Tuesday, February 10, 2009

Do you know? Unpaid internships

Do you know? There are specific standards that govern whether an unpaid internship passes muster under the Fair Labor Standards Act. If you business uses unpaid interns or externs, these rules are worth paying attention to.

The Department of Labor’s Wage and Hour Division uses a six-factor test to determine whether a trainee, intern, extern, apprentice, graduate assistant, or similar individual is an employee. If even one of these factors fails, then the individual is an employee and all of the regular minimum wage and overtime rules apply. The six factors are:

  1. The training is similar to what would be given in a vocational school or academic educational instruction;

  2. The training is for the benefit of the trainees or students;

  3. The trainees or students do not displace regular employees, but work under their close observation;

  4. The employer that provides the training derives no immediate advantage from the activities of the trainees or students, and on occasion the employer’s operations may actually be impeded;

  5. The trainees or students are not necessarily entitled to a job at the conclusion of the training period; and

  6. The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.

In the typical internship or externship program (i.e., where the work is simply an extension of an academic program), these factors are usually met, an employer-employee relationship does not exist, and the business does not have to worry about minimum wage or overtime laws for the interns or externs. If you use interns and are concerned about whether they are considered employees that must be paid minimum wage and overtime, consult an employment attorney.