Are you thinking of hiring an intern to help in your business because you need the help and think you won’t have to pay them? You may be wrong in your assumption. According to the U.S. Department of Labor Wage and Hour Division, some internships may need to be paid minimum wage and overtime (if applicable). Internships in the “for-profit” private sector will most often be viewed as employment, unless the test described below relating to trainees is met.
There are some circumstances under which individuals who participate in “for-profit” private sector internships or training programs may do so without compensation. The Fair Labor Standards Act (FLSA) defines the term “employ” very broadly as including to “suffer or permit to work.” 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 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.
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.
Keep in mind that 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. 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.
Some states have more stringent overtime rules than the U.S. Department of Labor, so be sure to check with your state agency as well regarding any questions on this topic.
If you are thinking of using an intern in your business, make sure you follow the regulations and pay at least minimum wage if required to do so.
Candy
