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How much of a risk is this to my business?
If you do a google search for "unpaid internships for Florida businesses" in addition to information from the department of labor, two separate Florida law firms have articles appearing on the first page of the organic results that target interns, encouraging them to hire a lawyer to sue the Florida business. Here are some examples:
DOL - Displacement and Supervision Issues.
More likely to be educational if…
DOL - Job Entitlement
Why your summer intern is not free labor.
Department of Labor perspective:
According to the DOL, the following six criteria must be applied when making a determination as to whether the intern is an employee and eligible for minimum wage and overtime, or whether the intern is really a trainee (and therefor exempt from the FLSA):
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; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
Many Florida businesses believe that they can use summer interns as free labor. The intern gets real world experience, right? The intern wants to work for free, so that makes it okay, right? No. Almost all summer interns must be paid in compliance with Florida and federal wage laws, including the Fair Labor Standards Act (FLSA) and Florida’s Minimum Wage Act (Fla. Stat. §448.110).
The FLSA defines the term “employ” very broadly as including to “suffer or permit to work.” Covered and non-exempt individuals who are “suffered or permitted” to work must be compensated under the law for the services they perform for an employer. In Florida, internships in the “for-profit” private sector will most often be viewed as employment, unless the narrow test described below relating to trainees is met. This means the internship cannot be unpaid.
Rather than the 6 factors set forth by the Department of Labor, the 11th Circuit preferred the following 7 factors:
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—and vice versa.
2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
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.
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.
The Appellate Court explained that the “modern internship” as a requirement for academic credit and professional certification and licensure is very different from the past ideas of what an internship meant.
For starters, now-a-days, the students seeking the internships—as opposed to a particular company’s business requirements—drive the need for the internships to exist.
Second, licensure and certification laws provide evidence that we as a society have decided that clinical internships are necessary and important.
The news is not entirely bad for employers. The 11th Circuit Court of Appeals explained, “[t]he mere fact that an employer obtains a benefit from providing a clinical internship does not mean that the employer is the ‘primary beneficiary’ of the relationship. Therefore, we cannot see how consideration of whether the employer gains an ‘immediate advantage’ from an internship, in and of itself, brings us any closer to resolving who the primary beneficiary of the relationship is.”
Practical tips if setting up an intern program:
In Florida it gets more complicated because Florida businesses do not only have to look at the DOL for guidance, but the Courts sometimes look at things differently.
Recently, in the case of Schumann vs. Collier Anesthesia, P.A., 803 F.3d 1199 (11th Cir. 2015), the 11th Circuit Court of Appeals (controlling in Florida) gave employers guidance that the DOL test is not entirely controlling when it comes to summer interns.
The Appeals Court explained that, “[t]his test is not a regulation, and it did not arise as a result of rule-making or an adversarial process…and…“[w]e do not defer to this test…So our dilemma arises in determining how to discern the primary beneficiary in a relationship where both the intern and the employer may obtain significant benefits.”
The appellate court explained, “[w]e think that the best way to do this is to focus on the benefits to the student while still considering whether the manner in which the employer implements the internship program takes unfair advantage of or is otherwise abusive towards the student.”
The take-home message for Florida businesses is that almost always summer interns will be found by the department of labor and the courts to be “employees” eligible for minimum wage and overtime.
DOL - Similar To an Education Environment and the Primary Beneficiary of the Activity
Under the DOL test, in general, the more an internship program is structured around a classroom or academic experience as opposed to the employer’s actual operations, the more likely the internship will be viewed as an extension of the individual’s educational experience (this often occurs where a college or university exercises oversight over the internship program and provides educational credit).
DOL - Displacement And Supervision Issues.
Probably not exempt if…