Manufacturers are preparing to welcome interns into their businesses this summer. Internship programs can play a key role in a company’s ability to develop and retain talent, cultivate new ideas and perspectives, and provide valuable mentorship and opportunity to individuals entering the field, resulting in goodwill in the professional community. Employers often grapple with a number of issues and decisions related to structuring such programs and arrangements. One key question is how to structure internship relationships. Should individuals be classified as unpaid interns or should the arrangement resemble an employment relationship in which the intern is paid? Under what circumstances should individuals be called “interns” and does that term have a specific legal meaning?
As most employers know, under federal law and many state laws, non-exempt employees must be paid minimum wage for all hours worked and overtime for all hours worked over 40 hours in a work week. Individuals who are performing work on behalf of a for-profit company generally must be paid and cannot waive their right to receive legally-required wages. That being said, individuals who have a relationship with a company wherein they are the “primary beneficiary” of the relationship, could be characterized as unpaid interns rather than employees. Under federal law, in for-profit businesses this is a very specific analysis wherein courts examine the “economic reality” of the intern-employer relationship in...
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