Summer Interns - A Benefit or a Liability

Summer interns may be a good opportunity for both your business and the intern, but if the interns are not paid you may be exposing your business to significant liability.

The U.S. Department of Labor applies a six factor test to determine whether a for profit business may have an unpaid intern.

A copy this test and the Department of Labor's analysis can be found at the link below.

http://www.dol.gov/whd/opinion/FLSANA/2004/2004_05_17_05FLSA_NA_internship.htm

Briefly, the six factor test that permits a for-profit business to have an unpaid intern is

1. The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational instruction;
2. The training is for the benefit of the trainees (rather than the employer);
3. The trainees do not displace regular employees, but work under their close observation;
4. The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded;
5. The trainees are not necessarily entitled to a job at the conclusion of the training period; and
6. The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

If you have an unpaid intern and you do not meet all six factors of this test then you could be exposing your business to a Fair Labor Standards Act violation.

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