What You Need To Know About Unpaid Internships and FLSA

By JDXpert - April 03, 2016

I can still remember the pit I felt in my stomach when I placing my application for a summer internship in a bin with hundreds of hopeful students.  I thought I was being proactive!  I thought I was taking control of my future!  I didn’t think there would be hundreds applying for MY internship!  Why did so many of us find internships to be so crucial?   My peers and I knew that landing an internship would provide us with experience and a leg up when trying to establish employment after graduation.  Paid or unpaid, we didn’t care, as long as we could use it on resumes.  Organizations can also benefit greatly from internships but it is important to note key legal issues, primarily that of unpaid internships and FLSA compliance, before entering an internship program.

According to Department of Labor guidelines for unpaid internships, employers are required to compensate interns as they would nonexempt employees under FLSA standards unless certain conditions are met.

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

When all of the above criteria are met, these interns are not considered employees of the firm and FLSA minimum wage and overtime provisions do not apply.

It is important to remember that the more an internship is structured around what is learned in the classroom, the more likely it will be seen as an extension of the classroom.  Oftentimes, companies see interns as a way to accomplish tasks without having to hire a new employee.   Those who follow this thinking are in violation of DOL guidelines and may be subject to costly litigation or fines.  The goal of an internship is not to provide benefit to the company but to instill interns with skills that they can use at a multitude of work settings, not just at one business.  Companies are not to give tasks to unpaid interns that are normally performed by regular employees and interns cannot engage in productive tasks like filing, assisting customers, or other clerical work. To help ensure proper classification of an unpaid internship a company should work closely with the university or college to ensure that the internship is centered on education and benefits the student.  

Also, another way to help protect themselves, employers need to put the terms in writing, such terms as, the internship is unpaid and of a particular duration, and that he or she is not guaranteed regular employment after the completion of the internship.

Unfortunately, I did not get that internship but did take another opportunity which provided me with useful knowledge that helped me tremendously in the early years of my career.  Internships have many positives but remember, when deciding to pay or not to pay your interns this summer, be sure to follow the FLSA guidelines to protect yourself against potential litigation or fines.

Did you find this helpful?  If so, be sure to share with your colleagues and leave us a comment about how you handle unpaid internships.  For more information on the DOL guidelines for unpaid internships, please visit, http://www.dol.gov/whd/regs/compliance/whdfs71.htm



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