Unpaid Internship Rules

Internships give recent college graduates the opportunity for real-life job training. They can lead to full-time jobs. College students usually get class credit for internships. Business owners can use internship programs to scout new talent without committing to permanent new hires.

Business owners should not use interns as free labor. Federal labor laws require payment unless the program is for the benefit of the intern. Standards for unpaid interns are strict. The Fair Labor Standards Act (FLSA) determines whether you must pay your intern an entry-level wage.

Primary Beneficiary Test for Unpaid Internships

The U.S. Department of Labor (DOL) enforces federal labor laws. State laws about unpaid internship programs may differ from federal laws. The DOL's Wage and Hour Division uses a "primary beneficiary" test to differentiate between a regular employee and an unpaid intern. Seven factors determine if a position benefits the student or the employer.

• The intern and employer must understand that the work relationship has no compensation. The intern is working for school credit, not pay.
• The internship resembles training they would get in an educational environment. The internship should not be "scholastic" but contain elements related to the student's school work.
• The internship is part of the intern's coursework. The intern will get academic credit. Ideally, the intern must report weekly to a staff advisor and instructor to describe their progress.
• The intern works under close supervision of existing staff while getting educational benefits. The company's staff should know the intern's presence and purpose during their internship. Staff members who are willing to provide instruction should work with the intern.
• The internship is part of the academic calendar, allowing them to meet other academic commitments. The employer and intern recognize that the intern will leave on a specific date.
• The internship's length aligns with the internship's beneficial learning period. The internship should end if the employer does not have enough work for the intern.
• Both parties understand there is no job guarantee after the internship. Sometimes, hiring an intern after an internship means the "internship" becomes an orientation, and employers may have to pay the intern back for the period.

Crafting a Successful Internship Program

Small business owners may not have considered developing an internship program. Government agencies, corporations, and nonprofit organizations depend on them. Even small businesses can have workable programs. Small companies can work with community colleges rather than major universities to develop their plans.

Educational institutions and corporate human resources professionals agree there are important steps every employer can take to create a helpful internship program.

• Have a clear work experience goal. Interns look for specific types of training during internships, but your program should also give them experience in the job market.
• Work with the educational facility to design the intern's work and educational experience. An internship is part class and part job training. The intern is "paid" in college credit, so they should learn more than how to deliver coffee and make copies.
• Let interns shadow employees in other areas of the company. Interns are there to learn about all aspects of the business, not just one job. If you have the time, let them watch other workers in other portions of your company.

Student-Learners

Employers registering with the U.S. Department of Labor may pay workers at least 16 years old 75% of the applicable minimum wage. These so-called "student-learners" must get instruction in an accredited institution and work part-time. Employers can apply at the DOL Wage and Hours Division for authorization to hire a student-learner below the minimum wage.

Student-learners are not paid interns. A student-learner works part-time on a trial basis in conjunction with a vocational training program. For instance, a student in a welding school at a community college could become a student-learner with a local ironworker's shop. The student-learner would gain valuable training, and the shop owner would have the student for a trial period without displacing any existing workers.

Talk to a Lawyer

If your company plans to hire interns, ensure you understand the legal requirements. Internships help college students and recent graduates get started in their careers. They provide employers with a chance to cultivate talent. But, employers who violate the law can face stiff penalties. Contact a local employment law attorney to ensure you handle internships properly.