Private Internships Must Almost Always Be Paid

POSTED BY SCOTT T. SILVERMAN ON MAY 11, 2012

With the summer almost upon us, private, for-profit companies may be thinking of high school or college students as a resource for unpaid labor, through "summer internships."  This is almost always unlawful!

According to the Department of Labor ("DOL") Fact Sheet, internships in the “for-profit” private sector will most often be viewed as employment, unless a six-factor exclusion test is met.  Interns in the “for-profit” private sector who qualify as employees must be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek. The determination of whether an internship program meets the exclusion depends upon all of the facts and circumstances. However, the DOL states that the employer must meet all six criteria to exempt interns from payment, and that the exclusion is "quite narrow":

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.

In the unlikely event that an employer decides  that its program  meets this test, it must have a document for the student to sign, which should replicate the six factors and include the intern's acknowledgement that the position is an unpaid internship. The document should also specify the ending date of the experience.

In the more likely scenario that the summer hire qualifies as an employee, the employer would simply follow its normal hiring procedures.  However, it is vital that the employer include a written acknowledgement that the work is only for the summer and the employment position will terminate on a date certain.

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