Compensation Solutions Blog
Human Resources Outsourcing (HRO – PEO – ASO – Payroll – Agency)

Tips on the Employment of Unpaid Interns

With the wealth of qualified employees available in this economy as well as the advent of the summer season, it is always a good idea to consult the Department of Labor’s regulations regarding the utilization of unpaid interns under the Fair Labor Standards Act (“FLSA”). 

Whether trainees or students are W-2 employees, as defined by the FLSA, will depend upon all of the circumstances surrounding their activities on the premises of the employer.

To classify trainees or students as “unpaid interns” they must meet all of the following criteria:

• The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school.
• The training is for the benefit of the trainees or students.
• The trainees or students do not displace regular employees, but work under close supervision.
• The employer who provides the training receives no immediate advantage from the activities of the trainees or students and, on occasion, his operations may even be hindered.
• The trainees or students are not necessarily entitled to a job at the conclusion of the training period.
• The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.

If all of the above criteria are met then the trainees or students are not considered employees under the FLSA.  Companies who employ unpaid interns should consult with their insurance carrier to ensure that they have the proper coverage.

For more information, see Fact Sheet #71 from the Department of Labor, at http://www.dol.gov/whd/regs/compliance/whdfs71.pdf.