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Structure unpaid internships as investments in the future

Studies show that more than half of all hiring managers believe that the most recent college graduates are not qualified to enter the workforce and are, therefore, unemployable.

What should college students do to increase their prospects when few employers are willing to take a chance on adding them to the payroll?

Internships. Many business leaders, particularly when the company coffers are not overflowing, view internships as an opportunity to give a college student experience in return for some much-needed (and unpaid) help with daily business tasks.

Indeed, it is generally a good business practice to exchange one thing of value for another of value. However, in the case of unpaid internships, unless the net value of the internship favors the intern, you could be confronted with a lawsuit.

Understanding the duties that may be assigned to an unpaid intern is critical, particularly considering that some of the most sought after internships in the country are being challenged by former interns.

For example, a former intern for “The Charlie Rose Show” alleged that labor laws were violated when the talk show used unpaid interns to perform productive work.

The plaintiff alleged that, during the summer of 2007, she worked at least 25 hours weekly for the show without receiving proper compensation. Her work included research to prepare the host and her guests, assembling press packets and guiding guests through the studio.

By different former interns, a complaint was filed against Fox Searchlight alleging that the company violated labor laws by using unpaid interns – during the production of the movie “Black Swan” – to perform work that should have been done by paid employees.

The plaintiffs claim that Fox Searchlight cut production costs by using unpaid interns as, among other things, janitors and secretaries. Interestingly, a former intern of Harper’s Bazaar claimed that she worked up to 55 hours weekly without pay for time spent coordinating deliveries and undertaking other clerical tasks.

One would think that simply having these internships on a recent graduate’s resume would be reward enough. However, depending on the circumstances, the labor laws may require more.

Unlike nonprofit businesses, for-profit businesses may not use volunteers. Therefore, internships in the for-profit sector will generally be viewed as employment, thus subject to the pay requirements of labor law, unless the internship meets the criteria set by the Department of Labor.

The Department of Labor’s requirements revolve around the notion that an unpaid internship must be for the benefit of the intern, with only incidental benefits to the organization.

First of all, among other requirements, the internship program should be structured around a classroom or academic program and provide opportunities to use transferable skills. To this end, unpaid interns should not perform the routine work of the business, even if the intern is receiving some benefit in the form of new skills or work habits.

Further, unless the intern is being properly compensated, an organization should not depend upon the work of its interns. Therefore, interns should not be performing filing, clerical work and coffee runs.

Along the same line, without compensation, interns should not be used as substitutes for regular workers. However, if you are providing a job shadowing opportunity that allows an intern to learn job functions under close and constant supervision, with the intern performing no or minimal work, the experience will probably be viewed as a bona fide educational experience.

Conversely, if the intern receives the same level of supervision as the regular workforce, an employment relationship, as opposed to training, is indicated, thus triggering the requirement of minimum wage.

Any value that you receive from an unpaid intern should be offset by your burden to train and supervise the intern. When an intern benefits more from the internship program than the organization benefits, the situation is less likely to be considered “employment” requiring compensation.

Job entitlement is another critical area of investigation. An unpaid internship should be for a fixed duration that is established prior to the first day of the internship.

If an unpaid internship is put in place to train an individual for a specific job with the expectation that she or he will be permanently hired, then the individual will probably be considered an employee.

Likewise, if an internship is with the employer for a trial period with the expectation of permanent hire, the individual will be considered an employee.

The Department of Labor recommends drafting a written agreement with the intern, specifying that the intern has no expectation of continued employment at the conclusion of the internship.

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