Best Ohio Wage And Hour Attorney Answer: Can companies legally use “unpaid” interns without paying them? Do unpaid summer interns have rights under The Fair Labor Standards Act? Should summer interns be paid for overtime at time and a half for working over 40 hours per week?
As college campuses let out for the summer, many college students head home. Most find summer jobs. And, some of those students get summer internships to gain experience; pad their résumé; and give them a leg up in a tough job market.
It has always been quite common for companies to hire summer interns. It is also common for companies to not compensate these “interns” for their time and services. More recently, however, these so-called “unpaid internships” have come under scrutiny, and there has been an increase in lawsuits filed these interns asserting rights under the Fair Labor Standards Act (“FLSA”). Even worse for employers, Courts are paying attention, and in some cases, agreeing with the interns. Although our wage and hour lawyers have blogged before about the wage rights of interns, it bears repeating as internship season starts up again,
An example can be found in the recent decision of Grant v. Warner Music Grp. Corp., which was recently decided by the Southern District Court of New York. In Grant, the federal district court conditionally certified a collective action of approximately 3,000 unpaid interns who claim that Warner Music Group improperly classified them as exempt from minimum wage and overtime compensation. In the end, the question of whether the unpaid interns can successfully bring these wage and hour claims under the FLSA will depend on whether they are “trainees” or “employees.” If they are the latter then the FLSA dictates that they must be compensated as employees of the company, meaning at least minimum wage as well as overtime compensation at time and a half (unless they are otherwise exempt from overtime laws). If they are found to be “trainees,” then the employer may be in the clear.
The Department of Labor (“DOL”) has established six-factor test for “unpaid interns” that you would expect the Court in Grant to consult when ultimately determining whether the plaintiffs in that case are “trainees” or “employees”. The test includes the following criteria:
- Is it like an education environment? “The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;”
- Does the intern receive the benefit? “The internship experience is for the benefit of the intern;”
- Did the employer get rid of existing employees to make room for the intern? “The intern does not displace regular employees, but works under close supervision of existing staff;”
- Does the company get any benefit for the intern? “The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;”
- Is there a promise of an automatic job? “The intern is not necessarily entitled to a job at the conclusion of the internship;”
- Was there a clear understanding that there would be no payment at the beginning of the relationship? “The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.”
According to the Department of Labor Wage and Hour Division’s Fact Sheet, “If all of the factors listed above are met, an employment relationship does not exist under the FLSA, and the Act’s minimum wage and overtime provisions do not apply to the intern.” As such, all of the above criteria must be met in order for the company to avoid the intern from becoming an employee that is required to be paid under the FLSA. None of these factors carry more weight than the other. For example, the most common misunderstanding is that an employer will protest, “But, we agreed that there would be no payment!” Even if that agreement for no payment is in writing, the employer will still be liable for back wages if any one of the other criteria is not me – for instance, if the student intern is doing the job of a regular employee or has a promise of a job post graduation.
You should also note that above six criteria does not consider if a student receives academic credit for his or her participation in the internship. As such, even if the student gets credit, this will not save the employer from paying wages and overtime pay under the FLSA.
As for Grant, if the plaintiffs are not considered “unpaid interns” under this six-factor test then the employer may be in for a world of hurt.
Are you an unpaid intern? If you believe that your employer is not paying you your lawfully earned wages and your overtime compensation at a rate of one and half times your normal wages as requires under the Federal Fair Labor Standards Act or Ohio Minimum Fair Wage Standards laws or you are an nonexempt employee that has been misclassified as exempt or independent contractor, contact the attorneys at Spitz, The Employee’s Law Firm today for a free and confidential initial consultation. The wage and hour lawyers at Spitz, The Employee’s Law Firm will provide you with the best options for your overtime pay dispute situation. If you even think that you may be entitled to overtime pay that you are not being paid, call 866-797-6040.
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