Does Our Company Have to Pay Its Interns?

Learn about the Department of Labor's six-part test for separating interns from employees.

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Has your company set up an internship program? These days, when there are many more applicants for entry-level positions than there are jobs, some employers have taken to hiring interns in addition to employees. This gives new workers a chance to learn the ropes and get some experience, while the company gets free labor and an opportunity to scout the best potential hires. It's a win for everyone, right? 

Not necessarily. The basic exchange of the workplace demands that workers be paid for their labor. Employees are entitled to earn at least the minimum wage, to be paid overtime when applicable, and to other wage and hour protections. An employer can't avoid these responsibilities by simply calling workers "interns." To pay a worker less than would otherwise be legally required (or nothing at all), an employer must make sure that it is offering a true internship: an educational opportunity that benefits the intern and costs the company some time and effort. Otherwise, an employer is just failing to pay its workers, and will face wage and hour liability. 

What Is an Intern?

An intern is a type of temporary worker, usually a stuedn or person who is new to the filed, who takes an internship position to learn what the job is like and get some hands-on experience. Interns may be paid or unpaid, depending on the empoyer and practice in the industry. Internships are common in governments, nonprofits and in artistic fields, such as design, television and movie production, and museum work. 

If an internship is unpaid or paid less than the minimum wage (and any overtime due), however, it must meet certain requirements intended to make sure that the internship really is a valuable learning opportunity rather than a form of exploitation.

The Department of Labor's Six-Part Test

The federal Department of Labor looks at six factors to determine whether a true internship exists (meaning the intern is not legally considered an employee entitled to minimum wage and overtime). Generally, these factors are intended to uncover whether the internship is a benefit to the intern or to the employer:

  • The internship must be similar to training that would be provided in an educational environment. An internship that centers on an academic experience is more likely to meet this test, as is one that trains the intern for multiple employment settings rather than just to do the work of the employer.
  • The internship must be for the benefit of the intern. The more the business depends on the work of the intern, and the more time the intern spends on routine, regular work of the business, the more likely the intern will be considered an employee who is entitled to minimum wage and overtime.
  • The intern must not displace regular employees, and must work under close supervision of existing staff. A company that is using interns instead of regular employees (either because it has let employees go or put off hiring) is likely to be seen as an employer that owes wage and hour obligations. Similarly, if an intern receives the same supervision as regular employees, that argues against a true internship experience.
  • The employer gets no immediate advantage from the intern’s work—and may, on occasion, find its operations impeded by the internship. Having to provide an intern with extra training, special learning opportunities, and additional supervision and guidance, for example, will entail time and expense taken away from other activities, and is less likely to indicate an employment relationship.
  • The intern is not necessarily entitled to a job once the internship ends. An internship that is actually a trial period, the successful completion of which will lead to a job, will be considered regular employment.
  • Both employer and intern understand that the intern is not entitled to wages for time spent in the internship. In other words, no bait and switch is allowed. If the intern was led to believe that he or she would be paid, the company must make good. 

 

by: , J.D.

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