Apr 20, 2016 | Written by: Share|
Many companies hire interns over the summer, and mistakenly believe the interns do not have to be paid. Since these companies are providing high school or college students with valuable work experiences that hopefully will help the students find paying jobs upon graduation, company management sometimes thinks that the experience is sufficient “payment” for the work provided. However, depending on what these summer interns are doing, the company may need to pay them at least minimum wage.
Recently, the White House, in conjunction with the Department of Labor (DOL), established regulations that control whether or not a company must pay an intern, summer or otherwise. The DOL developed six factors that an employer must apply to determine whether an internship can be unpaid.
All of the following six criteria must be met in order to establish that an intern qualifies to work 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;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. 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;
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 an internship meets all six of these criteria, the Fair Labor Standards Act does not consider that an employment relationship exists. Therefore, the employer is not required to pay the intern minimum wage or overtime. However, if these six criteria are not met, the intern is entitled to at least minimum wage as well as overtime.
To avoid running afoul of the DOL regulations, review these factors before you decide not to pay a summer intern, and confirm that the internship can be legally unpaid. If you need assistance making this decision or need advice on other employment legal matters, contact Deborah B. Rosenthal at 908-735-5161 or via email.