News & Events
DOL Wage and Hour Division Clarifies Rules for Unpaid Interns in the For-Profit Sector
06/18/2010
It is the season when college students turn their sights to internships to boost their resumes and gain vaulable workplace experience. Before hiring unpaid interns, employers are well-advised to review a recent fact sheet published by the U.S. Department of Labor (DOL). Shortly after receiving criticism from the Economic Policy Institute for its purportedly outdated regulations on the issue, the Wage and Hour Division of the DOL on April 21st released a fact sheet further explaining the test to be used to determine if an intern qualifies as an “employee” who must be paid minimum wage and overtime compensation. “Fact Sheet #71: Internship Programs Under the Fair Labor Standards Act (FLSA)” observes that the FLSA defines the term “employ” “very broadly” and cautions that the trainee exclusion is “quite narrow.” Accordingly, the fact sheet provides that interns and trainees must be treated as regular employees unless their internship or training program meets the following six criteria:
1) the internship is similar to training that would be received in an educational
environment;
environment;
2) the experience is for the intern’s benefit;
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 intern’s activities and, on occasion, may actually be impeded in its operations;
5) the intern is not necessarily entitled to a job at the conclusion of the internship;
6) the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
With respect to the first two criteria, the fact sheet explains that “the more an internship program is structured around a classroom or academic experience as opposed to the employer’s actual operations,” such as “where a college or university exercises oversight over the internship program and provides educational credit,” the more likely the exemption will apply. Likewise, the exemption is more likely to apply if “the internship provides the individual with skills that can be used in multiple employment settings, as opposed to skills particular to one employer’s operation.” Conversely, if interns perform “productive work” like filing, clerical activities, or assisting customers, then “the fact that they may be receiving some benefits in the form of a new skill or improved work habits will not exclude them” from the definition of “employee” and the accompanying minimum wage and overtime requirements.
With respect to displacement and supervision, the agency notes that interns who serve as “substitutes” or are used to “augment” the existing workforce should be paid at least minimum wage and, if applicable, overtime compensation. On the other hand, if the employer is providing job shadowing opportunities, and the intern performs no or minimal work only under the supervision of regular employees, the intern is less likely to be viewed as an employee under the FLSA. Finally, unpaid internships should be of a fixed duration, established prior to the outset of the program, and generally should not be used as “trial periods” for individuals who expect to be employed at the conclusion of the internship.
