Mark Pestronk
Q: Every so often, my agency takes on interns or trainees. Usually, they are students at community colleges who want to learn how to be travel agents, but sometimes they are older people who have been stay-at-home parents for years and now want to get back into the workforce. We pay them nothing. A colleague told me that we need to be careful about the Wage-and-Hour Law. He said that if an intern complains to the Labor Department, we may be held liable for unpaid wages and withholding taxes. Is this true, and if so, what do we need to do to ensure that we don't get forced to pay our interns?
A: The U.S. Labor Department interprets and enforces the Fair Labor Standards Act, which requires that employers pay minimum wages that are currently $7.25 per hour for up to 40 hours per week unless your state or city has a higher minimum. According to the Labor Department, you must pay interns (also known as trainees) unless all six of the following factors are present in the relationship between your agency and the intern:
(1) "The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school."
This does not necessarily mean that you must teach the entire travel curriculum of a travel school or community college. Instead, it appears to mean that whatever you teach must at least be part of that curriculum.
(2) "The training is for the benefit of the trainees or students."
The purpose of the internship must primarily be to teach the intern about the travel agency business or travel industry.
(3) "The trainees or students do not displace regular employees, but work under their close observation."
You cannot replace a paid worker with an unpaid worker. If you do, you will have to start paying the latter. With older employees, you must be especially careful not to fire a paid worker who could charge you with violating the Age Discrimination in Employment Act when you replace him or her with a younger person, even an unpaid one.
(4) "The employer that provides the training derives no immediate advantages from the activities of the trainees or students, and on occasion operations may actually be impeded."
Your agency is not allowed to benefit from the intern's efforts or presence. This factor dooms many internships where the intern needs to do chores that no one else wants to do, such as stuffing brochure racks.
It has caused unpaid interns in lots of other industries to complain to Labor.
(5) "The trainees or students are not necessarily entitled to a job at the conclusion of the training period."
Conversely, if you promise the intern a job at the end of the internship, you will not pass muster under the Labor Department criteria.
(6) "The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training."
If you never tell the intern that he or she is expected to work for nothing, then Labor would expect you to pay the intern.