During these summer months there are college students clamoring for real world work experience. (Right?!) So if you’re debating creating an internship position for your business, there are some basics you should familiarize yourself with. The classic internship is an unpaid, short-term position with a company that provides an individual with educational experience in coordinance with their work toward a degree. Oftentimes this occurs when a college or university oversees the internship program and provides educational credit. But there are several factors involved that determine whether an internship should be paid or unpaid.
The Fair Labor Standards Act (FLSA) specifies that in an employment relationship, non-exempt individuals who are “suffered or permitted” to work must be compensated for the services provided to their employer. Interns typically must be paid at least minimum wage and overtime compensation for hours worked over forty in a work week. However, there is a way to determine if your internship program may be unpaid. The following criteria must be used when making this determination:
• The internship experience is to the advantage of the intern (not the employer);
• The internship, is similar to training which would be given in an educational setting;
• The employer that provides the training receives no immediate benefit from the work provided by the intern; and on occasion its operations may actually be hindered;
• The intern does not replace regular employees, but receives close direction from existing staff;
• There is a mutual understanding between the employer and the intern, that the intern is not entitled to wages for the time spent in the internship; and
• There is no expectation on behalf of the intern of a job at the end of the internship.
In the event that all of the above requirements are met, then an employment relationship does not exist under the FLSA, and the minimum wage and overtime provisions do not apply. Ultimately, the employer should establish a start and end date for the internship, prepare training and have a specific idea of the activities the individual will participate in. This will keep the program on track to eliminate any possible confusion regarding the type of internship.
Ultimately, unpaid internships should never be used as a trial period for individuals who are seeking employment. If there is any discussion of employment upon commencement, that individual is considered an employee and should be paid for the internship hours.
For additional information on internships, please contact us at www.newfocushr.com.
Written by: Kristen Shingleton Deutsch, M.B.A., CCP