Do You Have an Unpaid Intern,
or Do You Really Have an Employee?
The Fair Labor Standards Act (FLSA) defines the term “employ” very
broadly as including to “suffer or permit to work.” Covered
and non-exempt individuals who are “suffered or permitted” to
work must be compensated under the law for the services they perform
for an employer. Internships in the private sector will most often
be viewed as employment, unless the test described below relating
to trainees is met. Interns in the 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.
There are some circumstances under which individuals who
participate in private sector internships or training programs
may do so without compensation. The Supreme Court has held that
the term "suffer or permit to work" cannot be interpreted
so as to make a person whose work serves only his or her own interest
an employee of another who provides aid or instruction. This may
apply to interns who receive training for their own educational
benefit if the training meets certain criteria. The determination
of whether an internship or training program meets this exclusion
depends upon all of the facts and circumstances of each such program.
The following six criteria must be applied when making this
- 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.
If all of the factors listed above are met, an employment
relationship does not exist under the FLSA, and the Act’s
minimum wage and overtime provisions do not apply to the intern.
This exclusion from the definition of employment is necessarily
quite narrow because the FLSA’s definition of “employ” is
very broad. Some of the most commonly discussed factors for private
sector internship programs are considered below.
Similar To An Education Environment And The Primary
Beneficiary Of The Activity
In general, the more an internship program is structured around
a classroom or academic experience as opposed to the employer’s
actual operations, the more likely the internship will be viewed
as an extension of the individual’s educational experience
(this often occurs where a college or university exercises oversight
over the internship program and provides educational credit). The
more 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, the more likely the intern would
be viewed as receiving training. Under these circumstances the
intern does not perform the routine work of the business on a regular
and recurring basis, and the business is not dependent upon the
work of the intern. On the other hand, if the interns are engaged
in the operations of the employer or are performing productive
work (for example, filing, performing other clerical work, 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 FLSA’s minimum wage and overtime requirements
because the employer benefits from the interns’ work.
Displacement And Supervision Issues
If an employer uses interns as substitutes for regular workers
or to augment its existing workforce during specific time periods,
these interns should be paid at least the minimum wage and overtime
compensation for hours worked over forty in a workweek. If the
employer would have hired additional employees or required existing
staff to work additional hours had the interns not performed the
work, then the interns will be viewed as employees and entitled
compensation under the FLSA. Conversely, if the employer is providing
job shadowing opportunities that allow an intern to learn certain
functions under the close and constant supervision of regular employees,
but the intern performs no or minimal work, the activity is more
likely to be viewed as a bona fide education experience. On the
other hand, if the intern receives the same level of supervision
as the employer’s regular workforce, this would suggest an
employment relationship, rather than training.
The internship should be of a fixed duration, established prior
to the outset of the internship. Further, unpaid internships generally
should not be used by the employer as a trial period for individuals
seeking employment at the conclusion of the internship period.
If an intern is placed with the employer for a trial period with
the expectation that he or she will then be hired on a permanent
basis, that individual generally would be considered an employee
under the FLSA.
In order to protect themselves and their organizations, employers
should be aware of and in compliance with these and other regulations/decisions
issued by various federal/state agencies and courts. If Paul
Hilton, Human Resources Consulting, LLC can be of any assistance
with these or other HR related issues, please do not hesitate
to contact us.
Paul Hilton Human Resources Consulting works with our clients to insure that all required documentation is correct and sufficient to successfully defend against a claim to any unemployment compensation commission.
|For assistance with any Human Resources related questions or other
issues, please Contact Us.
Our newsletter is updated regularly, providing
information of interest
to many of our readers. We invite you to check back frequently.
Paul Hilton is a certified Human Resources Consultant, located in
If you would like to subscribe to our Newsletter
e-mailing list, please submit our Contact