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What is the difference between an unpaid internship and an unpaid employee? Nemeth Law attorney says “Use six legal criteria as a guideline”

Detroit, Mich. —March 18, 2014—The hunt is on for full or part-time employment or summer internships for Michigan college students and soon-to-be graduates. As these young adults update their resumes and seek meaningful employment, how can they determine if an opportunity deemed an unpaid internship isn’t a euphemism for an unpaid job? Employment attorney Patricia Nemeth, founder of Detroit-based employment law firm Nemeth Law, P.C. says there are legal guidelines as to what defines a legitimate internship position.

“There are six criteria outlined by the U.S. Department of Labor’s Wage and Hour Division that help clarify and determine whether an intern is truly a trainee or an employee under the Fair Labor Standards Act (FLSA),” says Nemeth. “College students, recent college grads and employers should consider these criteria to determine if a position should be categorized as a paid position or does not require payment.”

1. The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational instruction;
2. The training is for the benefit of the trainees;
3. The trainees do not displace regular employees, but work under their close observation;
4. The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded;
5. The trainees are not necessarily entitled to a job at the conclusion of the training period;
6. The employee and the trainees understand that the trainees are not entitled to wages for the time spent in training

Nemeth says the critical determinant implicit in the criteria is the emphasis on training and not task completion.

“Short-term positions where an individual is performing the same routine tasks and producing the same outcomes as paid employees likely do not meet the criteria for an unpaid internship,” said Nemeth. “Examples include tedious and lengthy assignments spent inputting data or compiling address lists where no valuable training is taking place. Of equally important consideration in these scenarios is the employer benefits from the completion of these assigned tasks because it is work that would typically be assigned to a regular employee.”

Another distinguishing factor is unpaid internships may often qualify for college credit.

“When an internship is offered for college credit, that internship opportunity has been vetted by the college or university and determined to have educational value and a training benefit for the student and may be appropriately categorized as unpaid,” said Nemeth.

There are several professions that rarely provide unpaid internships due to the competitive nature of the fields and to avoid issues regarding job classification or wages.

“The engineering and accounting professions generally require strong academic skills and offer only formal, paid internships, even though training is the focus. These fields compete within their industries for the top students, who tend to have multiple paid employment opportunities regardless of the economy,” said Nemeth.

About Nemeth Law, P.C.
Nemeth Law specializes in employment litigation, traditional labor law and management consultation for private and public sector employers. It is the largest woman-owned law firm in Michigan to exclusively represent management in the prevention, resolution and litigation of labor and employment disputes.