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New DOL Guidance on Unpaid Internships

Published by on April 30, 2010

The Department of Labor recently issued a Fact Sheet to help employers determine whether interns must be compensated in accordance with the Fair Labor Standards Act.  More after the break. The guidance suggests that internships in the “for-profit” private sector will typically be viewed as employment unless the interns qualify as “trainees” under a six-factor […]

The Department of Labor recently issued a Fact Sheet to help employers determine whether interns must be compensated in accordance with the Fair Labor Standards Act.  More after the break.

The guidance suggests that internships in the “for-profit” private sector will typically be viewed as employment unless the interns qualify as “trainees” under a six-factor test.  The DOL lists the following factors to consider in determining whether an internship in the private sector qualifies as training:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to 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, but works under 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 operations 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.

Assuming all of the factors are met, the guidance states that the internship will not be considered employment under the FLSA and thus can be unpaid.  The guidance suggests that the more an internship is tied to an academic setting as opposed to the employer’s business (such as receiving academic credit from a university), the more likely the internship will not be considered employment.  If, however, the internship involves performing productive work for the employer (such as helping customers or doing clerical work), it will likely be viewed as employment and be subject to the FLSA’s minimum wage and overtime provisions. 

The DOL suggests that if an intern receives the same amount of supervision as the company’s regular employees, the internship will more likely be considered employment.  In addition, if an employer is using interns to fill in for regular employees, those interns must be compensated under the FLSA.  Finally, if the internship is being used as a trial period prior to an offer of permanent employment, it will likely be considered employment.

For additional information, see Ohio Employer’s Law Blog: 

http://ohioemploymentlaw.blogspot.com/2010/04/dol-confirms-that-it-has-its-eye-on.html

Link to Fact Sheet

http://www.dol.gov/whd/regs/compliance/whdfs71.htm

Contributed by Claudia L. Guzman

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