Interns: Paid or Unpaid?

Summer has arrived and companies everywhere are looking for interns. When hiring interns, how do companies know if they have hired a true intern or an employee who should be, at least, receiving minimum wage?

The Fair Labor Standards Act requires that employees be paid at least minimum wage for all hours worked. The FLSA excludes from coverage those persons who work for another for their own advantage such as an unpaid internship. The DOL has developed a six factor test for determining whether an internship qualifies for unpaid status. The factors include:

1. Whether the internship, even though including actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
2. Whether the internship experience is for the benefit of the intern;
3. Whether the intern displaces regular employees, and works under close supervision of existing staff;
4. Whether the employer providing the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
5. Whether the intern is entitled to a job at the conclusion of the internship;
6. Whether the intern understands that he is not entitled to wages for the time spent on the internship.

If the internship meets all six factors, it may qualify for unpaid status. However, the DOL takes a very narrow view of this exemption and believes that very few "for profit" employers can properly offer these programs. The DOL has published a Fact Sheet on Internship Programs under the FLSA.

To be compliant, the focus of an internship program should be mentoring and exposing interns to real-life experience versus having them produce a certain amount of work.