With summer right around the corner, organizations looking for summer interns need to need to know if their interns should be paid under the Fair Labor Standards Act (FLSA). The U.S. Department of Labor's Wage and Hour Division (WHD) released a six factor test that employers can use to determine if their interns should be paid.
What employers need to ask themselves :
- The internship is more about education than contributing to company operations
- The primary benefit of the internship is derived by the intern
- The intern does not displace employees
- The employer derives no immediate advantage from the activities of the intern
- There is no guarantee of a job when the internship is over
- All parties understand there will be no compensation for the internship
In general, nonprofit organizations may be allowed to hire unpaid interns. However, for-profit employers should use the test above to determine whether the intern is classified as an employee. If they are, then they must pay interns at least minimum wage.
The WHD updated its Fact Sheet in April 2010, discussing when employers can and cannot forgo paying interns. For additional information, visit the Wage and Hour Division website or call their toll-free helpline at 1-866-4USWAGE.
Intern or Employee? The 6-Factor Test