Don’t Get Schooled This Summer: Internship Compliance Tips

As schools let out for summer, internship season is upon us. While internship programs can benefit both students and businesses, the failure to ensure compliance with state and federal laws can lead to costly legal headaches.

Compliance with the Fair Labor Standards Act (FLSA) is still important, but it is not the only compliance concern that employers must address. In the past few years, many states, including New York, have implemented additional legal protections.

As a reminder, with regard to wages, true unpaid internships are rare, given that compensation is generally required whenever the employer benefits from the work the intern performs. As previously discussed on the Scarinci Hollenbeck Business Law News Blog, the Department of Labor uses the following six-factor test to determine whether an intern can truly be unpaid:

• The training must contain a significant educational component;
• The training must primarily benefit the intern;
• The interns may not displace regular employees but work under the close supervision of existing staff;
• The company must not derive an immediate advantage from the intern’s activities;
• The intern should not necessarily be entitled to a job at the conclusion of the program; and
• There must be a clear understanding that the intern is not entitled to wages.

Even if interns are unpaid, they may be covered under certain employments laws. In New York, lawmakers amended the state’s Human Rights Law to protect interns from discriminatory practices with regard to hiring, discharge, or terms/conditions of employment. In response to high-profile court decision dismissing a case by an unpaid intern, the law also now expressly prohibits sexual harassment of interns by employers, codifying both the quid pro quo and hostile environment tests for sexual harassment.

In New Jersey, proposed legislation would amend the Law Against Discrimination, the Conscientious Employee Protection Act, and the Worker Freedom From Employer Intimidation Act to include unpaid interns. Accordingly, employers could be held liable for harassment, discrimination, intimidation, and retaliation against this new class of workers. The bill passed the Senate last year, but is not yet law.