We explained in a previous post that the IRS scrutinizes unpaid internships. It is not the only government agency that does. The Department of Labor is another. That is because, zero being the lowest number, unpaid interns make less than minimum wage. State and federal labor regulators are most interested, then, in making sure that interns are just that, not employees in disguise hired for free for a year.
To qualify as such, an internship must have the primary purpose of training or educating the intern. It must be to that individuals’ benefit, not the company’s. This does not mean that the intern should have no value, but there should be no immediate, measurable advantage to the business. Also, the unpaid intern cannot displace a paid employee or be automatically entitled to remunerated employment at the end of the internship.
Rules are much more relaxed of course for paid interns, even if, during their internships, those inexperienced young people are paid less than other employees. Taking someone as an unpaid intern, however, is fraught with risks. Your lawyer should never be more than a phone call away.