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Regulations When Offering an Unpaid Internship

Regulations When Offering an Unpaid Internship

Internships provide recent college graduates and those transitioning to new careers with the opportunity for real-life job training and can even lead to full-time jobs. College students, meanwhile, often receive class credit for internships. Employers can use internship programs to scout out new talent and get temporary help without committing to permanent new hires. But business owners who view interns as free labor or potential hires need to know that federal labor laws require payment in most circumstances. That’s not to say employers can never have unpaid interns; they’re just not very common, at least legally. State laws may also apply, but the Fair Labor Standards Act (FLSA) governs how interns must be compensated under federal law.

Here is the Six-Part Test for Unpaid Internships

The vast majority of interns working at for-profit organizations must be paid at least the minimum wage and any applicable overtime. Technically, paid interns are temporary employees and treated virtually the same as regular employees with respect to labor law. But you may legally hire an unpaid intern if the following six criteria are met:

  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 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 providing the training derives no immediate advantage from the activities of the intern and on occasion its operations may actually be impeded.
  5. There is no guarantee of a job at the conclusion of the internship.
  6. Both parties understand that the intern is not entitled to wages for the internship.

Common Factors to Consider for Internship Programs

  • Similar to an Educational Environment An internship is more likely to be viewed as a training program as opposed to actual employment if it is structured around a classroom experience and if the intern is provided with skills that can be applied to other employment settings. A rule of thumb is that an unpaid intern does not regularly perform the company’s routine work, nor is the business dependent upon that individual’s work product.
  • Displacement and Supervision Interns used as substitutes for regular workers or to provide a needed boost in personnel must be paid at least minimum wage and any overtime. But if the intern is receiving job shadowing opportunities without performing more than a minimum of work, the relationship is more likely to be viewed as an unpaid internship.
  • Job Entitlement Employers should establish the duration of the internship from the beginning and avoid making any promises of a permanent position or calling it a “trial period.”

Student-Learners

Employers who register with the U.S. Department of Labor may pay individuals who are at least 16 years of age 75 percent of the applicable minimum wage. These so-called “student-learners” also must be receiving instruction in an accredited school, college or university and work on a part-time basis. If you would like to apply for authorization to employ a student-learner at below the minimum wage, you must fill out and submit a form to the Wage and Hour Division of the U.S. Department of Labor (PDF).

Business Lawyer Free Consultation

When you need legal help regarding an unpaid internship, please call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

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About the Author

People who want a lot of Bull go to a Butcher. People who want results navigating a complex legal field go to a Lawyer that they can trust. That’s where I come in. I am Michael Anderson, an Attorney in the Salt Lake area focusing on the needs of the Average Joe wanting a better life for him and his family. I’m the Lawyer you can trust. I grew up in Utah and love it here. I am a Father to three, a Husband to one, and an Entrepreneur. I understand the feelings of joy each of those roles bring, and I understand the feeling of disappointment, fear, and regret when things go wrong. I attended the University of Utah where I received a B.A. degree in 2010 and a J.D. in 2014. I have focused my practice in Wills, Trusts, Real Estate, and Business Law. I love the thrill of helping clients secure their future, leaving a real legacy to their children. Unfortunately when problems arise with families. I also practice Family Law, with a focus on keeping relationships between the soon to be Ex’s civil for the benefit of their children and allowing both to walk away quickly with their heads held high. Before you worry too much about losing everything that you have worked for, before you permit yourself to be bullied by your soon to be ex, before you shed one more tear in silence, call me. I’m the Lawyer you can trust.