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Firms should explore rules before hiring interns

“I manage a small business. I’m interested in hiring a couple of interns this summer to fill in for employee vacations, but I can’t afford to pay them anything.
“I know that some of my friends have brought students into their businesses to work in exchange for college credit. But I was wondering: Is this legal since the students are not being paid minimum wage?”
Though managers bring in summer interns all the time–and internships are extremely popular with students and colleges–the law on this is surprisingly complicated.
To put it as simply as possible, businesses like yours can use unpaid student interns if you are very careful and follow the state and federal regulations that apply, says Andrea Terrillion, a Rochester lawyer who concentrates her practice on labor and employment issues.
Though complicated, the laws–including the Fair Labor Standards Act and New York’s Wage and Hour Law–are designed to prevent employers from getting cheap labor or paying employees less than the minimum wage.
“The payment of the minimum wage is very protected,” she says.
Basically, the Fair Labor Standards Act requires you to look at all the circumstances surrounding the activities of the student on your premises and evaluate them according to six criteria. If the student’s situation meets all of them, then he or she would not be considered an employee who must be paid the minimum wage. Here are the six criteria:
–The training given by the employer is similar to that which would be given in a vocational school, even though it includes actual operation of the facilities of the employer.
–The training is for the benefit of the trainee or student.
–The trainees or students do not displace regular employees but work under their close supervision.
–The employer that provides the training derives no immediate advantages from the activities of the trainees or students, and, on occasion, the employer’s operations may actually be impeded.
–The trainees or students are not necessarily entitled to a job at the conclusion of the training period.
–The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.
In this circumstance, there are other factors that need to be examined, too, such as how much the educational institution is involved in dictating what duties the student can perform and how much of the work is related to the appropriate curriculum, Terrillion says.
The best advice is to establish a relationship with an educational institution that has a track record in managing internships. And if you set up an internship program, put the entire agreement in writing.
Most schools already know the laws and draw up appropriate agreements between the employer, the student and the school, she says.
At the University of Rochester, for example, a “learning agreement” is drawn up between the student, the employer and the school that contains information such as a description of the job the student will perform; the amount of credit involved; the time frame and what the student will learn; and information on site visits by faculty supervisors, says Burt Nadler, assistant dean and director of UR’s Center for Work and Career Development.
If the student is expected to spend some portion of his or her time filing, for example, the agreement often includes other curriculum-related tasks the student will do in exchange for it.
“The internship must be a skills-enhancing experience,” he says. “They don’t want to file 100 percent of the time. They want to learn as much as they can.”
Nadler’s advice to employers is to clarify your expectations of the interns you hire “early and often.” Take the time to introduce students to the work and clarify the smaller things that you might take for granted such as appropriate behavior and dress.
“Don’t assume that they know what to do,” he says.
Also, evaluate the interns at regular, pre-established intervals and “treat them as you would full-time employees,” he says.
But remember that you need to lay the groundwork for the internship experience by establishing a good relationship with an educational institution and doing some careful legal research, perhaps with the assistance of a lawyer, Terrillion says.
Even though your intern will be unpaid, you also will need to check your insurance policies and workers’ compensation coverage before you go ahead.
If your business is not careful with the preliminaries, you could end up paying more in damages and legal fees than you would if you had gone ahead and paid the intern the minimum wage for the entire summer.
The employer is the one taking the risk here.
“The colleges aren’t going to be liable for back pay, but the employer is,” she adds. Though establishing an internship program can take work and time, many employers have no regrets about hiring the students, Nadler says.
“Most employers can’t believe what the interns were able to do by the end of eight weeks,” he says. “They always say it was well worth the investment.”
(Managers at Work is a bimonthly column exploring the issues and challenges facing managers. Contact Kathleen Driscoll with questions or comments by phone at 249-9242 or by e-mail at kadriscoll@aol.com.)

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