The Department of Labor recently announced new guidelines regarding unpaid internships, making it significantly easier for for-profit employers to implement unpaid internship programs.
According to Terry Bonnette, a partner at Detroit-based Nemeth Law, P.C., paid versus unpaid internships have been a hot topic among employers for a long time and, through the years, it has become increasingly more difficult for for-profit employers to accept unpaid interns.
“A new administration generally brings legal changes to laws that impact employers. While 2017 was a bit of a wait and see for employers on many fronts, the decision to address internships was a bit surprising,” Bonnette said. “In the past several years, employers were called out and sometimes publicly shamed for not paying interns; now, regulations have been relaxed, making the possibility of unpaid internships more likely.”
The DOL test allowing unpaid internships for interns and students working at for-profit companies follows:
1. The intern and employer understand there is no expectation of compensation.
2. The internship provides training similar to that given in an educational institution.
3. The internship is tied to a formal education program and integrated coursework.
4. The internship accommodates the intern’s educational commitments.
5. The internship’s duration is limited to the period in which the intern receives beneficial learning.
6. The intern’s work complements rather than displaces paid employees while providing educational benefit.
7. The intern and employer understand there is no entitlement to a paid position at the conclusion of the internship.
Bonnette said the new rules allowing unpaid internships stem from a focus on extending the intern’s education and workplace experience, whereas the old rules focused on whether the employer received any benefit from the intern’s work. In his experience, Bonnette says paid internships are more common among Michigan employers and will likely remain that way, regardless of what the law permits.
“Especially in a strong economy where the competition for young talent is fierce, employers don’t want to lose out on intern candidates — often future employees — because of a relatively low hourly wage,” Bonnette said.
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