My nephew just came home for summer break from his sophomore year at college, which got me to thinking. (No, not about how much I would like to be back in college.) What profitable use of the next three months will our returning college students make of their time?
One time-honored possibility: the internship. Internships can be paid or unpaid. For our present purposes, the question is whether the “unpaid” ones really should be paid under the wage and hour laws. What follows is not about whether, as a matter of philosophy or public policy, unpaid internships are a desirable thing. Our discussion is limited to what employers are required to do to stay out of trouble with the law as it actually exists.
Here the US Department of Labor provides us with a straight answer about what is required by the Fair Labor Standards Act [FLSA]:
Internships in the “for-profit” private sector will most often be viewed as employment, unless the test described below relating to trainees is met. Interns in the “for-profit” private sector who qualify as employees rather than trainees typically must be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek.
In what circumstances do interns not have to be paid? When they're trainees, as defined by the following six part test.
The following six criteria must be applied when making this determination:
- 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;
- 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 that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
- 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.
In short, the only internship for which a private sector employer does not have to pay at least minimum wage is for a true “training” relationship. Thus, to repeat, most internships have to be paid.
The same rules do not apply to public sector and not-for-profit/charitable employers, which still may offer unpaid internships without running afoul of the FLSA. However, we encourage even those employers to obtain legal advice before taking on interns on an unpaid basis.