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Unpaid Interns – Too Good to be True?

With summer fast-approaching, many employers are now deciding whether to hire summer interns. Undoubtedly, the benefits of an internship extend to both the employer and the intern. The company receives the intern’s services, while the intern enjoys exposure to and experience within his or her chosen field. If your company is considering hiring an intern, however, it is imperative that you seriously evaluate the internship program and policies to ensure that your company is not violating federal law.

The Fair Labor Standards Act ("FLSA") provides that individuals who "suffer or [are] permitted to work must be compensated under the law for the services they perform for an employer" unless otherwise exempt. An internship in the private, for-profit sector is typically viewed as employment. As a result, these interns must be paid at least the minimum wage and overtime compensation for any hours over forty worked in a work week.

Under certain circumstances, however, individuals who participate in for-profit, private sector internships or training programs may do so without compensation. If an intern receives training for his or her own educational benefit and that training meets certain criteria, then the employer is relieved of the obligation to compensate the intern. The six criteria that must be applied when making this determination is as follows:

  • 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 displaced 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.

If you are considering hiring unpaid summer interns, it is vital that you consult with an attorney with experience in employment law to ensure that your company is protected.

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