The Department of Labor has updated its guidance for unpaid internships. The new approach grants employers at for-profit companies in Texas more flexibility. Previous rules established by the department in 2010 insisted that an employer had to meet all six requirements to avoid paying minimum wage or overtime. The new test includes seven points of consideration meant to determine whether the arrangement benefits the intern's education or actually benefits the employer.
Labor regulations still clearly require that an unpaid internship must benefit the intern more than an employer. An unpaid internship that meets this standard should not displace a paid employee or interfere with the intern's academic schedule. Additionally, the relationship must make clear to the intern that the position does not involve compensation. The intern's duties should also add to their educational experience and result in course credit.
Although the new guidelines give employers some flexibility, they do not ease the provisions of the Fair Labor Standards Act. Employers should carefully evaluate the rules when assigning the duties to an unpaid intern.
A person who suspects that an employer has mislabeled a position to avoid paying wages, overtime or benefits could ask for a legal evaluation. An attorney could examine the person's duties and any documentation related to the arrangement to see if any wage and hour laws are being violated. If evidence suggests that the employer has failed to observe applicable laws, then the attorney could explain the problem to the employer. Filing a complaint with labor authorities could coincide with negotiations with an employer. If the employer does not correct the situation and make a settlement, then an attorney could take the matter to court. Litigation might result in an award of back pay.