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Is Your Unpaid Intern Really an Employee?

by Martin Salcedo, Esq. - The Human Equation on 3/12/2013
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woman training man in the workplace

The Fair Labor Standards Act (FLSA) establishes federal standards for minimum wage and overtime compensation. Under the FLSA, interns in the for-profit private sector will generally be viewed as employees entitled to compensation except in very limited circumstances.

Whether an individual working in an internship or training program is considered an employee that should be paid minimum wage and overtime compensation under the FLSA depends on the facts and circumstances. When making this determination, the following criteria must be applied to each particular situation:

  1. The internship, even though it includes performing actual work, 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 works under close supervision of existing staff and does not displace regular employees;
  4. The employer derives no immediate advantage from the activities of the intern, and its operations may occasionally be impeded by the intern;
  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, which means that intern does not need to be paid. Since application of this “internship exclusion” is highly dependent on the facts and circumstances of a particular situation, there are no clear-cut rules. Nevertheless, here are some factors that are commonly discussed in the internship context:

  • Internships structured around a classroom or academic experience are more likely to be viewed as an extension of the individual’s education rather than employment.
  • Programs providing job shadowing opportunities and supervision that allow an intern to learn certain functions are more likely to be viewed as an educational experience.
  • Individuals that receive the same level of supervision as regular employees are more likely to be viewed as employees rather than interns.
  • Interns used as substitutes for regular workers or to augment an existing workforce during specific time periods should be treated as employees under the FLSA.
  • Internships should last for a fixed period of time that is established before the internship starts.
  • Internships should generally not be used as a trial period for individuals seeking employment.

Volunteers for non-profit organizations are generally treated differently under the FLSA. Individuals who freely volunteer their time without anticipation of compensation for religious, charitable, civic, or humanitarian purposes to non-profit organizations are generally not entitled to compensation under the FLSA. Volunteers for government agencies and for private non-profit food banks are also generally not entitled to compensation. This means that unpaid internships in the public sector and for non-profit charitable organizations are generally permissible.

Since the “internship exclusion” under the FLSA is quite narrow, employers need to be very careful whenever it is being used to justify not compensating an intern. If there is any doubt, seek legal counsel to make sure employees are not being improperly classified as interns for wage and hour purposes.

If you would like to learn more about wage and hour requirements under the Fair Labor Standards Act, click here. If you would like information about insuring against FLSA claims, Setnor Byer Insurance and Risk.

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5/1/2018 9:53:00 AM #

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