In qualifying internships, the intern benefits most from the experience.
Many employers offer internships to students and other persons new to a field or industry. Applying the term “intern” to these positions, however, does not automatically exempt the employer from federal and state minimum wage and overtime requirements. Unless the positions meet certain criteria, interns will be subject to the same wage and hour requirements as employees.
Unpaid Interns
The Department of Labor (DOL) has established six criteria to help employers determine whether interns are considered employees or trainees under the Fair Labor Standards Act. The criteria:
- The individual receives training similar to what would be given in a vocational school or academic educational instruction.
- The training is for the benefit of the intern or trainee.
- The interns or trainees do not displace regular employees, but work under close observation.
- The employer that provides the training derives no immediate advantage from the activities of the individuals and on occasion the employer’s operations may actually be impeded.
- The interns or trainees are not necessarily entitled to a job at the conclusion of the training period.
- The employer and the individual understand that no wages are paid for the time spent in the internship.
Internship programs that do meet these requirements may be unpaid or be offered a stipend. Internships that do not meet these standards must be offered as paid positions. Interns in paid roles are entitled to the same wage and hour laws as other employees.
Avoiding Misclassifications
When designing an internship program, employers should ensure that the intern, not the business, obtains the primary benefit of the experience. The more a program is structured around a classroom or academic experience, rather than the company’s actual operations, the more likely the intern will not be considered an “employee.”
Additionally, employers should maintain documentation on the structure and features of the internship program, including an agreement detailing the parties’ mutual intent that: (1) their relationship will not be one of employment but rather an internship for the individual’s benefit, (2) the intern does not expect employment or compensation, and (3) the relationship is to provide the intern with skills that can be used in multiple settings. Employers should periodically review their internship program to determine how well it is working in practice.
Additional Information
Department of Labor Fact Sheet: Internship Programs under the FLSA
