Federal and state regulators are convinced that many unpaid internships violate minimum wage laws and have began to investigate and fine employers. The Labor Department claims it is cracking down on firms that fail to pay interns properly and is expanding efforts to educate companies, colleges, and students on the law regarding internships.
There are six federal legal criteria that must be met for an internship to be unpaid. Those criteria include that the internship should be similar to the training given in a vocational school or academic institution. The intern should not displace regular paid workers and states the employer “derives no immediate advantage” from the intern’s activities.
Employers are calling for the Labor Department’s six criteria to be updated, because they are based on a Supreme Court decision from 1947, when internships and apprenticeships were production-type work. It is difficult for companies offering internships to meet the criteria that an intern not perform any work to the immediate advantage of the employer. Many employers would like to see that modified to provide mutual advantage to both the worker and the employer.
The rules for unpaid interns are less restrictive for non-profits and charities, because “interns” could be classified as volunteers.
California, and some other states, require that interns receive college credit as a condition of accepting unpaid internships, but federal regulators warn that this does not necessarily free employers from paying interns.
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