Many private, for-profit employers often ask the question of whether they should be paying their interns (summer interns or otherwise). It all depends on the way the internship is structured. The U.S. Department of Labor focuses mostly on the purpose of the internship and who will be benefiting from it.
Interns can benefit companies by providing them with a reserve of potential new employees, inexpensive labor, creating a positive public image for the company, and building relationships with communities and educational institutions. The biggest complication of this is determining if the intern is actually an employee – and subject to minimum wage and overtime requirements. Whether or not the intern is an employee depends on each circumstance.
In order to identify and classify unpaid interns, the DOL reviews factors under the “primary beneficiary test.” DOL Factsheet #71 addresses those factor, which include:
- The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
- 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.
- The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
- The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
- The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
- 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.
- 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.
No single factor is determinative, and employers should consider all factors when deciding to pay or not pay an intern. Government and non-profit employers may be exempt from this factor test, but should carefully review their own requirements for an unpaid internship.
If you have questions or concerns about classifying summer interns, please do not hesitate to contact one of our Employment and Labor Law attorneys: Thomas Ryan, Esq. (firstname.lastname@example.org), Ursula Leo, Esq. (email@example.com), or Jessica Jansyn, Esq. (firstname.lastname@example.org). Our attorneys can also be reached by phone at (973) 729-1880.