With summer approaching, architecture and engineering firms that engage seasonal interns should review their internship programs to ensure compliance with applicable wage and hour laws. These programs can give unpaid interns valuable experience, and firms often receive valuable free labor in return. But the intern arrangement is not that simple. Recently, multiple class action lawsuits have been prosecuted by former unpaid interns. These interns alleged that they were actually “employees” and were entitled to minimum wage and overtime pay. By taking the right steps, you can avoid this mistake in your own firms.

 

Although unpaid internships and volunteer programs in the public, civic, and charitable sectors are generally permissible, such is not the case in the for-profit, private sector. Interns in the latter are entitled to minimum wage and overtime pay under the federal Fair Labor Standards Act (FLSA), just like any regular employee. The exception to this rule is if the terms of the internships meet the specific criteria described below.

 

Architecture and engineering firms that will be engaging unpaid interns can avoid liability in connection with their internship programs by meeting six specific requirements. It’s true that some courts treat these six requirements merely as factors that firms need to consider when hiring unpaid interns. However, the Department of Labor (DOL) takes a harder stance: it mandates that all six conditions must be met in order to keep unpaid internships legal. They include the following.

 

1.   Internships are similar to training that would be given in an educational environment.

If interns learn skills that are transferrable to other firms or industries, rather than the employer’s own operations, it is more likely that the internships will be viewed as training. Likewise, if internships are structured around a classroom or academic experience, as opposed to a firm’s operations, they are more likely to be viewed as part of the interns’ academic experience. To meet this requirement, employers in the architecture and engineering fields should allow interns to observe a broad range of functions within their firms, regularly speak to interns in classroom-type settings, or create projects for interns that simulate (but do not involve) the actual work of architecture or engineering.

 

2.   The internship experience benefits the intern.

This requirement is less burdensome than some of the others. By providing interns the opportunity to perform real-world tasks, they are able to develop new and useful skills. That said, to remain lawful, internships cannot provide a substantial benefit to the firm. The employer’s benefits must be secondary.

 

3.   The intern does not displace regular employees, but works under close supervision of existing staff.

If an architecture or engineering firm substitutes interns for regular employees to increase its capacity during busy periods or increased workloads, the interns must be paid a minimum wage. In other words, if the firm would have hired additional architects or engineers, or required its existing staff to work additional hours if the interns were not there, then the interns likely will be viewed as employees.

 

In addition, a firm needs to provide more supervision to interns than to regular employees. Interns who receive the same level of supervision as regular staff are more likely to be considered employees. By contrast, interns who mostly observe or shadow existing employees are less likely to be considered employees themselves. 

 

4.   The firms that provide the training derive no immediate advantage from the activities of interns.

Interns who are aspiring to careers in architecture or engineering clearly derive a benefit from performing actual work for an architecture or engineering firm, but the DOL states clearly that “if the interns are engaged in the operations of the employer or are performing productive work&hellipthen the fact they may be receiving some benefits in the form of a new skill or improved work habits will not exclude them from the FLSA’s minimum wage and overtime requirements because the employer benefits from the intern’s work.”

 

Nonetheless, if firms allow their interns to shadow regular employees, and the interns perform minimal work, it is much less likely that interns will be considered employees. Unfortunately, firms that satisfy this requirement do not get a real benefit, and actually place a burden on their operations. 

 

5.   The intern is not necessarily entitled to a job at the conclusion of the internship.

The internship should be for a specific time period, agreed upon in advance. Do not use unpaid internships as a recruiting tool for vetting potential new employees.  

 

6.   The firms and the interns understand that interns are not entitled to wages for the time spent in the internship.

Architecture and engineering firms need to make sure that the terms of an internship are clear, including the lack of compensation. They should put these terms in writing, then require interns to sign off on them. Good documentation, as always, is critical.

 

 

What should your firm do?

The DOL considers most internships in the for-profit sector as employment that is subject to the FLSA. Architecture and engineering firms that have unpaid internship programs should assess their programs against the DOL’s six-factor test described above. If you’re planning to hire unpaid interns, it’s a good idea to consult legal counsel to be sure that any unpaid internships safely fall outside of the employment relationship.

 

 

John Balitis chairs the Employment and Labor Relations Practice Group at Fennemore Craig, where he has practiced for the last 25 years. Balitis can be reached at 602-916-5316 or jbalitis@fclaw.com.

 

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