San Francisco partner Cheryl Orr was quoted in an article for SHRM titled “Unpaid Internships: What Employers Need to Know.” The article explores the potential increase in unpaid internships now that the U.S. Department of Labor (DOL) has relaxed its intern compensation standards and offers advice to employers on how to avoid wage-and-hour lawsuits if they choose to hire unpaid interns.
In January, the DOL abandoned the six-part test that it had been using to determine whether interns could go unpaid, and replaced it with a “primary beneficiary test” for determining whether interns are employees. Cheryl said of the new test, “While it may be easier to comply with, it’s harder to interpret. That’s because there’s no one overriding factor. Employers need to go through all the factors for each individual situation before making a decision to pay or not to pay.”
Cheryl also advised that if an employer offers unpaid internships, the employer should “get something in writing” that proves that the intern and employer have agreed to the terms. She also suggested that employers consider working with a formal education program that connects the internship with the academic progression of the intern.