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FLSA Regulations on Internships: Paid vs. Unpaid
As we approach the summer, one of the hot topics you may be facing is summer internships. When determining the role of interns, your company must decide whether they will be paid or unpaid. Lawsuits filed by unpaid interns against their former employers have made recent headlines. It is important that your company understands the criteria defined by the Fair Labor Standards Act when determining whether to hire an intern as paid or unpaid.
The Fair Labor Standards Act has been updated by the Wage and Hour Division of the U.S. Department of Labor to define clear rules for an internship to qualify as unpaid.
The below are the criteria for an unpaid intern, as directly defined by the FLSA:
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 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 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.
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
If the role of your intern does not meet all six of these requirements, then the law requires their position to be paid. Paid internships have certain recordkeeping standards under the FLSA, including capturing specific personal information from the intern and an accurate work schedule. Paycor Expert Arlene Baker posted some tips on best practices for proper record retention that may help you stay organized as the summer approaches.
Remember, be sure to follow the FLSA guidelines when determining an intern’s role and whether to pay them. Spending time evaluating their role will save you a headache and potential litigation in the future.