Important New Ruling About Internships

With unpaid training or internships, employers must consider who has the ‘primary benefit’ from the relationship.

A recent ruling by the U.S. Court of Appeals for the 4th Circuit says that employers must consider who the “primary beneficiary” of the relationship is when providing training or internships.

The case involves plaintiffs who participated in uncompensated training that was intended to prepare them to work as casino dealers in conjunction with an area community college.  The plaintiffs allege that they should have been compensated and paid for the training as employees.  The training program was taught over a period of 12 weeks.

Even though the Hanover, Maryland casino company cited in the suit claimed that it had no table top games at its casino, the training inferred they were potential employees of the casino.

It is because the casino derived the primary benefit of having individuals who were trained as potential employees rather than trainees was enough in the eyes of the Court in order to state a claim.

Companies face the risk of liability whenever they offer training to potential employees. Considering the question as to who derives the “primary benefit” from the relationship can leave an organization on the hook for unpaid wages according to the Court’s ruling.

At NetPEO, we can help you answer the questions that center around what is appropriate as far as training new or potential employees in order to meet guidelines according to Fair Labor Standards Act provisions.

We also offer a  full range of services including payroll, management of employee benefits   and other areas of liability management.   NetPEO also offers brokerage services and employee leasing services to help you meet your current personnel needs.

Contact us today to find out how we can help.  Call to schedule a free assessment.