The Internship Test

According to a report in from U.S. News, “students who have a paid internship are much more likely to have received a job offer than those students whose work experience has been in an unpaid internship.”  The study finds that 65.4% of students with paid internships received a job prior to graduation, where only 39.5% of students who had an unpaid internship received a job offer, prior to graduation.

Unpaid internships have recently come into the spotlight because some argue that it possibly exploits the free labor of the intern, while being more beneficial to the employer, rather than the intern.  The Fair Labor Standards Act (FLSA) has issued guidance on this (which we detail below), essential stating that if the work that the intern is doing is useful to the employer, it’s a violation of the FLSA, if they do not receive at least minimum wage, even if they receive school credit.  It may be helpful to ask yourself before you hire interns, “is this work more of an educational benefit to the intern, or is it more of a benefit to the employer’s business?”  If you have trouble determining this, contact us at myHRcounsel!

Test for Unpaid Interns

 The following six criteria must be applied when making this determination:

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 a 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.