It is time to change others lives and get ready for a new class of interns arriving in May. Summer internships offer a great opportunity for students to get experience, strengthen their resumes and obtain a first job. Internships are undeniably an important aspect in workforce education and can be a good source of talented new recruits.

Organizations who offer internships often do not pay their interns. However, this is a risky proposition. Under the Fair Labor Standards Act (FLSA), the legal standard to qualify as an unpaid internship is high. If the intern does not meet the test established by Department of Labor, the ‘intern’ is deemed to be a misclassified employee. As employees, ‘interns’ are entitled to minimum wage and overtime pay.

Since 2012, several organizations in the publishing, fashion and entertainment business (The Charlie Rose Show, Searchlight Pictures, Donna Karan to name just a few) have been sued by their former interns. The allegations were that interns performed real work. They should have been classified and paid as employees.

The DOL has a six-part test that must be met if you want to establish a legitimate unpaid internship program. You have to jump through all six hoops to qualify your internship program as unpaid:

  1. The internship is similar to training that would be given in an educational environment. Does that mean you need to replicate a classroom setting with instructors on hand?
  2. The internship experience is for the benefit of the intern. Unless you are a business with a social mission that might be a tough one to sell to your operations managers.
  3. The intern does not displace regular employees but works under close supervision of existing staff. Interns can’t fill in for an employee out on sick days or leave.
  4. The employer that provides the training derives no immediate advantage from the activities of the intern, and on occasion, its operations may actually be impeded. “Operations impeded? It’s OK if we’re losing customers, at least the intern’s learning.”
  5. The intern is not necessarily entitled to a job at the conclusion of the internship. That’s probably a good thing for employers, just in case the intern does not turn out as wonderful as the interviewer thought.
  6. The employer and intern understand that the intern is not entitled to wages for the time spent in the internship program. Although this is the easy one to pass, the trouble is you need the other five.

Tough test, isn’t it?

So, if you are considering an unpaid internship program this summer, take the time to ensure it is legally compliant. You might avoid legal entanglements with the DOL and the IRS.

Your best bet is to do like Procter & Gamble did with me all those years ago. Pay your interns at least minimum wage. Don’t forget to pay overtime if they work over 40 hours a week. Then you can put them to work and get value for your money!