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Does Your Company Have an Internship Program?

It is almost summer and many companies have plans to have college interns within their organizations. Have you asked the question as to whether interns should be paid a minimum wage and overtime under the Fair Labor Standards Act (FLSA) for services that they provide to your organization? If not, please consider these suggestions first.

Internships should be constructed around a classroom or learning environment.  Formal agreements with a college or university who exercise oversight over the internship program and where the intern receives education credit for the experience should be implemented. The more that the experience provides the student with skills that may be used in multiple employment settings, the more likely the intern would be viewed as receiving training. If the intern is involved in an employer’s actual operations by learning skills that directly benefit the employer’s operation through the performance of routine work, the more the relationship is viewed as an employment relationship and not an internship.

If an employer utilizes interns to supplement or augment their existing workforce then interns should be paid at least minimum wage and compensated for their overtime, generally hours worked over 40 in a workweek, depending upon the state. If the employer would have hired temporary employees or required current employees to work additional hours had the interns not performed the work, then the interns are viewed as employees entitled to compensation under the guidelines of the FLSA.

If the employer provides job shadowing opportunities that allow an intern to learn under the close supervision of employees and they perform no or minimal work, this activity is likely to be considered an educational experience. However, if the intern receives the same level of supervision as other employees, it would suggest an employment relationship compared to an educational and/or training relationship.

In the formal agreement with the college or university, it is strongly recommended that the duration of the internship and the fact that the internship is unpaid be agreed to prior to the start of the relationship. Unpaid internships should also not be used as a trial period for future employment opportunities with the employer generally at the conclusion of the internship experience. If an intern is placed with an employer for a trial period with the expectation that he/she will be hired at the conclusion of the internship program, it may be viewed as an employment relationship.

In summary, the following six criteria must be applied when determining whether a position is truly an internship:

  1. The internship must be similar to training which would be given in an educational or academic environment.
  2. The internship experience must be for the benefit of the intern, not the company.
  3. The intern may not displace regular employees and must work under close supervision of existing staff.
  4. The employer may not derive an immediate advantage from the activities of the intern and at times their operations may actually be impeded.
  5. The intern is not 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 and both parties understand the duration of the relationship.

If all of the criteria listed above are not met, an employment relationship exists under the FLSA and the intern is entitled to the minimum wage and overtime provisions of the law. So, make sure that your interns meet the criteria as explained to help to avoid any confusion later.

For additional information on how to structure an internship program, please contact New Focus HR at www.newfocushr.com.

Written by:  Kristen Deutsch, M.B.A., CCP






New Focus HR is a human resources consulting and training company that services all organizations. Our expert team collaborates with businesses to attract, motivate, retrain and retain their biggest assets, employees. While engaged with an organization, our focus is to find solutions that improve the company’s internal HR-related practices while increasing results at the same time! Our focus. Your results.