Interns Aren’t (Necessarily) Free Labor

It’s almost summer. High school and college students are eager to gain on the job experience to enhance their résumés, and business owners are eager for cheap labor. A summer internship sounds like a match made in heaven, right?

the new intern

Well, it can be. Just be careful. Some business owners seem to equate “intern” with “unpaid,” and that can get them in trouble.

The U.S. Department of Labor Wage and Hour Division (WHD) has issued Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act. Turns out, in most cases when working for a for-profit organization, interns do need to be paid at least minimum wage.

As the WHD Fact Sheet says:

Internships in the “for-profit” private sector will most often be viewed as employment, unless the test described below relating to trainees is met. Interns in the “for-profit” private sector who qualify as employees rather than trainees typically must be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek.

The Fact Sheet goes on to list six criteria that must be met in order for the internship to meet the exclusion from minimum wage regulations:

  • 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;
  • The internship experience is for the benefit of the intern;
  • The intern does not displace regular employees, but works under close supervision of existing staff;
  • 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;
  • The intern is not necessarily entitled to a job at the conclusion of the internship; and
  • The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Unless the internship meets all these criteria, the intern must be paid at least minimum wage. It’s a good guess if they’ve gone through the trouble of issuing a Fact Sheet, the WHD is going to be taking a close look at this.

So, hire those interns. Show ’em the ropes. Just be sure to pay them properly.

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