Everyone wins with internship programs. Employers are able to boost workplace productivity and students are able to strengthen business skills. Students gain real-life experiences, learn new programs, and experience life in a professional workplace. Employers gain temporary help from fresh and eager aspiring business leaders. And, while internships and practicums (essentially internships that are tied to a specific college course and lessons) are not deliberately designed to serve as an extended interview, they often allow employers to evaluate potential new hires before extending an offer.
- Internships, whether paid or unpaid, offer valuable work experience and can help you build your résumé (and a professional network).
- Interns are expected to be a part of the employee team and are expected to be punctual, responsible, proactive contributors who comply with all workplace rules and regulations.
- Duration of the internship varies from employer to employer. Most interns average 10 hours a week with the employer, spending roughly 100 hours per semester as an intern.
Start an Internship:
To begin an internship for Walla Walla University Students at your organization, email Darel Harwell or call 509-527-2089.
Starting and Maintaining A Quality Internship Program is a wonderful guide full of resources for employers who are looking to start an internship program or make improvements to current internship programs. This document is provided to you by permission from its author, Michael True. Please note the forms contained in this article are not the same forms used by Walla Walla University for co-op/internships. However, employers may find the some forms within this document particularly useful for their own records and evaluations.
Please review Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act from the United States Department of Labor to help you determine if your internship offerings should be paid or unpaid.
Legal Issues: Internships
by George C. Hlavac, Esq., and Edward J. Easterly, Esq.
NACE Journal, February 2015
Employers must be wary of how they classify interns, how they structure an internship, and what benefits they will provide to interns.
Based upon recent court decisions and lawsuits, new laws, and the heightened scrutiny of internships, employers should review several areas when determining how and when interns will be used. Since colleges and universities are often where students find out about internships, career services also should be aware of these issues.
The biggest issue continues to be the payment, or nonpayment, of interns. As many employers are aware, in May 2010, the U.S. Department of Labor (DOL) issued a six-part test to determine if an employer is required to provide payment for an internship. Under this test, an employer is not required to pay an intern if these criteria are met:
- The internship, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in the educational environment;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees;
- The employer that provides the training derives no immediate advantage from the activities of the intern, and on occasion its operations may be impeded;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages.
Since that test was enacted, a flood of lawsuits have been filed against employers, and websites have been established solely to recruit interns to join such lawsuits. In October 2014, approximately 9,000 unpaid interns were part of a class-action lawsuit with NBCUniversal that was settled for $6.4 million dollars. The interns in that matter claimed that NBCUniversal failed to provide them payment of minimum wage for performing actual “employee” work. In addition to the NBCUniversal claim, International Creative Management, CBS, and Fox Searchlight have also been subject to recent class-action lawsuits filed by individuals who claim that they were wrongly classified by employers.
Employers may be subject to liability through more than just lawsuits. The DOL has begun to conduct its own investigations into allegations that employers have misclassified interns. These investigations have focused on smaller claims (in some cases $700 in back pay), but any violation also subjects an employer to liquidated damages and additional penalties.
Employers, therefore, must be mindful when classifying an intern as “unpaid.” An employer must focus on the productive work performed by the intern. If the productive work outweighs the training and supervision burden imposed on the employer, an employee/employer relationship may be present, and an employer may be subject to liability under the Fair Labor Standards Act (FLSA).
Employers have also attempted to rely upon the fact that an unpaid intern receives college credit to support its position that regardless of the duties performed, the intern is technically “compensated.” Recent case law, however, has essentially blown that argument out of the water. Courts have recently stated that receiving college credit in and of itself does not establish an unpaid internship and is of “little importance” in determining if interns must be paid. The true test is whether the internship is structured to benefit the intern and not the employer.
As such, an employer must focus on the work performed by the intern, the training provided by the employer, and who, ultimately, receives the benefit of the internship.
A second issue that is tied to compensation is unemployment benefits. As an initial matter, each state has its own specific unemployment compensation regulations. Generally, to collect unemployment, one must be “able and available” for work. As a practical matter, interns, as college students, are usually not available for work at the conclusion of an internship because they must return to college. It is unlikely that interns, whether paid or not, will be able to collect unemployment benefits at the conclusion of an internship.
Workers’ Compensation Issues
Workers’ compensation provides benefits to individuals who suffer injuries during the course of and arising out of the scope of their employment. Workers’ compensation laws vary from state to state, with each state determining an individual’s right to benefits.
For example, the New York Workers’ Compensation Board specifically states: “An unpaid student intern providing services to a for-profit business, a nonprofit, or a government entity is generally considered to be an employee of that organization and should be covered under that organization’s workers’ compensation insurance policy. Workers’ compensation law judges have ruled that the training received by student interns constitutes compensation (even though the student interns may not be receiving actual “cash payments” for their efforts).”
Other states such as Utah look at the relationship between the intern and the employer to determine eligibility. As such, questions about whether an individual is an employee and whether the intern is paid or unpaid are essential to determining coverage under some applicable workers’ compensation statutes, but each determination must be made on a state-by-state basis.
Regardless, it is imperative to make a determination prior to implementing an internship program. In most instances, workers’ compensation claims bar recovery by the intern for any work-related injuries. So if an intern is injured while on an employer’s premises, his or her sole recovery would be under the applicable workers’ compensation statutes. Further, if an employer fails to include a covered employee on its workers’ compensation coverage, it could be subject to additional penalties from its carrier.
Both federal and state statutes provide protections for individuals to be free from discrimination at the workplace. Generally, such anti-discrimination statutes only protect “employees.” Accordingly, unpaid interns were left without coverage under such statutes. Recently, however, several states have passed laws that protect unpaid internships. New York, Oregon, and California have all passed statutes that ban harassment and discrimination against unpaid interns in the workplace.
By way of example, California was the latest of the three to pass its law, which went into effect January 1, 2015. The law amended the current statute to make it unlawful to discriminate or harass an unpaid intern or volunteer on the basis of a legally protected classification (i.e., race, national origin, gender, sexual orientation—which is protected in some states, disability, or age). New York’s statute took effect July 22, 2014, and also prohibits employers from refusing to hire, discharging, or discriminating against an intern on the basis of a protected classification. Tellingly, New York’s statute provides a definition of “intern” that essentially mirrors the six-part test.
If an internship does not take place in one of those three states, the key inquiry remains whether the intern falls within the definition of an employee. New York’s amendment came about, in part, as a result of a lawsuit filed by a former Syracuse University intern who alleged that she was subject to harassment during her internship. That student’s case was eventually dismissed because, as an unpaid intern, she was not a protected employee under state or federal law.
Other courts have made similar determinations. Regardless of the issues presented, the key issue is generally whether there was remuneration provided to the intern in exchange for services. The question is what happens when the individual is not provided with pay but with other types of compensation. Courts have stated that non-financial benefits that create or relate to career opportunities may suffice. For example, free training and educational opportunities (such as a corporate leadership course) may establish an employer/employee relationship where the individual can demonstrate an economic dependence upon the training and not a mere pleasure from the “compensation.” Also, at least one court has found that where a volunteer was provided with a “clear pathway to employment” deriving from her position as a volunteer, she could establish the plausibility of an employment relationship under federal anti-discrimination laws. If an intern can establish that he or she was provided with some form of remuneration for services provided, a court may find that the intern is afforded protections under federal and state anti-discrimination laws.
Additionally, both employers and universities can be subject to common law tort theories of liability. If the unpaid interns are unable to use the statutory protections, they may still file suit for intentional infliction of emotional distress for harassment or discrimination. As a result, employers should treat interns the same as regular employees and investigate all claims of discrimination promptly and effectively.
Whether an intern is paid or unpaid, it is recommended that employers take all claims of harassment or discrimination seriously and conduct a thorough investigation. Merely because an employer believes an intern is not an employee does not mean a court will make the same determination.
Some employers require interns to sign employment agreements at the commencement of the internship. Such agreements provide the scope of the intern’s duties, along with the inclusion of restrictive covenants. Such agreements may include noncompete, non-solicitation, or nondisclosure provisions. Both the intern and the employer should have an attorney review the agreement to ensure they understand the legal requirements that come along with entering into such terms and conditions.
Whether such agreements are valid, however, is an entirely different issue. In general, employment agreements are necessary if an employer wants to define the manner in which an employee can be terminated, to specify the terms of severance, and to provide certain restrictions on employment. Regarding interns, most of the foregoing terms are unnecessary as the scope and duration of the internship is definite and certain. The only true need to have an intern sign an employment agreement is to protect the employer’s business interests.
A nondisclosure agreement prohibits an employee or intern from disclosing an organization’s confidential and/or proprietary information to third parties during both the tenure of employment and after termination. The individual agrees that he or she will not reveal anything the company considers confidential (e.g., customer lists or research and development plans). Unlike other forms of restrictive covenants, a nondisclosure agreement does not restrict an individual’s ability to obtain work upon the termination of employment, but merely protects an employer’s proprietary information. As interns are generally provided with unlimited access to an employer’s business, it is not unusual for a company to require interns to sign a nondisclosure agreement upon the commencement of the program. Employers should have interns sign such agreements to protect the company’s interests. These agreements should be explained and given to interns during the orientation period. Provided the nondisclosure agreement is not overly broad and is explained to an intern prior to execution, a court will likely find such an agreement valid.
Noncompete and non-solicitation agreements
Unlike a nondisclosure agreement, noncompete and non-solicitation agreements limit an individual’s ability to perform work in his or her chosen profession for a certain period of time. As of today, no court has determined whether a noncompete or non-solicitation would be deemed valid and enforceable against an intern, but it is unlikely that a court would find such an agreement valid. The reason is that an employer would be hard-pressed to point to the “legitimate interest” it is trying to protect with the use of such an agreement. Further, a court is unlikely to restrict the ability of a college student to engage in his or her chosen profession when he or she is entering the work force. While an employer may have interns sign such an agreement, the likelihood is that they are not going to be worth the paper on which they are drafted.
Affordable Care Act
In March 2010, the Affordable Care Act (ACA) was signed into law by President Barack Obama. At its heart, the ACA is a set of health insurance reforms intended to make healthcare more accessible to Americans. The consequence of such accessibility is increased responsibilities for employers. Not all employers, however, are impacted by the ACA’s requirements and not all interns are required to be covered.
In this regard, only “covered employers” are bound by the requirements of the ACA. A covered employer is any employer that employs 50 or more employees working an average of 30 or more hours per week. This includes nonprofit organizations. The determination of a “full-time” employee also includes a “full-time equivalent” (FTE) employee. An FTE employee equals the total number of full-time employees plus the combined number of part-time employee hours divided by 30. Provided an employer’s number of full-time employees exceeds 50, it is covered under the ACA.
A full-time employee does not, however, include independent contractors or unpaid interns (as defined above), as both are excluded from the definition of “employee” under the FLSA. If an internship is paid, however, there are additional exclusions available. “Seasonal employees” can also be excluded from the ACA. Seasonal employees are defined by the ACA as an individual hired to work for a position that is customarily six months or less at approximately the same time each year. Additionally, the ACA allows parents to keep their children on their insurance until the age of 26. If coverage is provided in that manner, the intern is not required to be covered by the employer.
Notwithstanding the foregoing, if an employer has more than 50 FTE employees, it must provide health insurance for its full-time employees, or pay a per-month “Employer Shared Responsibility Payment.” This is essentially a penalty assessed to employers that fail to comply with the ACA. Regarding interns, such positions are usually short-term assignments, lasting only a semester or a few months during the summer. For an individual to be considered full-time under the ACA, he or she must average more than 30 hours per week for 120 days. The 120 days do not have to be consecutive but must occur during a 360-day period. Accordingly, provided an intern works less than 30 hours per week, or does not work 120 days for an employer, he or she is not covered under the ACA and an employer is not required to provide healthcare coverage. However, if the alternative is true, the intern must be provided coverage and also must be counted toward the number of full-time employees when determining whether an employer is covered by the ACA.
Employers should also be fully aware that the ACA protects against retaliation. If an individual complains about an employer’s implementation, or lack thereof, of any requirement of the ACA and is either terminated, disciplined, or not hired as a result of that complaint, he or she may file a complaint against the employer and seek damages. Employers should be wary of how they treat a new hire or intern who asks relevant questions related to the ACA and the employer’s responsibilities for compliance.
Internships provide a benefit to both employers and the interns. Given the current legal landscape, however, employers must be mindful of how they structure such relationships. Each day more lawsuits are filed, more statutes are proposed, and new laws are implemented that impact the internship dynamic. Employers have a legal requirement to keep abreast of such changes to avoid significant liability.
George C. Hlavac, Esquire, and Edward J. Easterly, Esquire, are attorneys in the Labor and Employment Law Department at Norris, McLaughlin & Marcus, P.A.
- See more at: www.naceweb.org/j022015/internship-legal-issues.aspx
15 Best Practices for Internship Programs
Excerpted from Building a Premier Internship Program: A Practical Guide for Employers (NACE university relations and relations members receive a complimentary copy of this resource as part of their welcome kit.)
Best Practice #1: Provide interns with real work assignments.*
Providing interns with real work is number one to ensuring your program’s success. Interns should be doing work related to their major, that is challenging, that is recognized by the organization as valuable, and that fills the entire work term.
You can guarantee that hiring managers provide real work assignments by checking job descriptions, emphasizing the importance of real work assignments during a manager/mentor orientation sessions, and communicating with interns frequently throughout the work term to determine who they perceive what they are doing.
*Note: The best practices presented here assume the organization's goal is to convert interns to full-time hires and is therefore paying its interns. Unpaid internships present a number of problems for organizations focused on intern conversion, not the least of which is legal issues that arise if the unpaid intern is given real work assignments.
Best Practice #2: Hold orientations for all involved.
It’s important that everyone “be on the same page,” so to speak. Make this happen by holding an orientation session for managers and mentors as well as a session for students. Orientations ensure that everyone starts with the same expectations and role definitions. This is time well spent—the effort you put into these sessions will pay off throughout the program.
Best Practice #3: Provide interns with a handbook and/or website.
Whether in paper booklet format, or presented as a special section on your website, a handbook serves as a guide for students, answering frequently asked questions and communicating the “rules” in a warm and welcoming way.
A separate intern website serves many of the purposes of the handbook, but has the advantage of being easy to change. You can use your website as a communication tool, with announcements from the college relations staff or even articles of interest written by the interns themselves.
Best Practice #4: Provide housing and relocation assistance.
Few employers can afford to provide fully paid housing for interns, but you’ll find that you get a lot of appreciation if you offer any kind of assistance toward housing expenses. If that’s not possible, provide assistance in locating affordable housing: For those relocating to the job site, the prospect of finding affordable, short-term housing can be daunting. Easy availability of affordable housing will make your opportunity more attractive to students, broadening your pool of candidates.
If you can pay for all or some of your interns’ housing, be sure to design (and stick to) a clear policy detailing who is eligible. This will eliminate any perceptions of unequal treatment. In addition, be aware that employer-paid or employer-subsidized housing is considered a taxable benefit. Check with your internal tax department on exceptions to this.
You will also want to consider the issue of relocation, which is separate although related to housing. Many organizations pay some or all of their interns’ relocation expenses to and/or from the job site.
Best Practice #5: Offer scholarships.
Pairing a scholarship with your internship is a great way to recruit for your internship program—and this is especially true if you are having difficulty attracting a particular type of student or student with a specific skill set to your program. Attaching a scholarship can increase your pool of candidates with the desired qualifications.
Best Practice #6: Offer flex-time and/or other unusual work arrangements.
Students mention flex-time as one of their most-desired features in a job. (A flexible time schedule during their internship eases their transition to the workplace.)
If you think about how students spend the day on campus (varied schedule each day, with varied activities such as work, class, social time), you can understand that 8 a.m. to 5 p.m. Monday through Friday is a bit of an adjustment for them. A flexible schedule can make them feel less chained in by an unchanging routine.
Other work arrangements that have been found successful with students include keeping them on as part-time, remote employees after they go back to school (depending on the type of work they do for you and whether they have a willing manager), and having them come back and work over school breaks for a couple of weeks. These are excellent ways to keep communication open and build a stronger bond.
Best Practice #7: Have an intern manager.
Having a dedicated manager for your intern program is the best way to ensure that it runs smoothly and stays focused on your criteria for success. Unfortunately, the size and resources available to most internship programs mean that this isn’t always possible. If your program isn’t big enough to warrant a dedicated full-time staff member, an excellent short-term solution is to hire a graduate student (look for a student working toward an advanced HR degree) to be your intern, and put this college relations intern in charge of the daily operation of the internship program. This gives the interns a “go-to” person, and gives you and your staff a break from the many daily tasks involved in running a program of any size. For this to work, you have to plan the program structure in advance (don’t expect your intern to do it), and be very accessible to your college relations intern.
Best Practice #8: Encourage team involvement.
Involve your college recruiting teams—whether they are “volunteers” who participate in college recruiting, staff members dedicated to college recruiting, or some combination of both—in your intern program. They can sponsor social or professional development events, and help to orient the interns to your company culture. In my experience, college team members served as cooks at intern picnics, hosts at speaker events, and drivers for social outings such as ball games.
Best Practice #9: Invite career center staff and faculty to visit interns on site.
Although some programs—especially those that are very structured on the university side—make visits by career center staff and faculty a regular practice, most do not. In general, career center staff and faculty members have relatively few opportunities to visit employer work sites to see firsthand the types of experiences that their students are getting. By inviting them to your site, you will build a better working relationship with these groups, which can lead to more student referrals, enhanced campus visibility, and increased flexibility on their parts when your business needs dictate it.
Best Practice #10: Hold new-hire panels.
New-hire panels are one of the best ways to showcase an organization to interns as a great place to work. These are panels of five or six people who were hired as new grads within the last three years. They act as panelists in a meeting of interns, giving a brief summary of their background and then answering questions from the intern audience. Your interns get insight about your organization from your new hires—people who they perceive are like themselves and who they consequently view as credible sources of information.
In these meetings, I’ve found that the interns consistently bring up the same topics: Why did you choose this employer over others? What was your first year like? How is being a full-time employee here different from being an intern? Do you recommend getting a graduate degree? In the same field, or an M.B.A.? Is it better to go straight to graduate school after the bachelor’s or better to work a while?
It’s also fairly consistent that the new hires will offer other types of advice to your interns, such as how to handle finances those first couple of years out of school. (Their typical advice: Don’t run right out and buy a new car, and, Start contributing the maximum to your savings plan as soon as you are allowed.)
College relations staff should attend these sessions, but should remain unobtrusive, staying in the back of the room so as not to stifle the conversation. By being there, you stay aware of what is on the minds of your target group, and you can answer any detailed questions that may come up, such as those related to benefits.
Best Practice #11: Bring in speakers from your company’s executive ranks.
One of the greatest advantages to students in having internships is the access they get to accomplished professionals in their field. Consequently, speakers from the executive ranks are very popular with students—it’s a great career development and role modeling experience for interns. Having a CEO speak is especially impressive. Best scenario: Your CEO speaker is personable, willing to answer questions, and willing and able to spend a little informal time with the students after speaking—your interns will be quite impressed.
For you, having your executives speak to interns is another way to “sell” your organization to the interns, and get your executives invested in (and supporting) your program.
Best Practice #12: Offer training/encourage outside classes.
Providing students with access to in-house training—both in work-skills-related areas, such as a computer language, and in general skills areas, such as time management—is a tangible way to show students you are interested in their development.
You may also want to consider providing interns with information about nearby community colleges: Many students will be interested in attending during their work term to take care of some electives and/or get a little ahead with the hours they need to graduate. If you have the budget, you may also want to consider paying the tuition for courses they take while working for you, but, as is the case with housing, any assistance you can provide—even if it’s just providing them with information about local schools—will earn you points with students.
Best Practice #13: Conduct focus groups/surveys.
Conducting focus groups and feedback surveys with these representatives of your target group is a great way to see your organization as the students see it. Focus groups in particular can yield information about what your competitors are doing that students find appealing.
Best Practice #14: Showcase intern work through presentations/expo.
Students work very hard at completing their work and are generally proud of their accomplishments. Setting up a venue for them to do presentations (formal presentations or in a fair-type setting such as an expo) not only allows them to demonstrate their achievements, but also showcases the internship program to all employees.
Best Practice #15: Conduct exit interviews.
Whether face-to-face or over the telephone, a real-time exit interview done by a member of the college relations team is an excellent way to gather feedback on the student’s experience and to assess their interest in coming back. Having the students fill out an exit survey and bring it to the interview gives some structure to the conversation.
Courtesy of the National Association of Colleges and Employers.
The full guide and other resources are available for purchase at the NACE Store.