Many companies like to take advantage of the opportunity to hire interns during the summer months. It’s usually a win-win; the employer can use the extra help, and the intern gains valuable work experience.
If you’ve hired interns this summer, you do have responsibilities as an employer from a legal standpoint.
To Pay or Not to Pay?
Companies frequently ask if they are required to pay interns. Yes, it’s possible to offer unpaid internships; however, companies that wish to hire unpaid interns should be prepared to explain and possibly defend their internship programs if a legal challenge or dispute arises.
If an intern is truly serving as an employee, he or she is entitled to minimum wage and overtime pay under federal law.
Determining an Intern’s Employment Status
Employers must comply with the Fair Labor Standards Act (FLSA), even when working with seasonal interns. When it comes to determining whether to pay interns or not, the FLSA uses a ‘primary beneficiary test’ to determine whether the employer or the intern primarily benefits from the relationship.
In essence, the primary beneficiary test evaluates compensation expectations, work output expectations, training and educational opportunities provided, and scheduling. The internship may be unpaid if the internship experience is more heavily skewed toward education and overall exposure to an industry as opposed to the employer extracting unpaid work from an intern.
If an employer is uncertain, the safest and typically most appropriate approach is always to pay the intern an hourly wage.
We encourage you to read the Department of Labor (DOL)’s Fact Sheet 71 for further guidance on this issue. If you need advice on working with interns, please call us at 678-208-2802.