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Summer Internships: Paid or Unpaid?

Internships are at their peak during the summer months. A summer internship can be a great way for students and recent college graduates to learn new skills and apply what they’ve learned in their field of study.

Unless very narrow tests are satisfied, employers must pay interns at least the minimum wage and overtime in accordance with the Fair Labor Standards Act (FLSA). The DOL uses a six-part test to determine whether an intern is an employee and must be paid under the FLSA*; all six criteria must be fulfilled for the internship to be unpaid:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in an educational environment. Under this criterion, the more an internship program is structured around a classroom or academic experience (e.g., college credit is offered), the more likely the internship will be viewed as an extension of the individual’s educational experience rather than an employment relationship. 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. 

    Best Practice: The training offered to an unpaid intern should be aligned as closely as possible with their course of study. Employers should consider working with a college or university to provide educational credit and offer guidance for defining the learning objectives of the program. Internships should be structured and documented thoroughly and carefully.

  2. The internship experience is for the benefit of the intern. For it to be unpaid, the internship must be for the benefit of the intern, not the company.

    Best Practice: Avoid involving unpaid interns in the operations of the business or assigning interns productive or routine work, or assignments that an employee would normally perform. For example, avoid asking interns to file, run errands, or assist customers. Interns should be learning new skills that can be applied in multiple employment settings, not just within your business. Remember that interns are not entry-level employees and should not be treated as such. Additionally, it’s important to provide supervisors with guidelines for how they are to interact with interns.

  3. The intern does not displace regular employees but works under close supervision of existing staff. Employers may not look to unpaid interns as a way to meet business demands or be dependent on the interns’ work. If an employer uses interns as a substitute for regular workers, or to augment its existing workforce during specific time periods, then the interns are likely to be viewed as employees and entitled to compensation under the FLSA.

    Best Practice: In order to be unpaid, interns must be under close and constant supervision of existing staff. Employers should consider their options for providing this type of supervision, such as job shadowing and mentoring.

  4. The employer derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded. Remember that the objective of an internship should be to provide a meaningful learning experience in an intern’s area of study, not for the company to benefit from the intern’s work.

    Best Practice: In providing an experiential learning opportunity, an employer should exercise caution so it does not get an advantage from interns' activities. Any work done by an unpaid intern should be insubstantial in nature and secondary to the training process.

  5. The intern is not necessarily entitled to a job at the conclusion of the internship. Unpaid internships should not be used as a trial period for individuals seeking employment at the conclusion of the internship period.

    Best Practice: Unpaid internships should last a relatively short period of time. Before an internship begins, provide the intern with a written document stating that the internship relationship will be temporary and that there should be no expectation that he or she will then be hired on a permanent basis at the conclusion of the internship.

  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship. Under this criterion, both parties must understand that the internship is unpaid.

    Best Practice: Strongly consider having written agreements with interns that describe the details of the internship program, including whether they are entitled to pay. Remember that an agreement alone will not relieve the internship from meeting the other five criteria outlined above.

For internships to be unpaid under the FLSA, all of the above six criteria must be satisfied. Evaluate each situation on a case-by-case basis and review the relationship periodically because it may change over time. When in doubt, pay interns at least the minimum wage and overtime when due.

* Note: These six criteria apply to for-profit employers only. Some states have additional criteria for determining whether interns are entitled to minimum wage and overtime; check your state law to ensure compliance.

Have questions about interns?
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Top Related Resources
  • FLSA Guide
  • Internship Policy
  • Fact Sheet: Internship Programs 
  • Overtime Policy
  • Hiring Guide

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