As Internship Season Approaches, Remember That Unpaid Internships Can Be Risky

By
Right now, many organizations are getting ready for a new class of interns to arrive in May when schools and colleges finish for the summer.  With fully laudable intentions, many organizations offer summer internships as a chance to allow students to get their feet wet in a business or industry, fully recognizing that the students’ contributions and added value, if any, are not that great.

Experience teaches that many organizations do not pay interns.  However, this is often a risky proposition.  Under the Fair Labor Standards Act, the legal standard to qualify as an unpaid internship is actually quite high.  The consequence of failing to meet that legal standard—and in our experience many may not—is that the “intern” is deemed to be a misclassified employee, and would be entitled to be paid minimum wage and overtime for all of the hours worked as an unpaid intern. 

This exposure, including liquidated damages and potential penalties and attorneys’ fees, can be significant. In addition, there could be tax exposure for any unpaid employment taxes and withholdings that were not made because the wages that should have paid were not.

So, if you are considering an unpaid internship program this summer, take the time to ensure it is legally compliant.  For those that want to take a closer look at their internship programs, our Client Alert on this issue provides a detailed summary of the compliance issues and risks, and practical tips for employers.  The Client Alert can be found here.

Also published on our Fair Labor Standards Act Law Blog.

Comments

Post a Comment

Popular posts from this blog

OSHA's Mandatory Vaccination Rule Stayed by Federal Court

By
On November 5, 2021, the U.S. Occupational Safety and Health Administration published its anticipated emergency temporary standard on COVID-19 Vaccination and Testing (the “ETS”). Citing the “grave danger” posed by the virus to unvaccinated employees in the workplace, the headline-grabbing core of the ETS is the requirement that covered employers must implement and enforce a policy that mandates that employees be fully vaccinated against COVID-19 by January 4, 2022 or to submit to weekly COVID-19 testing and wear a mask.   The ETS stated that it was to take effect immediately, i.e ., when it was issued on November 5, 2021.   However, numerous legal challenges to the ETS were filed in federal courts across the country on the same day it was issued.   The challengers in the legal cases asserted, among other things, that the ETS is not valid because OSHA did not have the authority to issue the ETS and that it is unconstitutional. In one of those challenges, the ...
Read more

Governement Agency Scruntizes Confidentiality Agreements

By
The Securities and Exchange Commission ("SEC") recently announced that it had opened an enforcement action against a company based on a confidentiality agreement that the SEC claimed interfered with the rights of would-be whistleblowers.  According to the SEC, the confidentiality agreement was presented to employees during workplace investigations, and prohibited the employees from speaking about the investigation with anyone unless the company granted permission.  The SEC claimed that such a provision violated the whistleblower protections of Rule 21F-17 of the Securities Exchange Act of 1934, which prohibits actions that impede whistleblowers from reporting possible securities law violations to the SEC.  Our colleague Morgan Curry has offered a solid analysis of the SEC's action here .  As a result, businesses are well advised to take a look at their confidentiality provisions, especially those in employment and severance agreements,...
Read more

Womble Hosts Local SHRM Chapter for Employment Law Update

By
Image
(Winston-Salem, NC)  For the eleventh year in a row, John Pueschel of Womble Bond Dickinson’s Winston-Salem office hosted the 2019 Legal Update for the Winston-Salem Chapter of the Society for Human Resource Management at the Firm’s Winston-Salem office. Over 50 HR professionals of clients and local businesses attended. The event provided information and best practices on legal issues of particular interests to HR professionals. Womble Bond Dickinson attorneys led many of these sessions, which included: Internal Investigations, led by Womble Bond Dickinson attorney Kurt Stakeman and J.T. Moser , Director of Enterprise Risk and Corporate Investigations at Wake Forest University Health Sciences; Womble Bond Dickinson attorney Gemma Saluta , who is a Board-certified workers’ compensation specialist, facilitated a Q&A session with Industrial Commission Deputy Commissioner Michael Silver ; EEOC Re quest for Collection of Pay Data, presented by Womble Bond Dickinson atto...
Read more