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W W W. M A I N E B I Z . B I Z 13 A P R I L 1 6 , 2 0 1 8 H OW TO B Y D A W N H A R M O N I nternships: To pay or not to pay? As summer approaches, employers across the state will begin to receive resumes from students seeking practical work experience through internships. While internships can provide a great experi- ence for both employers and students, one question that commonly arises is whether an intern should be paid. Obviously, the most eff ective way to avoid wage and hour litigation is for employers to pay interns at least mini- mum wage. However, in some situa- tions, an unpaid internship can benefi t both the employer and intern. In January, the U.S. Department of Labor relaxed its test to determine whether an intern or student is, in fact, an employee entitled to pay and adopted a "primary benefi ciary test." It includes seven factors to consider and the pur- pose of the test is to determine whether the employer or intern is the primary benefi ciary of the internship. The factors include: 1. Both parties understand that the intern is not entitled to compensation 2. e internship provides training that would be given in an educa- tional environment 3. e intern's completion of the program entitles him or her to aca- demic credit 4. e internship corresponds with the academic calendar 5. e internship's duration is limited to the period when the internship educates the intern 6. e intern's work complements rather than displaces the work of paid employees while providing signifi cant educational benefi ts 7. e intern and the employer understand that the internship is conducted without entitlement to a paid job at the internship's end. Unlike the previous test, not all fac- tors need to be met to satisfy the test; additionally, no single factor is determi- native. Rather, the criteria are designed to examine "the economic reality" of the intern-employer relationship to determine which party is the primary benefi ciary of the internship. If, after analyzing the relationship under the primary benefi ciary test, it is evident that the intern is the main benefi ciary of the relationship, he or she does not have to be paid under federal law. To date, Maine courts have not ruled on the issue of when an intern must be paid. If an employer decides to off er an unpaid internship, clear communica- tion and documentation is essential. is should begin with an employer's recruitment materials and/or writ- ten description of the internship. e internship description should clearly defi ne the duties and responsibilities of the position and explicitly state that the internship is unpaid. Before the internship begins, the employer, intern and, preferably, the school, should enter into a written agree- ment. e agreement should expressly state that there is no expectation of com- pensation, the duration of the internship is limited (tied to a semester or summer, for example), and there is no promise of future employment. Once the internship begins, open communication during the internship will work to prevent misun- derstandings along the way. ere may be instances in which an employer analyzes the internship and cannot conclude that the internship satisfi es the "primary benefi ciary test." In these instances, from a risk manage- ment perspective, it makes sense for an employer to compensate the intern at a rate no lower than minimum wage. Whether paid or unpaid, intern- ship programs can provide substantial benefi ts to both interns and employers. Interns receive practical experience in their intended fi eld while employ- ers gain an extra set of hands and the opportunity to engage with an individ- ual who comes with a fresh perspective and eagerness to learn. D H is a employment attorney at Perkins ompson. She can be reached at @ . Comply with the DOL's 7 rules for internships Construction Loans Real Estate Development Rehab & Renovation Short Term Bridge Where others see buildings, we see communities. Where others see numbers, we see people. Where others see problems, we see solutions. Maine Capital Group provides single-source lending and strategic advisory services for small to mid-sized financing opportunities in the residential and commercial real estate markets. www.mainecapitalgroup.com Contact Shawn Lyden: slyden@mainecapitalgroup.com / 207-513-1059 4 C I T Y C E N T E R , 3 R D F LO O R , P O R T L A N D 75 Pearl Street, Portland, ME 04101 | 207.773.5651 | MPMLaw.com protecting what matters In a rapidly changing market, our commercial real estate attorneys guide clients through the complex issues facing today's developers, investors, and brokers. 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