of Labor (DOL) as well, the primary benefit must be for the intern.

Here are seven questions you should consider to be sure your internship qualifies:

  1. Do you and the intern both clearly understand that there is no expectation of compensation? Ideally, this understanding should be memorialized with a written acknowledgment from both the intern and the company.
  2. Will the internship provide training that would be similar to what would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions? This can prove a high bar to hurdle. Under an older test, the DOL said training should take place in a classroom or academy more than in the employer’s actual operations, and that it should provide the interns or trainees with skills they can use in other workplaces, not just at the employer’s workplace. Although that test has since been abandoned, meeting those guidelines would certainly help an employer’s case.
  3. Is the internship tied to the intern’s formal education program by integrated coursework or the receipt of academic credit? This will likely necessitate a partnership with a local college, university or trade school.
  4. Does the internship accommodate the intern’s academic commitments by corresponding to the academic calendar? For example, the internship shouldn’t run from Memorial Day to Labor Day, or from the summer solstice, June 21, to the fall equinox, September 22, unless the intern’s summer break spans the same timeframe.
  5. Will the internship stop if it no longer provides the intern with beneficial learning? Your intern must continue to learn during the entire duration of his or her internship. You can’t train them for a couple of weeks and then continue to have them perform work without further training.
  6. Will the intern’s work complement, rather than displace, the work of paid employees while providing significant educational benefits to the intern? Neither the courts nor the DOL will look kindly upon it if you take on unpaid interns with the goal of training them in a certain job so they can someday replace older workers.
  7. Do both you and the intern understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship? This is a two-way street. The intern must understand that he or she isn’t entitled to a paid job; and you the employer must understand that the intern is under no obligation to take a position with your company. As with Question 1, it is a good idea to memorialize this understanding with a written acknowledgment signed by both parties. This doesn’t mean you can’t offer a paying job to the intern if you’re impressed by them, just that they’re not entitled to one.

None of these questions is the final word. And they need not all point in the same direction for a court to conclude that an intern is not an employee. In addition, under the primary beneficiary test, the factors are “non-exhaustive,” which means that courts, in certain cases, may consider relevant evidence beyond the above questions. Still, if you can answer “yes,” to most or all of these questions, it will go a long way in helping limit the legal risks of an unpaid internship.