Every spring, as college students nationwide prepare for finals and pull all-nighters to wrap up their spring semesters, many simultaneously ramp up their search for the perfect internship. The Wage and Hour Division understands that these “foot-in-the-door” opportunities can provide invaluable experience and have a great impact on future career paths. But when can internships be unpaid, and when must interns be considered employees? When must these programs pay not just in terms of experience, but in cold, hard cash?
Just like many college officials, parents and students, the Wage and Hour Division is concerned that interns work under conditions that are in compliance with federal law. If you in fact are an “employee,” you must be paid properly. A fair day’s work deserves a fair day’s pay.
The Fair Labor Standards Act, as interpreted by the Supreme Court, provides criteria for what is and is not legal regarding payment for internships. Six criteria must be applied when determining if an internship can be unpaid:
- 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 displace 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.
It’s important that students familiarize themselves with those six requirements, and especially important that employers do so as well. Additionally, the following guidelines should be considered:
- Interns in the non-profit and government sectors may not have to be paid. The Wage and Hour Division recognizes an exception to the employment relationship for individuals who volunteer their time, freely and without anticipation of compensation for religious, charitable, civic, or humanitarian purposes to non-profit organizations.
- In the for-profit world, the more an internship is used to benefit the employer, and the employee performs productive work, the more likely it is that the intern is an employee and therefore entitled to be paid properly.
- The more a for-profit employer structures an unpaid internship program around a classroom or academic experience as opposed to the employer’s actual operations, the less likely the internship will be viewed as employment.
- Interns in the “for-profit” private sector who qualify as employees rather than trainees typically must be paid at least the federal minimum wage and overtime compensation for hours worked beyond 40 in a workweek.
If you believe that you are working for free in an internship that should be paid, or if you have any questions, give us a call at 866-4US-WAGE. We are here to help and have taken action to ensure interns receive minimum wage and overtime according to the law. In a 2013 investigation, we found more than $37,000 in back wages due to 38 employees working as unpaid interns for a snowboard company in Waterbury, Vt. Before that, a minor league baseball team in Tennessee paid more than $31,000 in back wages to 14 interns it had paid only $150 per week.
But we do more than just enforce the law. We also conduct a number of outreach events across the country each year to inform workers of their rights and employers of their responsibilities, including those related to internships. We also provide guidance on our website – please see our Fact Sheet on Internships under the FLSA.
In a job market where competition for top positions is ever increasing, experiential learning and the skills learned through internships can provide an enormous advantage. But the hope for a better “someday” should not come at the cost of working without pay today. The Wage and Hour Division is committed to ensuring that when interns are employees, that experience pays.
Laura Fortman is the principal deputy administrator for the Wage and Hour Division.