Hiring interns as part of your summer hiring can be a great idea: They’re looking for real-world experience in your industry, so it seems like a perfect arrangement–the intern gains valuable workplace experience and you get free or below-minimum-wage labor. However, you should be aware that the Fair Labor Standards Act (FLSA) has specific requirements for if/how you must pay interns.
The FLSA permits unpaid internships in the public sector and for non-profit charitable organizations where the intern volunteers without expectation of compensation. However, in the private sector, the key is whether the work serves the student’s interests or the employer’s interests. As with most employment regulations, it can be tricky to determine whether you can offer an internship or training program for less than minimum wage and/or not pay overtime.
Six criteria are required:
- Even if the internship may include actual operation of the employer’s facilities, the intern receives training similar to that in an educational environment;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees, but works under close supervision of existing staff;
- The employer derives no immediate advantage from the intern’s activities. In fact, occasionally, the employer’s operations may be impeded by working with the intern;
- The intern is not necessarily entitled to a job when the internship concludes; and
- The employer and the intern both understand that the intern is not entitled to wages for the time spent in the internship.
If all these factors are met, an employment relationship does not exist under the FLSA, and the Act’s minimum wage and overtime provisions do not apply to the intern.
MSEC can help you navigate these and other aspects of the FLSA.