Should You Sign an Unpaid Internship Agreement?
If you are considering hiring an intern, you need to get familiar with laws, regulations, and the specifics of an unpaid internship agreement.
Creating contracts and other legal documents can be annoying and time-consuming. Do you have enough knowledge to do it yourself? If not, do you need to hire an expensive lawyer, or are there other ways?
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An unpaid internship is legal as long as an intern is the primary beneficiary of the agreed arrangement. If an employer primarily benefits from this arrangement, an intern:
- Is considered an employee under the Fair Labor Standards Act (FLSA)
- Needs to be paid for his or her labor, i.e., is entitled to minimum wage
If the Department of Labor believes an internship violates the FLSA:
- An employer may be punished
- An intern can face punishment, especially in the case of international students who might even be deported
You can use the Primary Beneficiary Test to determine who the primary beneficiary is.
Some U.S. states have certain requirements of unpaid internships, for instance, affiliation with academic or educational organizations.
Aside from the Primary Beneficiary Test, companies need to check their state legislation before opting for unpaid interns.
For example, the state of California has one of the strictest positions in terms of unpaid internships. Here are some requirements:
- A vocational program or an accredited school needs to implement and supervise all internship programs
- Employers cannot hire an intern until they submit an internship proposal to the Division of Labor Standards Enforcement
If these above-listed criteria are not met, an intern needs to get minimum wage.
This type of agreement is important as it determines the responsibilities and roles during the internship. While lots of businesses practice unpaid internships to provide training within these organizations, interns:
- Cannot replace employees
- Need to work for their own and not the company’s benefit
The following tips—together with the agreement—can be a good way to prevent potential disputes:
- Keep a log of hours and overtime
- Offer college credit (if possible)
- Do not assign scut work
- Provide general and transferable training tasks that directly relate to the intern’s field of study
The following table outlines what an unpaid internship agreement should contain:
|Name and details of the company||Includes the following company’s details:
You can also state the purpose of the agreement in this section
|Name and details of the intern||Lists:
|Intern’s duties||Addresses the intern’s duties within the company, i.e.:
|Nature of internship||Includes the details of the work timings, such as:
This is a good place to mention the participation of the educational institution during the internship period
|Additional acknowledgments||Mentions some of the following:
|Termination clause||Covers the events that can lead to the termination of the internship|
|Signatures||Includes full names and signatures of the:
To create an unpaid internship agreement, you can use the legal assistance of an expert or consult some contract templates available online. While the former might cost a small fortune, the latter can be too generic and not suitable for your type of organization or the training you will provide to the intern.
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