Portions of this posting have been excerpted from Corporate Counsel (http://www.law.com/corporatecounsel/PubArticleCC.jsp?id=1202601446782).

In an original article from Corporate Counsel titled “Hiring Summer Interns? Make Sure You Do it Right,” the author discusses the importance of following strict guidelines when taking on interns.  She acknowledges that internships can be beneficial for companies and students but cautions that “businesses that don’t compensate interns for the work they perform can end up paying a big price down the road.”

The Department of Labor released guidelines in 2010 for employers in the for-profit sector to create internships that comply with the Fair Labor Standards Act.  The guidelines set forth a six-factor test for determining whether or not an unpaid internship is lawful.  The test can be difficult to satisfy.

The article points out that there has been an increase in private lawsuits brought by unpaid interns.  Employers are advised by the article’s author that “an internship is not an opportunity for them to save money on entry-level work.”  Further, “just slapping the label ‘intern’ on somebody doesn’t mean that you don’t have to pay them.”  The article concludes by stating that some employers find unpaid internships to be too risky.  However, such internships can be beneficial – just make sure you take proper precautions and set them up correctly.

IP & Business Law Counseling, LLC can help your company implement an Unpaid Internship Agreement that is based on requirements under the Fair Labor Standards Act.  Specifically, we can prepare an unpaid internship offer letter and agreement (also known as a learning contract) that outlines the terms and conditions of a student’s unpaid internship.  This document will help you minimize risk by setting expectations and acknowledging that all of the criteria considered by the Department of Labor have been met.