Summer may be in the rearview mirror, but high school and college students across the country are still attempting to polish their resumes by taking unpaid internships with employers of all types. But “for-profit,” private-sector employers looking to provide students with a glimpse into the working world may find themselves at odds with the Fair Labor Standards Act (“FLSA”), the federal statute governing minimum wage and overtime payments. Using somewhat arcane language, the FLSA requires that non-exempt individuals who are “suffered or permitted to work” be compensated for the services they perform. The Department of Labor’s Wage & Hour Division has taken the position that interns working in the for-profit, private sector must be paid as employees unless each of the following six factors is satisfied:
- The internship, even though it includes actual operation of the employer’s facilities, is similar to training that would be given in an educational environment;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees, but works under close supervision of existing staff;
- The employer derives no immediate advantage from the activities performed by the intern;
- The intern is not necessarily entitled to a job at the end 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.
With the DOL cracking down on FLSA violations, employers utilizing interns –regardless of the season – are cautioned to examine the nature and purpose of the internship to determine whether each of these six criteria is satisfied. If even one of the criteria is not met, the intern must be compensated as an employee. Click here to view the DOL’s Internship Fact Sheet.