Internship rules may change for business

Minnesota businesses may consider using interns to perform business tasks as these workers obtain experience, knowledge and even educational credits. While considered a low-cost alternative to hiring wage workers, these arrangement may lead to business disputes. The federal Fair Labor Standards Act, along with state laws, govern whether a worker is an employee entitled to FLSA wage protections or may be considered an unpaid intern.

A properly-designed internship program can benefit interns are often supported by educators and employers seeking well-trained recent graduates. However, employers can also exploit interns by using their free labor without providing them with any appreciable education or experience.

The U.S. Circuit Court of Appeals for the Second Circuit in New York issued an important opinion on FLSA’s application to unpaid interns used by for-profit employers that could govern this issue in Minnesota. It ruled on appeal of a lower court decision granting partial summary judgment to two unpaid interns on a movie company’s film and at its corporate offices in New York City.

Determining the proper status of these workers is difficult. The Court, however, elected to adopt a test that would determine whether the intern or the employer is the prime beneficiary of their relationship and whether the internship is intended to integrate formal education with practical and real-world experience in a workplace. To reach this conclusion, courts would have to consider the benefits that interns receive for their work.

The Court cited a non-exhaustive list of factor under this test. These factors include any expectation of compensation among the parties, whether the internship provides training that would be similar to an educational environment, the extent the internship is tied to the intern’s formal educational program through coursework or credits, whether the internship corresponds to the intern’s academic calendar, whether the internship’s duration is limited to the time beneficial learning is provided to the intern, whether the intern’s work complements and does not displace the work of paid employees and whether there is an expectation of whether the intern is entitled to a paid job at the conclusion of the internship.

To help avoid these employment disputes, business should receive legal advice on wage laws and labor standards. Planning and proper documentation may help employers utilize interns in a bona fide program and, as in most labor matters, defend against claims for alleged violations of wage and labor laws.

Source: JUSTIA US Law, “Glatt v. Fox Searchlight Pictures, Nos. 13-4478-cv, 13-4481-cv (2nd Cir., July 2, 2015)” Retrieved Sept. 14, 2015

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