What Is an Unpaid Internship?
Internships have become a common way for students and other job seekers to gain some work experience and for prospective employees to test the waters of employment opportunities. While internships were long thought of simply as a form of work experience for young adults, the last decade, in particular, has seen significant debate in the legal community over whether an unpaid internship can qualify as an internship at all. The Fair Labor Standards Act (FLSA) provides that trainees or students at nonprofit educational institutions or in vocational or on-the-job training programs shall not be considered employees of the institution or program if: (1) such training is for the benefit of the individuals; (2) the individuals do not displace regular employees , but work under the close observation of a staff member; (3) the institution that provides the training derives no immediate advantage from the activities of the individuals and on occasion its operations may actually be impeded; (4) the individuals are not necessarily entitled to a job at the conclusion of the training period; (5) the institution and the individuals understand that the individuals are not entitled to wages for the time spent in training. Courts have found that this particular language of the FLSA does not provide a complete definition of internship but that it can be used as a general guideline. As a result of this lack of a precise definition of an unpaid internship, the law continues to be murky as to whether unpaid internships can legally be offered for positions outside those defined by the FLSA, particularly when the offered work is supportive rather than educational in nature.
Components of an Unpaid Internship Contract
When formulating an unpaid internship contract, it is essential to provide detailed information to the student intern about their workplace responsibilities and the scope of the internship. All aspects of the internship should be clearly set forth in writing to ensure that the intern knows exactly what to expect when they enter the workplace.
At the outset, the contract should clearly indicate that the internship is unpaid. The contract may also stipulate that any payments received by the intern are intended as stipends or bonuses as opposed to compensation for work done. Additionally, the contract should address whether the intern is eligible for college credit.
It is important to include a thorough description of the duration of the internship. The contract should explain the date on which the internship begins and the date on which the contract terminates. Also specify whether the start date is flexible, and explain any limits that the flexibility might be subject to. For example, an employer may want the intern to start at a certain time depending on availability.
Next, include a description of the position that the intern is filling. Be as specific as possible by including various tasks that the intern may be responsible for, such as helping to design a spreadsheet or preparing for meetings. Don’t forget to address more general duties, such as answering the phone or filing paperwork.
A description of the job location and any other sites the intern will be expected to visit, as well as the listed hours of the internship, is helpful to both the employer and the intern. The intern will have a better understanding of the complete scope of their responsibilities, and the employer is establishing that the intern will work only the hours that are mutually agreed upon.
One of the most important terms that should be included in any unpaid internship contract is the quality of supervision to be provided to the intern. This term should address how many supervisors there are, the experience level of the supervisors, how they will be contacting them for questions, and any processes they will be using to evaluate the intern’s work. It may also be helpful to include details about the interns’ own job performance, including the type of feedback they should be expecting and the overall performance standards. If, for example, the intern is delayed in appointing a client, the employer wants the intern to be prepared to explain why they were delayed. Furthermore, the employer should be sure to give the intern time to raise any questions or problems they may have with this term before signing the contract.
Legal Requirements for Unpaid Internship Contracts
When it comes down to the law, interns are interns. Just because an internship is labeled "unpaid" doesn’t mean that a business is on safe legal ground. On the contrary, there are quite a few laws pertaining to unpaid internships that still must be met. In fact, between state, federal, and even international laws, the guidelines surrounding internships can be quite murky and difficult to navigate. That’s why it’s imperative to have a good understanding of what’s at stake – because the consequences can be severe. Unscrupulous businesses have come under fire from the Fair Labor Standards Act (29 USC 201, et. seq., or "the FLSA") which, like the California Division of Labor Standard Enforcement, the FLSA does not recognize the title of "intern." The DOL describes interns as "trainees" and, as such, has developed strict guidelines that internship programs must meet in order to comply with the FLSA. While the FLSA is not always applicable to every industry, California law is even stricter; therefore, it is important not to make assumptions based on the FLSA alone.
Even if the internship program covered by the FLSA, non-compliance can result in the intern losing his or her right to unemployment benefits or the employer might be required to pay back pay. As well, should an intern ever attempt to bring a lawsuit based on minimum wage eligibility, the company could face significant legal liability.
In other words, this is not an area where you want to make mistakes, misstep with the particulars, or operate without full knowledge of the laws governing this area.
Benefits and Learning Objectives in Unpaid Internships
This is perhaps the most important part of the contract. It is critical to set out what a student will learn from his or her internship, and if it possible, the particular skills which he or she will gain. You must also articulate how this will be accomplished, whether through one-on-one mentoring with someone in your organization or through particular projects or assignments. A good example would be: From the internship, the student will gain an understanding of, and familiarity with, all aspects of the Company’s business, and learn specific skills in the areas of _______________________. The student will work under the guidance of ____________ and will receive instruction and close monitoring while performing all duties and responsibilities. The student will be required to attend daily/weekly seminars which encourage discussion and feedback, during which time the success of the internship will be evaluated. Feedback and additional instruction will be offered as needed throughout the program.
This section sets out the educational benefits for the student as well as your expectations of him or her.
Unpaid Internship Contracts: Our Pitfalls and Solutions
One of the most common issues employers have with unpaid interns is that they may be out of work for weeks at a time because of school, vacation, or just being lost in the woods, and since they’re unpaid, they can simply fail to show up without consequence. While this can be very frustrating, what’s important to understand is that unpaid internships are by their very nature voluntary, and as long as the intern hasn’t been given any sort of pay or incentive to work, there is virtually no legal recourse you have as an employer to compel them to keep their commitment to show up for work. Setting clear expectations about attendance in the unpaid internship contract from the start is essential.
Another major issue many employers encounter is hiring someone who ends up being very low quality. While employers often choose to take on interns with the intention of training them for a future possible position with the company, it doesn’t always work out like that , and one of the major challenges faced by many employers is dealing with interns who just don’t seem to understand the company culture or the work they’ve been assigned. For these types of interns in particular, case studies of the internship progress and supervisor feedback should be explicitly laid out in the unpaid internship contract along with a deadline for when the performance review must occur, and the supervisor should probably sit down with the intern weekly to go over what they’ve accomplished and how they can improve in certain areas.
The third issue many employers face when hiring unpaid interns is that the interns may not be from a particularly wealthy background, and some may be unable to make ends meet if they provide unpaid work as their sole source of income. Employers can mitigate these sorts of issues by setting clear beginning and end dates for the unpaid internship in the unpaid contract, stating from the outset when the unpaid internship will conclude, and providing schedules of the hours/day so that the intern can plan their availability in advance.
Template Creation: A Complete Walkthrough
Creating a template for your unpaid internship contract ensures consistency and adaptability for future interns. It’s important to have a clear framework while allowing room for specific details regarding your organization. Here are some tips on creating a comprehensive template.
1. Header
In the header, list your organization’s name, address, phone number, and email address. If there’s space, include your logo, dates of the internship program, and any other pertinent information about your organization.
2. Employment Status
Acknowledge that the intern is not an employee. Include a short statement, such as "This internship does not create an employment relationship." later in the letter.
3. Responsibilities
In this section, lay out the intern’s duties. While it’s important to be precise, this section should remain flexible to allow for other duties to be performed. A broad description of the position mixed with specific duties tends to be more effective.
4. Internship Schedule
List specifics such as dates, hours, and frequency in this section. Be sure to leave the schedule open-ended if it may change over time. You may want to include a breakdown of the intern’s duties during the internship (what you want them to do on Day 1 vs. Day 15).
5. Supervision & Training
Although your interns are not employees, they should still receive supervision or mentorship. Include a section explaining exactly how you plan to supervise or mentor the intern.
6. Termination or Resignation
In the event of an unexpected termination or resignation, this section seeks to clarify the course of action for an intern. It’s common to give some notice to the supervisor or human resources in order to give others sufficient time to fulfill the internship role.
7. Signature Lines
Details such as a date, a printed name, and a place for a signature should be included at the end of the letter. The intern should take a copy of the letter for his or her personal records after signing.
8. Terms of Agreement
The final clause is probably the most critical. Consider referring to all relevant federal, state, and local laws and listing any special terms under those laws. It’s also a good idea to have a lawyer look over this template as well as a contracts expert in case you need to make any changes.
Final Ideas: Ensuring Valuable Unpaid Internships
From above we can conclude that a well-drafted unpaid internship contract is paramount for the success of the internship . Indeed, an internship employment contract would guarantee that the unpaid internship is not considered by law as an employment relationship causing penalties for the employer and loss of credibility, while ensuring a fair and rational internship for the intern who can satisfy its own career requirements. In other words, the unpaid internship must be of value to both the employer and the internship.
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