SUMMER INTERNS: TO PAY OR NOT TO PAY? – Part 1

Now that summer season is here, it’s time to review your payment obligations to interns.

The DOL’s Test for Interns and Trainees

Although the Fair Labor Standards Act (FLSA) doesn’t define intern or provide an exemption from minimum wages or overtime for interns, it recognizes that not everyone who performs duties for an employer is an “employee,” and thus entitled to compensation under the wage and hour laws. Generally, the FLSA provides that if a company benefits from using interns, it must pay them at least minimum wage. However if the intern isn’t doing anything that directly benefits your company but is just observing or learning, you might be justified in not paying him or her.

Whether student interns are considered employees under the FLSA depends on the circumstances surrounding their duties and activities. The U.S. Department of Labor (DOL)uses a six-part test to distinguish interns or “trainees,” from employees:

1. The training, even though it includes actual operation of the employer’s facilities, is similar to what would be offered in a vocational school.
2. The primary benefit of the training is for the intern.
3. The trainees don’t displace regular employees, but work under close observation.
4. The employer derives no immediate advantage from the activities of the interns, which on occasion might actually be counterproductive.
5. The intern is not guaranteed a permanent job at the end of the program.
6. Both parties understand that the intern is not entitled to wages for the time spent in the internship.