FLSA Regulations on Internships: Paid vs. Unpaid
FLSA Regulations on Internships: Paid vs. Unpaid

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:

p(((. 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.

p(((. 2. The internship experience is for the benefit of the intern.

p(((. 3. The intern does not displace regular employees, but works under close supervision of existing staff.

p(((. 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.

p(((. 5. The intern is not necessarily entitled to a job at the conclusion of the internship.

p(((. 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.

More to Discover

What is a W-4 Form?

What is a W-4 Form?

What is a W-4 Form? W-4 forms are essentially very basic tax returns filled out by employees. Specifically, it tells employers the correct amount of tax to withhold from the employee’s paycheck. Need a W-4 Form? Download it here. Why are W-4s important? The accuracy of an employee’s W-4 submission will determine the size of their tax refund (or bill) at the end of the year. The amount withheld should be as close as possible to their actual tax obligation—a big deficit can be an unwelcome surprise and may be accompanied by further penalties. Withholding more than necessary is considered by some employees as an easy way to save but, while refunds may seem like a nice treat, you are taking away the chance for employees to invest (or use)...

Case Study: Price Brothers, Inc.

Case Study: Price Brothers, Inc.

A need for robust reporting tools and a modern HR and payroll platform with onboarding capabilities led Price Brothers, Inc., to Paycor. “We’re constantly hiring and looking for skilled trade help on a daily basis. Now they can fill out the application online and we can email them the new-hire paperwork. They can complete everything online before their first day.” - Kim McLaughlin, CFO, Price Brothers, Inc. Why Price Brothers, Inc., left their payroll provider Price Brothers, a Charlotte, N.C.-based plumbing contractor who specializes in new-home construction, needed a more modern HR and payroll platform that could keep up with their growing business. Their former solution wasn’t intuitive and didn’t collect all the data they needed for...

How to Pay 1099 Employees

How to Pay 1099 Employees

As the gig economy grows more employers are looking to hire independent contractors (aka 1099 workers). But since paying independent contractors isn’t a walk in the park, many employers are looking for step-by-step instructions. Here’s a breakdown of everything you need to know: How Do I Pay a 1099 Worker? This subject is something you will need to discuss in detail with the person you’re hiring for the job. Often, they will have a written contract that stipulates how and when they should be paid. The two most common methods of payment are hourly and by the job or project. Some independent contractors — such as attorneys — prefer to be paid on retainer, which means you pay them a lump sum at the beginning of each month in return for a...

States with Salary History Bans

States with Salary History Bans

Requesting job applicants’ salary histories has been a pretty common practice for employers over the years. Recruiters and hiring managers often use this knowledge to exclude people from the candidate pool, either because the applicant is “too expensive” or their previous salary is so low, hiring managers think the person is poorly qualified or inexperienced.Businesses have also used previous salary information to calculate new hire compensation—a process that can perpetuate pay disparity between women and men. To address this inequality, several states and municipalities have enacted bans on asking for previous salary information, although laws vary in terms, scope and applicability. The states and territories that have enacted salary...