614.9445171
4200 Regent Street, Suite 200, Columbus, Ohio 43219
Schedule a Consultation
Business Attorney | Law Office of Maritza S. Nelson, LLC
  • Home
    • COVID-19
  • Who We Serve
  • Practice Areas and Fees
    • General Counsel Service
    • Business Law >
      • Business Formation and Governance
      • Contract Drafting and Review
      • Business Purchases and Sales
    • Intellectual Property >
      • Trademark Law
      • Copyright Law
    • Employment Law
    • Nonprofit Law >
      • Non-Profit Formation and Governance
      • Tax Exempt Status
      • Non-Profit General Counsel Service
  • Attorneys
    • Maritza "Shay" Nelson
    • Sarah Pollyea
  • Adding Value
    • Legal Audit Checklist
    • Legal Dictionary
    • 7 Common Legal Mistakes
    • Succession and Emergency Planning Worksheet
    • Business Contracts: Review Checklist
    • Webinars >
      • HR 101: Managing the Growing Pains That Come With Growing Your Business
      • Hiring Independent Contractors
      • Legal Audit and Risk Assessment
      • Structuring a Social Enterprise
  • Blog
  • Scheduling
    • Prospective Client Scheduling
    • Existing and Former Client Scheduling
    • Networking Scheduling
  • Contact
  • Home
    • COVID-19
  • Who We Serve
  • Practice Areas and Fees
    • General Counsel Service
    • Business Law >
      • Business Formation and Governance
      • Contract Drafting and Review
      • Business Purchases and Sales
    • Intellectual Property >
      • Trademark Law
      • Copyright Law
    • Employment Law
    • Nonprofit Law >
      • Non-Profit Formation and Governance
      • Tax Exempt Status
      • Non-Profit General Counsel Service
  • Attorneys
    • Maritza "Shay" Nelson
    • Sarah Pollyea
  • Adding Value
    • Legal Audit Checklist
    • Legal Dictionary
    • 7 Common Legal Mistakes
    • Succession and Emergency Planning Worksheet
    • Business Contracts: Review Checklist
    • Webinars >
      • HR 101: Managing the Growing Pains That Come With Growing Your Business
      • Hiring Independent Contractors
      • Legal Audit and Risk Assessment
      • Structuring a Social Enterprise
  • Blog
  • Scheduling
    • Prospective Client Scheduling
    • Existing and Former Client Scheduling
    • Networking Scheduling
  • Contact

Join our mailing list and receive our Legal Audit Checklist.

Check out our latest blog posts, webinars, and other valuable content.
Join the List

1/14/2020

0 Comments

Internships: To Pay or Not to Pay?

 
Internships: To Pay or Not to Pay?
Photo by NeONBRAND on Unsplash
As your business grows, it’s inevitable that you’ll need extra help. And often, you’ll need this help before your business can really afford to hire extra help. Enter: Unpaid Internships. Your small business gets free labor, and the intern gains valuable experience for their resume and (hopefully) a good reference for later on down the road.

But like so many things, the law isn’t so simple. All employees are entitled to at least minimum wage under the Fair Labor Standards Act (FLSA), and the FLSA determines who is an employee (regardless of what you might call the worker). So the question for you as a small business owner is whether or not your intern will be considered an “employee” under the FLSA.
Non-Profit Caveat: While most of our blog posts apply equally to both for-profit and non-profit entities, this one is an exception. The Department of Labor recognizes that individuals may freely volunteer their time to non-profit organizations. Because of this, unpaid internships are generally permissible in the non-profit sector. However, non-profit organizations should still be careful with paying stipends because they can call into question whether the person is still a volunteer or is now an employee.

7 Factor Primary Beneficiary Test

In determining whether someone is an employee, the law considers the following 7 factors to determine who the “primary beneficiary” of the relationship is:

1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee. Because of this, we don’t recommend offering interns “stipends.” Not only do they suggest that the intern is really an employee, but they also raise a question regarding whether the stipend was at least minimum wage when compared to the number of hours worked.

2. The extent to which the internship provides training that would be similar to what a student would receive in an educational setting.

3. The extent to which the internship is tied to an educational program (i.e. coursework or academic credit).

4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the intern’s academic calendar.
Don't miss out on new blog posts, webinar announcements, and other valuable content for serious entrepreneurs!
Join the List
5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.

6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern. This is especially tricky for small businesses who “hire” interns in lieu of hiring paid staff.

7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship. Using an internship as a trial run or probationary period before hiring a worker often doesn’t pass the “smell test.”
In theory, this test considers the “economic reality” of the relationship. It sounds simple enough—if the business is benefiting financially from a person’s labor, that person is probably an employee entitled to at least minimum wage. But in reality, every case turns on its own unique set of facts. And these factors apply, not just to disgruntled former interns, but even workers who weren’t paid for time spent in training, or interns who were asked to go above and beyond the educational portion of their internship and do other tasks that benefited the employer. 
Picture
Webinar Replay

Bottom Line: Unpaid Internships Are More Trouble Than They're Worth

The bottom line is that no one factor can answer the question: Is this worker really an employee? As a result, small businesses are better off avoiding unpaid interns. Otherwise, you might find your business in time consuming and expensive litigation trying to prove that the intern was the “primary beneficiary” of their relationship with your business.

If you do decide to use an unpaid intern in your small business, then you should:
  • Clearly document the nature of the unpaid internship.
  • Insist that the intern be a part of an educational program for which they are receiving academic credit.
  • Limit the internship’s duration and tie the duration back to the academic calendar.
  • Don’t use traditional job ads that emphasize what the worker must do to benefit your business.
  • Instead, document what the intern will learn from working in your business.
  • Don’t offer the intern a job at the conclusion of the internship.
Schedule a Consultation
0 Comments



Leave a Reply.

    Archives

    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    August 2019
    July 2019
    May 2019
    December 2016
    July 2016
    June 2016
    February 2015
    October 2014
    September 2014
    August 2014
    July 2014

    Categories

    All
    Benefit Corp (B Corp)
    Business Formation
    Business Law
    Confidentiality Agreements
    Contracts
    Copyright
    Corporation
    COVID 19
    COVID-19
    Employment Law
    Firm Announcements
    General Legal Advice
    Hiring An Attorney
    HR Policies
    Independent Contractors
    Intellectual Property
    Investors
    Limited Liability Company (LLC)
    Low Profit Limited Liability Company (L3C)
    Motivation
    Non Profit
    Partnership
    Privacy Policy
    S Corp
    Securities Laws
    Small Business
    Social Enterprise
    Sole Proprietorship
    Trademarks
    Trade Secrets

    RSS Feed

Services

General Counsel Service
Business Law
Intellectual Property
Employment Law

Non-Profit Law

About

Who We Serve
Bio​
Adding Value
Webinars
Blog
Contact
​
Scheduling

Legal

The information contained on this website is not legal advice or legal opinion and should not be relied upon. Furthermore, nothing contained in this website is intended to create or establish, and does not constitute, an attorney-client relationship. 

Document Retention Policy 
Privacy Policy
​Client Communications Policy

Subscribe to the mailing list to receive useful tips for entrepreneurs and business owners.
Join Mailing List
Copyright © 2021. | 4200 Regent Street, Suite 200, Columbus, OH 43219 | 614.944.5171 | info@msnlawoffice.com
Photos courtesy of Unsplash. Icons courtesy of Canva.
Photo used under Creative Commons from jseliger2