Can Maine Employers Legally Hire Unpaid Interns?

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Employers in Maine are receiving calls from students hoping to line up internships for 2010. Many students may, obviously, be glad to participate in an internship training program without pay (and even work their heads off) because of the job experience they can gain, as well as due to the possibility of being asked to stay on as full-time, paid employees after the training program is over.

But what are some key factors that employees should be considering when hiring unpaid interns? Does it matter if the intern will be working 40 hours per week or less? Is it even legal to hire unpaid interns? All are important questions to ask up front.

For starters, since some students have no expectation of being paid for their internship hours and are happy to be in a training program, many employers assume that the Fair Labor Standards Act (FLSA) is not relevant to this arrangement. That assumption is not necessarily correct, however.

Employers must first ensure that their unpaid interns and trainees will not be considered “employees” under FLSA (The Fair Labor Standards Act). If they are, the employer will be subject to liability under FLSA unless it has complied with FLSA’s minimum wage and overtime requirements.

It’s important to note that FLSA never mentions interns, or defines what an intern even is. But the law does distinguish between an employee and a “trainee.” Many interns qualify as trainees, and therefore aren’t covered by the FLSA; however, not all of them qualify.

On this front, the Department of Labor (DOL) uses a six-factor test to determine who can legally be considered a trainee. All of the following criteria must be met, according to the DOL:

• The training is similar to what would be offered in a vocational school;
• The primary benefit of the program is for the trainees;
• The trainees don’t displace regular employees;
• The employer gets no “immediate advantage” from the trainees’ activities (and, on occasion, the employer’s operations may actually be impeded);
• The trainees aren’t guaranteed a permanent job at the end of the program; and
• Trainees understand beforehand that they aren’t entitled to wages.

The long and short of it is that if the employer does not receive any immediate benefit from the work done, and it is the intern who benefits from the arrangement, the intern can legally be considered a volunteer rather than a paid employee. To keep compliant, rather than focusing on getting interns to produce a given amount of work, the focus of an internship program should be on mentoring and exposing interns to real-life experience.

Regardless of whether a so-called “intern” or “trainee” may not be expecting to get paid and may be glad to work just for the experience and possibility of future full-time work, there could be a situation where they are deemed “employees” under FLSA if the employer derives “immediate advantage” from their activities – such as when an intern performs work that would otherwise be performed by the employer’s regular employees.

It’s admirable to mentor the next generation of workers, yet it is nonetheless wise to err on the side of caution by first making sure that your company’s internships do not run afoul of the legal requirements meant to protect employees and employers alike.

Jonathan Shapiro is the regional managing partner of the Portland, ME office of Fisher & Phillips LLP. Shapiro is a leading voice in employment law, having been ranked by Chambers & Partners as a top labor and employment attorney for management in Maine since 2003, three times named a New England SuperLawyer in Employment law, and repeatedly named among the Best Lawyers in America for his expertise in Labor & Employment Law.

Disclaimer: The materials in this column are provided for informational purposes only, do not constitute legal advice, and do not necessarily reflect the opinions of Fisher & Phillips LLP or any of its attorneys or clients. Neither this column nor the information contained herein is intended to create an attorney-client relationship between the viewer, reader, recipient, or user and Fisher & Phillips LLP.