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The High Cost of Unpaid Internships

by Andrew Kepple
For many years, internships have provided students with an effective way to gain real-world work experience.  However, there are numerous pitfalls connected with hiring unpaid interns.  Recently, there has been an increase in litigation by unpaid interns against employers for failing to pay minimum wage in violation of the Fair Labor Standards Act (FLSA) and state minimum wage laws.  These lawsuits are significant because violations of minimum wage laws often results in substantial penalties.
Only certain individuals working in the private sector may do so without receiving compensation.  Under federal law, six criteria are considered when determining whether an intern will be allowed to work without pay.  The six factors include whether the internship is similar to training the intern would receive in an educational environment, whether the intern will displace regular employees, and whether the employer receives a direct benefit from the intern’s work.  A more detailed explanation of these factors can be found in the United States Department of Labor’s Wage And Hour Division Fact Sheet #71 .
If you have questions about hiring an unpaid intern for your business, or about any other employment law issues, please contact Attorney Michael P. Doherty, Andrew M. Kepple or one of our other employment attorneys at 508 541-3000.