Q&A: Unpaid Internships
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Q: We have a new intern – the daughter of one of the owners. It’s an unpaid internship, but I thought those were illegal. Should we be paying her for the work she performs?
A: The answer is most likely yes. In recent years, the Department of Labor has issued clarifying guidance on what qualifies as a bona fide internship. For a review of that guidance, read the following: https://www.dol.gov/whd/regs/compliance/whdfs71.htm.
Essentially, unpaid internships have to benefit the intern, not the employer. To be bona fide, courts have identified the following seven factors as a test:
1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, expressed or implied, suggests that the intern is an employee — and vice versa.
2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.
If your internship cannot pass the test above, your intern is most likely entitled to both minimum wage and overtime pay under the Fair Labor Standards Act.
