focus on labor law
A Legal Guide To Working with Interns UNPAID INTERNS ARE NOT EXPECTED TO WORK; THEY ARE EXPECTED TO OBSERVE AND LEARN BY DIANA DRAKE
Thomas F. Doherty
Stephanie D. Gironda
Catherine P. Wells
Enterprising high school and college students often spend at least part of their summers engaged in internships. What better way to test-drive a career and gain valuable job skills than to spend a few weeks immersed in the corporate culture? Recent headlines suggest, however, that when it comes to the legalities of hiring interns, businesses should beware. Last month, Sirius XM Radio agreed to pay $1.3 million to settle claims that it violated U.S. labor laws by not paying interns. The settlement came on the heels of similar cases involving such high-profile companies as Fox Searchlight Pictures and The Hearst Corp. “Employers need to be very cautious when they are going to utilize interns,” said Catherine P. Wells, chair of the employment group at Chiesa, Shahinian & Giantomasi in West Orange. “Departments of labor scrutinize these types of arrangements.” During the financial crisis of 2007 to 2009, many employers who were struggling to do more with less took advantage of unpaid internships, particularly as college grads and others were desperate for experience to help them become more marketable. Consequently, the Wage and Hour Division of the U.S. Department of Labor released a fact sheet in 2010 outlining information to help determine whether interns must be paid the 20 |
minimum wage and overtime under the Fair Labor Standards Act for the services that they provide to “for-profit” private sector employers. “That sheet basically made it clear that the intern experience is supposed to be for the benefit of the intern and not for the benefit of the employer,” said Stephanie D. Gironda, a senior associate with the employment law team of Wilentz, Goldman & Spitzer in Woodbridge. “Key to this is that the intern is not displacing any regular employees or is not used to supplement the work of employees, but is really there to get an educational experience. The employer is not supposed to derive economic advantage from the activities of the intern.” New Jersey law takes that further by requiring that unpaid internships are part of a school-to-work program. “It is advisable to coordinate any internship with an educational institution, whether a college or vocational school,” said Thomas F. Doherty, a partner with McCarter & English’s labor and employment practice in Newark. “That is the safest approach because [the internship] has educational benefit that has been recognized by a school, which should make it hard for disgruntled interns to come back and say they should have been paid.” For internships that are not connected to educational institutions, Wells suggested that employers tread carefully. “If you are going to call it an internship but it is not part of an approved educational program, I insist that my clients pay their interns at least minimum wage,” she said. Doherty said much the same: “If the person is rendering any services, then for $8.38 an hour, New Jersey minimum wage, you can be sure you are not going to be sued at least for not paying them wages.” On the other hand, he added, “Once you start paying somebody, you then wind up putting them in the category of employees for other purposes – for example, employment discrimination or employment retaliation and the like.” Wells advised employers to document and outline the specific internship responsibilities and expectations – everything from the limited duration of the internship (interning here does not mean you are guaranteed employment) to the areas of training that interns will receive – in case the Department of Labor comes calling. And if an unpaid intern is not meeting expectations? Employers need to pay close attention to the established internship guidelines. “By definition, an unpaid intern is not expected to really work; they’re expected to observe and to learn,” Wells said. “If someone called an intern in and said ‘You’re not performing,’ that would create significant risk that they were really treating the intern like an employee.” It is interesting to note that the New Jersey Legislature has moved to expand protections of the Law Against Discrimination and the whistle blowers statute so it applies to interns, Doherty said. While that effort has stalled, it's worth watching. What’s more, noted Gironda, New Jersey requires interns to be at least 16 years old and under the supervision of a mentor in the workplace. As for other recommendations, she concluded, “In most cases, you are going to have to pay interns to cover yourself.” ◆