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April 26, 2010
Intern or Employee? The 6-Factor Test

The Department of Labor has published guidance to help employers determine whether they must pay interns under the Fair Labor Standards Act.

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The department's fact sheet covers interns who provide services to for-profit employers in the private sector.

Paid Internships or Unpaid Internships?

In the fact sheet, the department notes that internships will most often be viewed as employment (and therefore subject to the minimum wage and overtime provisions of the FLSA), unless a test is met.  The department will look at the following 6 criteria when applying the test:

  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.

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, the department says. 

The fact sheet is available on Compensation.BLR.com:

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