How Will the 2018 Department of Labor Guidelines Impact Internships? Is There a Disruptive Solution?

If you are an employer with a for profit company, non-profit organization, or government agency, think back to when you were desperate for an internship to explore the work that would be involved in your chosen career path. Now, fast forward to 2018. Look around you and see if things have improved for those individuals seeking a quality internship. It is important to remember these students (bright-eyed, eager to learn, and filled with knowledge) want a shot at our table. Interns come with a cost and it is investing time. Think of them in terms if that was your kid working in someone’s office, you would want the best for them.

According to Bloomberg (Jan 2018) “The old test had six factors, one of which prohibited employers from deriving ‘immediate advantage from the activities of the intern.’ Companies found that standard overly rigid, arguing that it made it difficult for most internships to meet that requirement.”

The new guidelines issued in January 2018 by the Department of Labor are relaxed even though there are now seven criteria rather than six from the Obama era. The key difference for 2018 are the new rules establish a “primary beneficiary test” that ratfies programs that help the intern more than the company. There are seven factors determine whether the job meets the standard. One says internships should provide training that “would be similar to that which would be given in an educational environment.” Another says the intern’s job should complement, not displace, the work of paid employees. How is this standardizing the playing field level for employers and intern.

“This standard that the department is setting forth is easier for companies to satisfy in terms of internships qualifying as unpaid,” said Paul DeCamp, an attorney who works with employers at Epstein Becker & Green.

Now, let’s put on the business employer hat. Training is costly with time and money. Calculating that cost varies with each business; however a rule of thumb formula would be:

Hours spent training intern x hourly wage of experienced employee training intern plus the hours spent mentoring the intern. Total that up and it will come to around $5,000 for three months.

Now, the employer is thinking I don’t want to pay to train an intern that is going to leave. Best case scenario is to provide a quality internship that protects the student by giving them real job skills, mentoring from a technical experienced person, mentoring in the industry, ability to learn how to communicate across departments, contribute in ways that are meaningful and allow the student to acquire tangible skills and make a determination if they want to take a job with the employer where they are interning or seek employment with in a different industry, size of employer, different state, etc.

Employers know that if they are putting time and money into a student they want to see some type of tangible return. Certainly, they receive satisfaction from mentoring. However, most small to medium size employers don’t have automated employee management systems, an HR specialist, or are qualified in human performance development.

The best programs will include mentors in the student’s field of study. For example, I had one prospective client that wanted a video student to produce videos. I asked the prospect who would mentor the student. The reply, they would of course. I interrupted the prospect because I knew they did not have technical skills or knowledge in that area, rather the person thought they could provide industry experience as mentoring. That is not the only mentoring the student is seeking.

I saw this as a problem for many employers who didn’t know how to navigate intern management as its own unique employee subset. I also saw a lot of frustrated students that didn’t know what to put on their resume as their skills from their internship.

Students have told me that even though they were paid in their internship, they still didn’t receive the training, opportunity, mentoring they really wanted. So what is a student to do? Take a paid internship that may lead to no tangible experience and skills, what if they get experience but no mentoring? What if the student takes an internship where there is real learning and no paycheck? I asked my own interns to take a soft poll among their peers and the results were unanimous. They would rather than a short term internship with real skills that prepared them adequately for an entry level job than a paid one with no guidance.

Employers don’t want academic institutions telling them how to design a compliant experiential intern program. I saw an opportunity to provide a solution that would protect the student and the employer and help them document and manage their intern ethically and would align with academic institutions guidelines as well as the National Association of College and Employers (NACE) standards. After all, interns are humans, they were us before we got experience. Employers have a responsibility to be good stewards of those entrusted in their business.

Why am I so passionate? My background is a hybrid that spans 22 years combined experience in the public classroom, teaching as a professor in higher ed, consulting in areas of nonprofit management and working directly in fund development , and consulting with entrepreneurs in multiple industries and sectors. I understand their pain points and saw a solution that would be a win/win for students and employers. Want to know more? Contact Isabella out to schedule a time for us a short chat about your compliance program needs and how to create an experiential program for your company staff and interns.