Unpaid Internships: Tread Carefully

Internships are popular both for college students looking for real-world work experience and for organizations hoping to train the next generation of employees. The rules regarding internships may vary depending on whether you are a for-profit business, a government agency, or a non-profit organization. Still, a key question for anyone is whether interns need to be paid or if it is enough that they receive college credit for their work.

Here are some things to consider to avoid legal issues with your internship program.

Federal Rules and Guidelines

The U.S. Department of Labor Wage and Hour Division has federal rules regarding internship programs that need to be followed. Employees are required to be paid, but interns are not typically considered to be employees under the Fair Labor Standards Act (FLSA).

The “primary beneficiary test” is how you can determine whether an intern is a paid employee or an unpaid intern who receives benefits through academic credit from their educational institutions at the conclusion of the internship rather than money.

To maintain a proper unpaid internship program, you must have a structured educational experience that contains beneficial learning activities for your interns. That means they can’t just be free labor running errands or doing grunt work but must be in a structured educational environment within your organization and receiving professional development.

If the intern’s work does not fall within these parameters, your interns qualify as employees, and you must offer paid internships for at least minimum wage plus overtime as applicable.

Employee vs Intern

With federal law and state labor laws potentially governing your business, you need to obtain legal advice about your employees and any internship opportunities you may want to start.

Employees have many legal protections that interns do not have. When you decide to bring interns into your organization, make sure not to displace your regular employees from their normal tasks. Instead, allow your full-time employees to continue their work while potentially assisting in the learning experience you provide to your interns. By maintaining this separation, you also preserve the legality of your employees' rights and your internship program.

Related Resources:

• Glossary: Employment Law (FindLaw’s Learn About the Law)
• Employment Law Overview (FindLaw’s Learn About the Law)
• Employment Law 101 (FindLaw’s Learn About the Law)