With summer vacation just around the corner, droves of college students will be vying for coveted internships at a variety of businesses throughout the U.S. While the thought of cheap or free temporary labor can be appealing, programs that are designed to simply substitute your traditional workforce with low and non-paid workers can become very problematic for employers.

Recently there have been several high-profile cases where individuals classified as interns have brought claims alleging that they were improperly paid and the U.S> Department of Labor and plaintiff attorneys have been aggressively pursuing cases where employees are improperly treated as exempt interns.

In Fox Searchlight Pictures v. Glatt, the Southern District of New York ruled that unpaid interns working on the production of the movie, Black Swan, were in fact employees, and should have received at least the minimum wage for their work. Other high-profile cases brought by, or on behalf of interns, involve such entities as Hearst Corp., Condé Nast Publications, Sirius XM Radio, Warner Music Group and Viacom.

If you are considering hiring unpaid interns and want to keep lawsuits at bay, managers and human resources pros should make sure of the following:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training, which would be given in an educational environment.
  2. The internship experience is for the benefit of the intern.
  3. The intern does not displace regular employees, but works under close supervision of existing staff.
  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.
  5. The intern is not necessarily entitled to a job at the conclusion of the internship.
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

According to the Department of Labor guidance, if not all of the above mentioned six criteria are met, then the intern must be paid at least the minimum wage and for any overtime work. While the agency's opinion is not itself law, it is recommend that employers carefully consider whether they meet the criteria before classifying individuals as unpaid interns.

If you plan on employing paid interns, work with your management team to ensure that the interns are being paid consistent with wage and hour laws, this includes interns who receive alternative compensation such as stipends, housing allotments, etc.

Originally published by Phoenix Business Journal.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.