Businesspeople Seated In Circle At Company Seminar

While the government rarely sticks its fingers into employer training programs (except for things like OSHA-required safety training), internship programs are a whole different kettle of fish. In fact, as a result of some recent guidelines published by the U.S. Department of Labor, a lot of what were previously considered acceptable internship programs are now flat-out illegal.

These days, if you’re interested in setting up an internship program in order to get “free employees” to sweep the floors or become “gofers,” think again. Unfortunately, this has become a prevalent image over the years, but not only does such an arrangement violate Department of Labor rules, some former interns are filing lawsuits over their status as interns.

According to the U.S. Department of Labor Wage and Hour Division Fact Sheet #71 (“Internship Programs Under The Fair Labor Standards Act”), to consider someone an unpaid intern, you must apply six criteria to make the determination: “1) The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment. 2) The internship experience is for the benefit of the intern. 3) The intern does not displace regular employees, but works under close supervision of existing staff. 4) 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. 5) The intern is not necessarily entitled to a job at the conclusion of the internship. 6) The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.”

“The Department of Labor has taken a pretty aggressive position that, in order for an internship to qualify as unpaid, the employer must meet all six criteria,” says Laura E. O’Donnell, a partner with the San Antonio law firm of Haynes and Boone. “The Department of Labor Wage and Hour administrator made a statement to the effect that there would not be many circumstances under which for-profit employers could have unpaid internships and still comply with the law.”

 As one can see, remodeling contractors must seriously consider whether they even want to create internship programs, especially in light of the second and fourth criteria. O’Donnell thinks that altruistic motives—wanting to do something good for the industry in general—would be the most likely reason why an employer would want to provide an internship program today.

“Another reason would be to give oneself the opportunity to identify potentially good candidates for future employment,” she says. “However, even this process is not cut and dried, and it needs to be handled appropriately in order to stay within DOL guidelines.” For example, if an employer utilizes an intern during the summer before that person’s senior year, it would potentially be problematic to offer that intern employment immediately following the internship (and thus discourage the intern from completing her senior year and graduating). However, it would not be problematic to offer that intern employment a year later, after the student has graduated.

 “We have had internships for almost 30 years,” says Julia Spence, vice president for human resources at Portland, Ore.-based remodeler Neil Kelly Co. “In the early years, we paid minimum wage and had the students do things such as making copies. After that, we began offering unpaid internships that focus more on job shadowing.”

These days, to remain in compliance with DOL requirements, the company works with college students primarily through Portland Community College and Oregon State University. “We do not work with unaffiliated individuals,” Spence says. Students typically register for credit during their last couple of quarters. The school then has a list of things they want the students to experience, accomplish, and learn. “We then pattern our internships to make sure they get this experience,” Spence says.

During the internships, students are assigned to projects that involve having them working in parallel with project managers or designers. “They create a make-believe client of someone they know, and put together a make-believe project, going through all the steps,” she says. “One benefit of the program for us is that we get to know a lot about the interns while they are here, and we’ve hired a number of them after they have graduated.” 

Do You Have What It Takes?

To help establish whether your company can sustain an internship program, ask:

How serious is our company about hosting interns?

  • Will our company culture be supportive of an internship program? 
  • Is our organization committed to working with vocational programs, schools, and other educational institutions?

What can interns do for us? What are our goals?

  • Does our organization have meaningful work for interns to do? 
  • Are there special skills that we require our interns to have?
  • Do we want to use the internship program to identify and recruit interns as potential new employees?
  • Would an intern’s inexperience actually be an asset for our company, providing a fresh perspective on our products or services? Or would such inexperience be dangerous to the intern and to others in certain positions?

What human resources do we have to support an intern?

  • Can our company provide an individual with efficient supervisory skills to work with interns?
  • Do we have someone at our organization who has sufficient time to organize the program?
  • Will the intern have access to people who would be mentors, resources, or internal clients?
  • In which parts of the company might the interns work?

What physical resources do we have to support an intern? 

  • For example: a safe, adequate workspace; jobsite tools; access to a computer, Internet, phone; parking.

What would be the timing of the internship?

  • What’s the best time of year for us to host interns?
  • What should be the duration of each internship?

What financial resources do we have?

  • Will our organization be able to afford to pay a salary to interns? If so, how much?
  • What remuneration, instead of salary, can we offer? (Stipend, parking, etc.)