Posts Tagged ‘Internship’

When Are You Required to Pay Interns?

Tuesday, April 19th, 2016

With summer months fast approaching, many employers are considering employing interns.  CAI’s Advice & Resolution Team often receives questions regarding pay requirements for interns.  There seems to be one school of thought out there that says the employer can decide whether or not they pay interns.  Well in fact, the USDOL (United States Department of Labor) has issued guidance on this issue (Fact Sheet #71.)  This fact sheet Internspecifies tests that must be met to exclude interns from minimum wage and overtime requirements under the FLSA (Fair Labor Standards Act).

The following 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
  • The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship

If ALL of the above factors are met, an employment relationship does not exist under the FLSA, and the minimum wage and overtime requirements do not apply.

Of course, the decision to pay an intern goes beyond the legalities of such.  There are many differing opinions as to whether or not employers should pay interns.  Local columnist, Alice Wilder at the Daily Tarheel, has written an interesting article on the virtues of paying an intern, that may be useful in making your decision.

Make Sure Your Unpaid Summer Intern Is Actually an Intern

Thursday, May 16th, 2013

summer internsMany organizations offer unpaid summer internships to college students or new job seekers. The opportunity is great for both parties. Interns gain professional experience, learn more about their preferred industry and make connections with the people they meet on the job. A company that offers internships meets several potential new employees who will learn a lot about the company and its culture, which is helpful for potential training in the future.

If you choose to hire unpaid interns, make sure you take great care in following the internship program guidelines provided by the US Department of Labor (USDOL).  Failure to do so could lead to a lawsuit like in the case of Hearst Magazines and a former intern.

Protect yourself and your company from a wage and hour investigation or lawsuit by knowing all of the factors that need to be met in order to offer unpaid internships. If your internship program does not include all of the criteria below, you have an employment relationship and must pay your interns minimum wage and overtime.

According to the USDOL’s Fact Sheet #71: Internship Programs under the Fair Labor Standards Act for an internship to be unpaid, it must meet the following six criteria:

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 education 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.

Along with the six criteria, USDOL also provides some examples and interpretations of workplace situations in the Fact Sheet.

For additional information on company internship programs and compensation, please call a member of CAI’s Advice and Counsel Team at 919-878-9222 or 336-668-7746.

Photo Source: US Department of Education

The Six Criteria for Unpaid Interns

Thursday, April 28th, 2011

With the U.S. Department of Labor’s (USDOL) Wage and Hour Division focusing so closely on uncovering and investigating violations of the Fair Labor Standards Act (FLSA), employers need to be sure that they are complying with every part of the wage and hour law.  One area where the actual regulations often fail to match what employers believe them to be concerns the paying of interns.

Thankfully, USDOL released Fact Sheet #71: Internship Programs under the Fair Labor Standards Act last year, which provides general information to employers to help determine whether interns must be paid under the FLSA for the service they provide.  For an internship to be unpaid, it must meet the following six criteria:

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 education 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.

Along with the six criteria, USDOL also provides some examples and interpretations of workplace situations in the Fact Sheet.

We encourage employers who have an internship program in place, or who are considering one, to review this important Fact Sheet.  A review of the six criteria and the interpretations in this Fact Sheet should help clarify any confusion.  Interns who do not meet the criteria should be paid at least minimum wage, plus any earned overtime.

If you have any questions about intern compensation, please contact a member of CAI’s Advice and Counsel team at 919-878-9222 or 336-668-7746.

Photos Source: Inspiring Interns