Are you thinking of hiring an intern because you need help in your business and think their labor will be free? Some internships may need to be paid minimum wage and overtime (if applicable). There are a few instances in which an internship in a “for-profit” private sector may be without compensation.
The following six criteria must be applied when making this determination:
- The internship is similar to training which would be given in an educational environment;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees
- 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;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
If all of the factors listed above are met, an employment relationship does not exist under the Fair Labor Standards Act (FLSA), and the minimum wage and overtime provisions do not apply to the intern.
If the employer would have hired additional employees or required existing staff to work additional hours had the interns not performed the work, then the interns will be viewed as employees and entitled compensation under the FLSA.
Some states have more stringent overtime rules than the U.S. Department of Labor, so be sure to check with your state agency as well regarding any questions on this topic.
If you are thinking of using an intern in your business, make sure you follow the regulations and pay at least minimum wage if required to do so.