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What are the rules on unpaid interns?

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in Compensation and Benefits,Hiring,Human Resources

Q. We have received résumés from many college students looking for unpaid positions this fall. Would we need to pay these interns?

A. It’s possible that some of these students can be con­sidered unpaid interns rather than employees. How­ever, unless employers understand the rules that qualify an internship for “unpaid” status they might be at risk of costly wage-and-hour liability.

The U.S. Department of Labor (DOL) announced in the spring that it plans to strictly enforce new standards for unpaid internships.

In general, interns are workers not on the employer’s payroll who are involved in a training program. Whether interns must be paid for their time depends on whether they are considered to be “employees.”

The Fair Labor Standards Act (FLSA) requires employees to receive at least minimum wage for all hours worked. However, the FLSA specifically excludes from the minimum wage provisions people who work for another for their own advantage, such as in an unpaid internship.

According to the DOL’s Wage and Hour Division, determining whether an intern will be considered an employee depends on the following six criteria:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment.
  2. The internship experience benefits the intern.
  3. The intern does not displace regular employees, but works under close supervision of existing staff.
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded.
  5. The intern is not necessarily entitled to a job at the conclusion of the internship.
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all of those factors are met, an employment relationship does not exist under the FLSA and the intern may qualify for unpaid status.

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