Internships are a great way for businesses to get some extra help while providing students with a valuable learning experience. Many years ago, it was widely accepted that most interns would work for no pay because it was viewed as a continued educational experience.
However, the U.S. Department of Labor recently set forth guidelines establishing when employers in the for-profit private sector are required by law to pay their interns.
The problem is that the guidelines aren’t crystal clear, so many businesses in Colorado and elsewhere could be running a risk of breaking the law by offering unpaid internships. If you are a business owner who currently has interns or is thinking about bringing on interns, it’s important that you understand the guidelines and the gray area that surrounds the guidelines.
First of all, in its Fact Sheet on Internship Programs Under The Fair Labor Standards Act (FLSA), the Labor Department explains that the FLSA requires "employed" workers to be compensated. The word “employ” is defined very broadly as to “suffer or permit to work.”
The Labor Department explains that, generally speaking, internships in the for-profit private sector will be considered employment and require pay of at least the minimum wage and overtime compensation unless each of the following six guidelines are met:
- Even though the internship includes actual operation of the employer's facilities, it is similar to training that would be given in an educational environment.
- The internship experience is for the benefit of the intern.
- The intern does not displace regular employees, but works under close supervision of existing staff.
- 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.
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
As you can see, there is plenty of room for error or misunderstanding when it comes to interpreting the six guidelines for unpaid internships as established by the Labor Department. An experienced employment law attorney can help to explain how each of the guidelines may apply to your internship program and help you conclude whether paying your interns is required under the law.