The Summer Interns Are Coming! Advice from the DOL
Just in time for the arrival of summer interns at many companies, the U.S. Department of Labor has issued guidance on the legality of unpaid internships at for-profit, private sector employers. In its Fact Sheet #71, entitled "Internship Programs Under the Fair Labor Standards Act," the DOL sets out a six-part test to determine whether interns can be unpaid, or whether they qualify as employees who must be paid at least the minimum wage plus overtime. The six factors the DOL states it will focus on are whether:
- 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;
- 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 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; and
- The employer and the intern understand that the intern is not entitled to wages for time spent in the internship.
Although a determination of whether an internship may be unpaid will focus on all the facts and circumstances of the program, the DOL states that in general, if all six of these factors are met, then the intern need not be paid. However, if one of the factors is not met, then there is chance the intern may qualify as an "employee" entitled to the minimum wage for all hours worked and overtime for all hours over 40 in a workweek. Thus, for example, if an intern is performing productive work for the employer, or the employer uses the intern in place of regular employees or to augment its existing workforce during specific time periods (such as during a seasonal peak), then the intern would likely need to be paid for his or her time.
The DOL's Fact Sheet makes clear the DOL will continue to view unpaid internships in the for-profit sector with skepticism. Employers who intend to offer unpaid internships should consider consulting with legal counsel to ensure that their program is in full compliance with the wage-hour laws.
Varnum attorneys Beth Skaggs, Jim Stadler, and Joe Vogan are ready to assist with such reviews, or to answer any wage and hour questions you may have. Please feel free to contact any one of them at 616-336-6000.