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Latest Information on non-paid internships at for profit companies
posted at 9/4/2012 11:29 AM EDT on Workforce Management
|What is the latest information regarding the legality of non-paid internships at for profit companies?|
Re: Latest Information on non-paid internships at for profit companies
posted at 9/4/2012 12:10 PM EDT on Workforce Management
In Response to Latest Information on non-paid internships at for profit companies:
What is the latest information regarding the legality of non-paid internships at for profit companies?
Posted by seedorrw
Federal Rules From SHRM. In particular note the item below regarding who receives the benefit of the interns work................
If your interns are “employees,” they are subject to the Fair Labor Standards Act (FLSA) and must be paid at least the minimum wage. Interns may be exempt from the requirements of the FLSA if they can be categorized as “trainees” as defined under the law.
In determining whether an intern is a trainee rather than an employee, the Department of Labor (DOL) has consistently applied the following six-criteria test, derived from a U.S. Supreme Court decision Walling v. Portland Terminal Co.:
In addition, in a 1983 Opinion Letter, the DOL determined that student interns would not be considered employees if they receive college credit for “an internship which involves the students in real-life situations and provides the students with educational experiences unobtainable in a classroom setting.” In a 1988 Opinion Letter, the DOL stated that students would not be considered employees when internship programs are "designed to provide students with professional experience in the furtherance of their education and training and are academically oriented for their benefit."
An academic credit requirement does not necessarily mean that a company is absolved of any requirement to pay the interns; the DOL’s six criteria still apply. Therefore, if interns fail to meet any of the above criteria, they should be paid as employees—at least minimum wage and overtime compensation when earned. Although earning class credit for the internship benefits the intern and can be required by the employer, class credit is not considered wages and should not be substituted for wages.
DOL opinion letters provide some guidance on when interns must be paid, but it is usually a good idea to consult legal counsel when designing and implementing an internship program.
Interns may also be treated as independent contractors rather than employees, but only if they are, in fact, independent contractors. The Internal Revenue Service provides guidance on determining whether a worker is an independent contractor or an employee. The DOL provides further guidance on independent contractors, volunteers and FLSA coverage.