MONEY

Deb Koen: When to pay an intern? Answer can be tricky

Deb Koen;

Question: I agree wholeheartedly with your column from last week on how to make internships beneficial for both the student and the company. What I'm not clear on, though, are the legal considerations related to paid/unpaid internships. Could you please address this?

Answer: There is a great deal of confusion about student internships and when they must be paid or unpaid. According to Sharon Stiller, a partner and director of the Employment Law Practice of Abrams Fensterman, LLP, "While companies may see unpaid interns as a great way to obtain free services, and students view this as one leg into a company, the state and federal Departments of Labor don't see it the same way."

Stiller highlights the following considerations:

There are strict requirements that must be followed in order to not pay student interns. Any business choosing to use unpaid interns should first review and comply with the New York state Department of Labor fact sheet concerning Wage Requirements for Interns in For-Profit Businesses, as well as having an agreement in writing with the unpaid intern clearly setting forth that the internship is unpaid.

Among the requirements that are most difficult to fulfill in order to pass muster for an unpaid intern are: 1) the intern must not displace a regular employee and 2) the activities of the intern may not provide an immediate advantage to the employer; in fact, on occasion, the operations may actually be impeded. What this means is that the experience must be for the benefit of the intern.

Complying with these requirements is sometimes easier if the unpaid internship is in conjunction with a school program, for which the intern is receiving credit. However, this does not substitute for compliance with the regulations.

What's the alternative for a business that does not meet the criteria? The business can still employ the intern, but the intern must be paid at least minimum wage. At nonprofit organizations, interns may fall into exemption from the minimum wage requirement as a volunteer or student.