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6 ways interns will destroy your game company

Unpaid interns can be an attractive prospect for your struggling studio, but strict laws could result in some dire consequences for your company. Know the facts.

Eric Boosman, Blogger

September 7, 2012

4 Min Read

I am not a lawyer.  This is not legal advice.  I would love for an actual lawyer to comment on this issue to correct any inaccuracies.

Free interns?  We'll take 'em!

As a bootstrapping indie studio, we are happy to have all the help we can get.  We've had several enthusiastic volunteers eager to lend their time and skills to us in exchange for the experience and credit in our games.  I figured we could just bring them on as interns and let them contribute to whatever extent they could and wanted to.

That idea, I've come to find out, is 100% illegal.

Wanting to make sure Dark Tonic would be legal owners of any work potential interns did on the studio's behalf, before bringing them on, I looked for an intern agreement that covered this.  My all-in-one suite of legal docs did not contain such an agreement, so I went looking online.  That's when I came across this article from the New York Times:  http://www.nytimes.com/2010/04/03/business/03intern.html?pagewanted=all

I was shocked.  My impression had always been that interns were essentially free labor, volunteering in order to get some valuable experience, which is just completely incorrect.

These are the actual federal legal guidelines for interns:  http://wdr.doleta.gov/directives/attach/TEGL/TEGL12-09acc.pdf

From that doc, the 6 main criteria that define a legal internship are:

  1. The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational instruction;

  2. The training is for the benefit of the trainees;

  3. The trainees do not displace regular employees, but work under their close observation;

  4. The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded;

  5. The trainees are not necessarily entitled to a job at the conclusion of the training period; and

  6. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

If these 6 criteria are not fulfilled, the "intern" will be legally acting as an employee, and entitled to minimum wage, and all other employee laws. 

There is also not a legal concept of a "volunteer" for a for-profit company.  That falls under the same rules. 

What can you do?

The only 2 legit ways I've found to receive free work as a for-profit company are either:

  1. An internship that meets all 6 criteria above.  In this case, the company is spending close to the amount of time training the intern as the intern's work benefits the company (so it is not actually free work).

  2. Have them work as independent contractors, and agree to limited/no compensation as specifically described in a contract.  The catch here is that as an independent contractor, they must determine the best way to achieve the results the company requests in the contract, but the company cannot tell the contractor specifically how something should be done, what tools to use, etc.  If the company does that, the contractor's status may automatically revert to that of an employee.

That line between contractor and employee is also fairly fine.  Here are the laws concerning them: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-(Self-Employed)-or-Employee%3F

From that page, these are the questions that define an employee vs. a contractor:

Common Law Rules

Facts that provide evidence of the degree of control and independence fall into three categories:

  1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

  2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

  3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Basically, a contractor is independent and makes full choices about how to achieve work results.

If you're an unpaid intern, and your host company isn't fulfilling those 6 criteria above, congratulations!  You volunteered yourself into a paying job!

If your company has or is considering bringing on an intern, educate yourself.


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