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Legal Issues

The following legal information is based upon the National Association of Colleges and Employers (NACE), the leading source of employment information and trends regarding the college educated, as well as on Department of Labor standards. NACE connects thousands of career services professionals at colleges and universities nationwide, and more than 3,000 HR/staffing professionals focused on college relations and recruiting.

If you have questions on the content below, please contact the CBIP staff.

  1. Must an intern be paid?
  2. Can an intern be considered an independent contractor or volunteer?
  3. After completing an internship, is the intern entitled to unemployment compensation?
  4. Is the employer liable if the intern is hurt at the workplace?
  5. Will the school sign a hold harmless agreement or release of liability?

1. Must an intern be paid?

You can offer an unpaid internship as long as the intern receives academic credit for the experience. The Fair Labor Standards Act (FLSA) severely restricts an employer's ability to use unpaid interns. It does not limit an employer's ability to hire paid interns. Essentially, if you are a for-profit company, you must either pay the intern, or require that he/she earn academic credit. Our internship program allows students to earn credit and get paid at the same time.

Even if you look at offering minimum wage, some form of compensation allows your organization to compete with other companies for the best and brightest interns. Students who need to cover tuition costs are sometimes forced to make decisions based upon that fact alone. In addition, offering pay to your interns helps communicate they are valued members of your team.

Several court rulings, while not addressing the criteria “head-on,” seem to suggest that as long as the internship is a prescribed part of the curriculum, is part of the school’s educational process and is predominately for the benefit of the student, the fact that the employer receives some benefit from the student’s services does not make the student an employee for purposes of wage and hour law. This is why it is especially crucial for any unpaid intern receive academic credit.

The Department of Labor stipulates that an intern is considered a “learner/trainee,” and therefore can be unpaid, if:

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2. Can an intern be considered an independent contractor or volunteer?

No, on both counts. In a typical internship, the employer exercises control over the result to be accomplished and manner by which the result is achieved. Because of this, a student intern may not be considered an independent contractor. This means that an intern cannot be paid as an independent contractor, either.

The Department of Labor (DOL) regulations define a volunteer as an individual who provides services to a public agency for civic, charitable or humanitarian reasons without promise or expectation of compensation for services rendered. Thus, an intern at any for-profit company would not fit the definition of a volunteer.

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3. After completing an internship, is an intern entitled to unemployment compensation?

No. Interns generally are not entitled to unemployment compensation after completing an internship.

There are several reasons for the student’s ineligibility. First, eligibility is based upon a person’s availability for work. Most often after an internship, the student returns to school and is considered unavailable for work.

Second, state laws require that an individual work at least 16 to 18 weeks during the calendar year, earning a minimum amount of wages before being eligible for unemployment benefits. If an intern has worked during a 10-week summer break, he or she would not have the requisite number of credit weeks to become eligible for unemployment compensation.

Third, if there was an understanding between the employer and the student at the outset of the internship that the length of the position was for a limited duration without promise of full-time work, the student would not be eligible for unemployment compensation.

Finally, most state laws exempt students who work for employers as part of an educationally related work program. The school merely needs to certify that the student’s work experience is part of an experiential learning program that combines academic instruction with work experience.

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4. Is the employer liable if the intern is hurt at the workplace?

This is a complex issue and one with no definitive answer. Generally, if an intern is on the payroll, he or she should be covered under the employer’s workers’ compensation policy, just like all other regular employees. If the intern is unpaid and earning academic credit for the internship, he or she is most likely covered under the school’s policies should an injury occur. In most cases, the courts look for employer negligence as the basis for any claims.

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5. Will the school sign a “hold harmless” agreement or release of liability?

No. State University of New York (SUNY) administrators may not sign a hold harmless agreement or release of liability, according to statewide policy. This policy is in accordance with the principles defined by the Cooperative Education and Internship Association (CEIA), the National Association of Colleges and Employers (NACE) and the National Society for Experiential Education (NSEE). While credit-bearing internships protect the student under SUNY insurance, it is the state's, and therefore the school’s position, that the school is not responsible for the actions a student may take independently.

As the school does not select students for the employer and the employer controls the workplace, company employment policies and the intern’s assignment, signing a hold harmless agreement is not appropriate.

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