Paid or Unpaid Internships?

Credit Union Association of Rhode Island
June 14, 2010 | COMMENTS

As the association conducts its 2010 Salary Survey, a question on internships arose. Some of the key factors that employers should consider when determining whether they must pay interns have been addressed in guidance published by the Department of Labor (DOL).

In the fact sheet, the DOL notes that internships will most often be viewed as employment, and therefore subject to the minimum wage and overtime provisions of the Federal Labor Standards Act (FLSA), unless a six-part test is met. The DOL will look at the following six criteria when applying the test:

1. 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.
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.
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all six of the factors listed above are met, an employment relationship does not exist under the FLSA, and the act's minimum wage and overtime provisions do not apply to the intern. This exclusion from the definition of employment is quite narrow because the FLSA's definition of “employ” is very broad. Visit this link for a copy of the fact sheet.

Reprinted with permission from the Credit Union Association of Rhode Island.