Legal Issues

Must an intern be paid?

You can offer an unpaid internship as long as the intern receives academic credit for the experience. The Fair Labor Standards Act (FLSA) severely restricts an employer's ability to use unpaid interns. It does not limit an employer's ability to hire paid interns. Essentially, if you are a for-profit company, you must either pay the intern, or require that he/she earn academic credit.

Even if you look at offering minimum wage, some form of compensation allows your organization to compete with other companies for the best and brightest interns.  In addition, offering pay to your interns helps communicate they are valued members of your team.

Several court rulings, while not addressing the criteria "head-on," seem to suggest that as long as the internship is a prescribed part of the curriculum, is part of the school's educational process and is predominately for the benefit of the student, the fact that the employer receives some benefit from the student's services does not make the student an employee for purposes of wage and hour law. This is why it is especially crucial for any unpaid intern receive academic credit.

The Department of Labor stipulates that an intern is considered a "learner/trainee," and therefore can be unpaid, if:

• The training is similar to what a student might experience in a vocational school, even though taking place at the employer's facilities
• The training is for the benefit of the student
• The student works under direct supervision of a regular employee and does not displace a regular employee
• The student is not entitled to a job at the end of the training period
• The employer provides training and derives no immediate advantage from the activities of the student
• The employer and the student both agree that the student is not entitled to wages for the training

Can an intern be considered an independent contractor or volunteer?

No, on both counts.  In a typical internship, the employer exercises control over the result to be accomplished and manner by which it is achieved. The foundation of any internship, paid or unpaid, is learning.  Because of these reasons, a student intern may not be considered an independent contractor. This means that an intern cannot be paid as an independent contractor, either.

The Department of Labor (DOL) regulations define a volunteer as an individual who provides services to a public agency for civic, charitable or humanitarian reasons without promise or expectation of compensation for services rendered. Thus, an intern at any for-profit company would not fit the definition of a volunteer.

Not-for-profit organizations are better served by setting up parameters for an internship vs. calling it a volunteer experience. Students tend to be more reliable and engaged during internships.