Human Resources News & Insights

Court slaps DOL on unpaid-intern rules

About this time last year, the Department of Labor was making noise about cracking down on companies who used unpaid interns. Now a federal judge has ruled the DOL regs are “overly rigid and inconsistent.”

You’ll remember that the DOL issued a fact sheet outlining six scenarios under which it’s OK to use unpaid interns. Here’s the fed’s six-point test:

  1. Is the training similar to what would be given in a vocational school or academic educational instruction?
  2. Is the training for the benefit of the trainees or students?
  3. Do the trainees or students work under their close observation of regular employees without displacing them?
  4. Does the employer derive no immediate advantage from the activities of the trainees or students, and on occasion are the employer’s operations actually impeded?
  5. Are the trainees or students not necessarily entitled to a job at the conclusion of the training period?
  6. Do the employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training?

The recent case involved private school students who worked part-time, unpaid, in a school-owned nursing home. The DOL sued the school, saying the students were providing actual services to the medical facility, and should be regarded as employees.

The feds pointed to the six-point test as the standard the court should use in deciding whether or not the students were employees.

The court declined. “We find the (DOL) test to be a poor method for determining employee status in a training or educational setting,” the judge wrote. “(I)t is overly rigid and inconsistent with a totality-of-the-circumstances approach.”

Finally, the court found that while the school did benefit from the students’ activities, the primary benefit of the program was the education received by the students. Thus, they were properly classified as unpaid interns.

Don’t let your guard down

Although the employer prevailed here, it’s still pretty clear that companies need to take a hard look at unpaid internship programs. Bottom line: If your company benefits from the work an intern does, the person’s got to be paid.

But it’s also reassuring to know that if an employer can make a case that the participants are reaping the lion’s share of the benefit of an internship program, judges aren’t going to automatically go along with a DOL lawsuit.

Cite: Solis v. Laurelbook Sanitarium and School, Inc. To read the full decision, go here.

Print Friendly

Subscribe Today

Get the latest and greatest Human Resources news and insights delivered to your inbox.
  • Ray

    When I was in college, every internship I took on was unpaid. This is the first I’ve heard of anything like this. It was just like doing volunteer work or community service, except you were gaining experience.

  • Getreal

    Internships historically have been unpaid and I dare say they have been win-win for both the employer and the intern – the employer almost inevitably gets benefit from the interns work and the intern gets some good hands-on experience. The DOL, in its liberal leanings, is now tending to “side” with the interns.

  • Common Sense

    As a general rule the the government should be hands off. There is obviously a symbiotic relationship between the intern and the company. Both parties enter the agreement willfully and both parties receive a benefit. I fail to see why bureaucrats need to make it their business (other than to justify their own existence). If the DOL succeeds in its goal, the result will be fewer internships for the people that want to take advantage of them.