The U.S. Department of Labor has recently announced that it is stepping up enforcement efforts against employers who offer unpaid internships. The Department – which formerly had a more flexible approach is assessing unpaid internships – is now prohibiting unpaid internships in the vast majority of circumstances. Nancy J. Leppink, a former Minnesota Assistant Attorney General and the current Director of the Department of Labor’s Wage and Hour Division, has stated, “If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law.”
An unpaid intern is permitted under the Fair Labor Standards Act (“FLSA”) if the intern is properly characterized as a “trainee,” rather than an “employee.” The Department has identified six factors it uses to determine whether an intern is a trainee:
1. The internship is similar to the training which would be given in an educational environment
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, bur works under the 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 operation may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
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 the above factors are met, an employment relationship does not exist under FLSA, the intern is considered a trainee, and FLSA’s minimum wage and overtime provisions do not apply to the intern. If the above factors are not met, the intern may properly be categorized as an employee and the employer may run afoul of FLSA.
If you have any questions about whether your internship program runs afoul of the law, contact my office.