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Unpaid interns can't be free labor

Saturday, March 13, 2010  
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By Sean F. Driscoll
BusinessRockford.com
Mar 13, 2010 @ 10:39 PM


ROCKFORD — Unpaid internships have traditionally been a win-win situation for colleges and companies.


Students get valuable work experience, and employers get the benefit of an extra worker without having to cut them a paycheck.


Rules to know
The Fair Labor Standards Act provides minimum wage and overtime protection to those employed within the meaning of the act. Based on the act and a 1947 U.S. Supreme Court ruling, the U.S. Department of Labor’s Wage and Hour Division has developed six factors to determine whether a trainee, intern, apprentice, graduate assistant or similar individual is considered an employee.


If all the following six factors are met, the individual is not an employee and can take an unpaid internship:


1 The training is similar to what would be given in a vocational school or academic educational instruction.


2 The training is for the benefit of the trainees or students.


3 Interns do not displace regular employees but work under their close observation.


4 The employer derives no immediate advantage from the activities of the intern, and on occasion the employer’s operations may actually be impeded.


5 The trainees or students are not necessarily entitled to a job at the conclusion of the training period.


6 The employer and intern understand that the intern is not entitled to wages for the time spent in training.


For more information, go to dol.gov/elaws/esa/flsa/scope/er15.asp.


But it’s not such a simple equation anymore — at least, not if companies want to stay on the right side of the law.


The U.S. Department of Labor has issued six criteria, developed in line with the Fair Labor Standards Act, on the relationship between unpaid interns and employers. If all six of them are met, then the intern is not considered an employee and can work without being paid.


But the guidelines aren’t absolute and leave plenty of room for interpretation. As a result, Rockford labor attorney Chuck Prorok said, companies can accidentally break the law, especially when tempted by shrinking work forces and a limp economy.


"As the economy has turned south, companies have been going to unpaid interns to do some things that people had been paid for before,” he said. "But I think it’s been an issue all along.
Because of the lack of a bright line, companies have occasionally been running afoul of the law, but (if) no one complains, it’s not an issue.”


The Department of Labor’s guidelines include requirements that the intern not displace a regular employee; that the employer derive no immediate advantage from the intern’s work; and that both the employer and the intern understand that students are not entitled to wages for the time spent in training.


Prorok said the responsibility lies with the company to follow the law, but local colleges say they also monitor internship arrangements to ensure that the law is followed.


Creating a learning plan
Staff in the Rockford College career services office, for example, have discussions with companies offering unpaid internships to ensure that they’re not using a student to replace a worker or otherwise violate labor law, said the office’s director, Kelly Cooper.


"When we had our internship fair, I was upfront with the companies. They can have a paid or unpaid internship at their discretion, but if it’s unpaid, it must be a true educational experience and not just free labor,” she said.


At OSF Saint Anthony Medical Center, interns must develop a work program that’s approved by
the hospital and the professor overseeing their class work, said Linda Mullen, director of organizational development.


"That agreement has to cover a narrow cut of an employee’s job so you’re not abusing fair-labor law,” she said. "Say you’re doing an internship in business. You don’t come in and do the job of a person, you come into our finance department and say you want to understand how you reconcile bank statements. You may work on that faction of work. It’s very project-oriented.”


Collaboration with school staff
Comtech Corp., a Rockford-based multimedia company, has offered internships for more than 20 years. President Joe Arco said he and his staff work closely with local college and university employees to design individual experiences for each student that give him or her needed experience — and comply with federal law.


"Their period with us is short, so we want to expose them to as much of the real world as we can,” he said.


‘Beyond the class work’
Arco offers media, graphic design and marketing internships. He’s got six interns with the company right now, including Rockford College Master of Business Administration student Stephanie McCammond.


McCammond, a marketing intern, is getting three credit hours for her semester of work at Comtech. Although she’s not getting a paycheck, the experience is well worth it because she knows her academic credentials won’t be enough to set herself apart from other job seekers.


"So many people will have their MBA, and companies are really looking for experience,” she said. "It’s great to be working here because that will give me something beyond the class work to set me apart.”

 
Reach staff writer Sean F. Driscoll at 815-987-1346 or sdriscoll@rrstar.com.


This story appeared at http://www.businessrockford.com/biznews/x1664757561/Unpaid-interns-can-t-be-free-labor on March 13, 2010.


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