Internships are considered to be an essential part of a student’s education and right of passage for college grads. The benefits are well-known: students participating in internship programs receive an invaluable educational experience and develop connections and relationships with professionals in their desired fields, giving them a leg up when they enter the workforce.
Businesses who have internship programs, in turn, are able to use the programs as recruiting and talent-development tools – students that successfully complete an internship often make great part-time or full-time employees. Interns also bring with them a kind of enthusiasm and energy that can help revitalize an organization’s existing workforce. An internship program also provides a great opportunity to strengthen a company’s reputation in the community.
So why have internships, a seemingly win-win relationship for both students and employers, been at the center of so much controversy over the past few years?
While no one is denying the intrinsic value of an internship, what employers, advocacy groups, educational institutions and lawmakers are debating is the value of the unpaid internship. In fact, more than 30 cases involving unpaid interns have been filed in the past four years. Specifically at issue is whether or not unpaid interns actually qualify as non-exempt employees and are thusly entitled to compensation and protections under the Fair Labor Standards Act (FLSA).
In 2010 the Wage and Hour Division of the US Department of Labor (DOL) published new guidance to be used when determining whether interns working for employers in the “for profit” private sector must be paid at least the minimum wage and overtime pay as outlined under the FLSA. These guidelines outlined a six-part test to determine whether or not interns qualify as employees.
If all six of the above criteria are met, then it is determined that an employment relationship does not exist under the FLSA, meaning an unpaid internship is legally permissible.
In the same fact sheet that outlines the six-criteria test for unpaid intern programs, the DOL also offers this guidance to employers: “…the more an internship program is structured around a classroom or academic experience as opposed to the employer’s actual operations, the more likely the internship will be viewed as an extension of the individual’s educational experience.” If, however, the students in question are being used to as substitutes for regular workers, or to supplement its current workforce in such a way where they are performing productive work (i.e. filing, assisting customers, etc.), they should be paid at least the minimum wage, as well as any overtime compensation for hours worked in excess of 40 hours per workweek.
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This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.