Summer is upon us and that means college students are out of school looking for relevant work experience and companies are hiring student interns. The perennial question is whether interns must be paid or not. How you address the issue will determine whether you’re in compliance with complicated state and federal laws or whether you end up getting an unpleasant visit from the U.S. Department Of Labor
Employers often feel that if they provide students a valuable work experience that should be sufficient. Students bolster their knowledge and resume while employers get some badly needed work done—and that’s the problem. Labor and many states believe these students are employees and must be paid.
In order to avoid violating the Fair Labor Standards Act, the internship must meet Labor’s test for “trainees.” An individual who passes this test is not considered an employee and is therefore not covered by the minimum wage or overtime provisions of the FLSA.
The Department of Labor has identified six criteria to determine whether an unpaid internship meets this test:
- The internship is similar to training which would be given in an educational environment;
- The experience is primarily for the benefit of the intern;
- The intern does not displace regular employees, and works under close supervision of existing staff;
- The employer that provides the training derives no immediate advantage from the activities of the intern;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship. The test is more likely to be satisfied where the internship has a classroom component and participants learn skills applicable to multiple employment settings.
Unless your internships meet this test, they should be paid.
Look at your plans for hiring interns. If the internship is primarily educational, there is likely no need to pay. If the interns are merely extra workers, they must be paid.
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