The Truth About “Unpaid Internships”

As summer approaches, many employers are gearing up for their annual summer internship programs. Offering summer internships can be a useful way for employers to “try out” potential new employees. Internship programs are, however, fraught with legal pitfalls for employers. Any employer that is considering implementing an internship program must educate itself about the requirements applicable to interns under the law.

The problems for employers begin with a misunderstanding about what an “intern” is. Many employers seem to believe that a worker is an “intern” if he or she was hired for the summer (or other specific, short-term period) and lacks relevant work experience. The classic example of this category of workers is a college student who joins a company for the duration of his or her summer break.

Many employers mistakenly believe that if they label such workers as “interns,” they need not pay them. These employers reason that, in lieu of wages, interns benefit from gaining on-the-job experience and cultivating professional contacts.

But under the Fair Labor Standards Act, many – if not most – interns are employees under the law and, as such, are entitled to be paid at least the minimum wage. In limited circumstances, it may be permissible to treat a worker as an unpaid intern, but strict criteria must be met. These criteria are:

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

Based on the above list, it should be clear that most “internship” programs do not meet the criteria for an unpaid internship. That does not mean employers with such programs should cancel them. It simply means the interns must be paid and, further, must be treated like other employees in all respects. For example, interns should be provided with copies of the employee handbook and be invited (or required, as applicable) to participate in any sexual harassment or other training being offered to staff.

Internships can be a mutually rewarding experience for employer and intern alike, but must be handled appropriately and within the confines of applicable labor laws. If you have questions about laws and regulations applicable to your company’s interns, please do not hesitate to contact one of our experienced HR professionals.

 



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