The Fair Labor Standards Act and Your Internship Program

Internships can be a valuable experience for both the intern and the company offering the internship. Under the right circumstances, internships can serve as extended interviews, in which you, as the employer, can learn more about the intern’s personality and capabilities in the workplace, while the intern gains potentially valuable on-the-job experience.

Because of the experience students can gain, many are open to taking unpaid internships. However, as an employer, you need to be aware of guidelines governing whether internships need to be paid or may be unpaid.

Generally, internships at for-profit businesses should be paid unless the intern is receiving training for his or her educational benefit. The U.S. Department of Labor provides the following six guidelines to consider when deciding if an internship is to be paid or unpaid:

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.

Determining whether an internship needs to be paid can be complicated and involves many different variables. The Department of Labor also provides additional situations to consider.

Likely to Qualify as Educational

An internship is likely to be considered an educational experience (and therefore will not need to be paid) if the internship is structured around a classroom experience. This is often the situation when a college or university provides oversight and educational credit for the internship. Additionally, if an internship provides the intern with widely applicable experience, rather than simply providing training for a specific job at the company, it is more likely to be viewed as an educational experience.

During my last quarter at the University of Washington School of Law, I was an intern and worked in the chambers of United States District Court Judge Dimmick.  I received full school credit for basically serving as an assistant law clerk.  I did research for pending cases and wrote draft opinions for Judge Dimmick’s signature.  It was a fantastic learning experience for me, and took a bit of the work load off of Judge Dimmick’s two paid clerks.

May Not Qualify as Educational

Alternatively, If the intern is responsible for duties that paid employees would otherwise handle, then the intern may need to be paid for his or her services. Note that if interns are completing productive work for your business, the educational experience may not exempt the intern from minimum wage requirements. Finally, if an internship is used as a trial period before considering hiring the intern for full-time employment, it is likely that the intern should be paid.

The guidelines for internship programs under The Fair Labor Standards Act can be complicated. If you are unsure how the law applies to your business, please contact us to schedule a consultation.