A new case law went into effect this summer, which is driving the requirement that interns be compensated for their work. The case is dubbed the Black Swan case, named after one of the movies in which the defendant (Fox Searchlight Pictures, Inc.) ‘employed’ interns for zero pay. In his ruling, the judge referred to a Department of Labor (DOL) “Fact Sheet” that includes six criteria that an intern program must meet.
As graduates look for opportunities to gain on the job experience and organizations look for ways to garner talent while minimizing payroll costs, it’s important to test your internship program’s legality.
In a nutshell, the law says that your intention for employing an intern should be to provide them training or job experience that they can apply to their studies or to further their career. It is key to understand that the employer should not be receiving the benefit (e.g. a free cost employee) of having the intern work for their organization and that instead it is the organization’s responsibility to provide the benefit (e.g. on the job training) to the intern.
Here are the criteria your program must meet in order for it to be legal NOT to compensate interns:
- The internship is similar to training, which would be given in an educational environment;
- The internship experience is really for the benefit of the intern, not for the benefit of the employer;
- The intern does not displace regular employees, but works under close supervision of existing staff;
- The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
Worried your internship program might not pass the test? Send us your questions and comments below.