Summer internships provide employers the valuable opportunity to evaluate individuals for potential future employment positions without having to pay wages. The internship process also has been a rewarding way for students to gain real life experience in a field of their interest. A win- win for everyone, right? Not so fast – certain requirements must be met to reap the benefits of a valid internship program.
The Fair Labor Standards Act (FLSA) defines the term “employ” broadly as including to “suffer or permit to work.” Individuals considered employed must be compensated for services performed for the employer, including payment of minimum wage and overtime.
Interns are not employees and not subject to those FLSA requirements. The U.S. Department of Labor has warned employers that the internship exclusion is narrow. The test for determining whether individuals are interns includes meeting the following six criteria:
- Internship is similar to training which would be given in an educational environment
- Internship experience is for the intern’s benefit;
- Intern does not displace regular employees, but works under close supervision of existing staff;
- Employer that provides the training derives no immediate advantage from the activities of the intern (and on occasion its operations may actually be impeded);
- Intern is not necessarily entitled to a job at the conclusion; and
- Employer and intern understand that the intern is not entitled to wages for the time spent in the internship.
Before considering a summer intern, employers should carefully review the internship program to determine whether it complies with federal and state laws. Recent lawsuits and government monitoring present potential wage and hour risks for employers.