Unpaid Internships- Traps for the Unwary

     With a tight job market, an internship can be a nice way to pad a young job seeker's resume.  According to the Washington Post, 55 percent of college seniors in 2012 had an internship or co-op experience during their college years.  Of those who held internships, almost half were unpaid. 
     There has recently been a wave of litigation that has brought into question the legality of many unpaid internships.  One recent high profile case was Glatt v. Fox Searchlight Pictures, Inc. in the Southern District of New York.  In that case, several unpaid interns on the set of the movie, Black Swan, sued Fox Searchlight Pictures alleging that they were employees and should have been paid minimum wage.  The judge ruled that Fox should have paid the interns because they should have been classified  as employees.   The judge followed criteria that were promulgated for unpaid internships in the private sector.
     Employers should be aware of the following six factors that the United States Department of  Labor has promulgated that unpaid internships in the private sector should meet:

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.

     Massachusetts employers should be especially be concerned about structuring their unpaid internships to be compliant because the failure to pay minimum wage triggers treble damages.  Employers may not get around the Wage Act by entering into special contracts with the employee exempting the employer's compliance with the Act.