Unpaid internships are viewed universally as great opportunities for students to acquire valuable job skills and experience. In fact, experiential learning opportunities provide students with a leg-up on those competing for jobs right out of college. However, there are downsides for employers that use unpaid interns, the most notable being potential violations of the Fair Labor Standards Act (FLSA).

Misclassifying employees as unpaid interns, and thereby denying them federal minimum wage and overtime wages can result in costly litigation, civil fines, or both. Furthermore, employers who willfully violate the wage payment provisions of the FLSA may be subject to criminal prosecution.

Because so much can ride on the proper classification of workers as unpaid interns, it is imperative that employers design and implement internship programs in a manner that complies with the Department of Labor’s (DOL) guidelines on internship programs. Among other things, a properly structured unpaid internship program will:

• Provide training similar to that which would be given in an educational environment and which is primarily for the benefit of the intern;
• Provide the intern with close and constant supervision by regular employees; and
• Make sure the intern understands the internship is unpaid and that there is no guarantee of regular employment at the conclusion of the internship.

Employers must be proactive and thorough to ensure compliance with the FLSA and the DOL guidelines. The steps employers can take to ensure proper classification of unpaid interns include:

• Working with educational institutions to ensure that the internship is academically oriented for the benefit of students;
• Making sure interns do not perform the tasks that regular employees would normally perform; and
• Putting the terms of the unpaid internship in writing such that the intern acknowledges the internship is unpaid and that he or she is not guaranteed regular employment.

Taking each of these steps and others may protect employers from liability for FLSA violations arising out of internship programs. To learn more about FLSA compliance and other legal issues associated with unpaid internships, including workers’ compensation, unemployment insurance, and equal employment opportunity issues, please attend the quot;Pay Practices for Interns and Seasonal Workers: Essentials for Managing Summer Helpquot; webinar hosted by Evelyn Gentry of Faegre Baker Daniels LLP, on May 10, 2012.

Evelyn L. Gentry is a Labor & Employment Associate with Faegre Baker Daniels, where she assists with preparation for employment-related litigation and advises businesses on labor and employment issues.