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Unpaid Internships: Priceless Opportunity or Illegal Employment?

This time of year, many companies consider summer interns.  It’s a great opportunity for everyone.  The student gets experience and you get free workers, right? Not so fast.  Although forty-seven percent of students who graduated college in 2012 worked as an intern – for free –those interns come with considerable risk. 

Companies such as Fox Searchlight and Hearst Corporation are still entangled in litigation brought by unpaid interns who worked for the company free of charge in hopes of entry into the industry. As summer approaches, it is a good time to evaluate whether your unpaid internship program is creating risk for your company.           

An internship must meet six criteria to avoid paying minimum wage:  (1) the internship must be similar to training provided in an educational environment, (2) the internship must be for the benefit of the intern, (3) the intern must not displace regular employees, (4) the employer must not receive an immediate benefit from the intern’s work, (5) the intern is not necessarily granted a job at the end of the internship, and (6) both the intern and employer agree that the intern will not receive wages for the time spent in the internship.

It is key that, if you plan to have unpaid interns at your company, you make sure you are not in violation of the law.  Otherwise, that “cheap” labor may end up costing you considerably.   

Provided by Sam Sherman, Esq. (P) 858-764-2421 | (F) 858-754-1260 | (E) Sam@TencerSherman.com

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