A Sustainable Workforce Starts With You

Beware of Unpaid Internships

Summer has arrived, and enthusiastic high school and college students are looking for summer internships.

Internships are not a problem if you are paying interns at least minimum wage, and are paying overtime hours (any hours worked over 40 in a work week) at one and one-half times their regular wage rate.

If you are considering unpaid internships, however, you may be exposing your company to a lawsuit.

Under the Fair Labor Standards Act, if you allow a person to perform services for you, in most instances that person must be paid and will be subject to minimum wage and overtime requirements.  There is a narrow exception for true unpaid internships, which must meet the following six criteria:

  1. The internship is similar to training given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace or supplant regular employees, or perform duties traditionally rendered by regular employees;
  4. The employer derives no immediate advantage from the intern’s activities, and the intern may actually impede the employer’s operations;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand, preferably in a signed writing, that the intern is not entitled to receive remuneration for his or her work.

Here is a link to DOL Fact Sheet # 71 regarding unpaid internships: Internship Programs Under The Fair Labor Standards Act.

In most cases, employers hiring interns want the interns to perform useful work of some kind, so it is difficult to satisfy criterion number four.  The unpaid internship exception is designed for internships that offer some kind of educational training (criterion #1) and benefit the intern, not the employer (criterion #2).

As such, the safe option is to stick to paid internships.  If your company is contemplating some kind of training program / unpaid internship, check with your legal counsel to make sure the program fits the above criteria.

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