Can My Company Offer Unpaid Summer Internships? Yes, but be careful you don’t violate the wage and hour laws.
High school and college students often are willing to work for little or no pay during the summer months to bolster their resumes. Businesses see this as a good opportunity to get some extra help around the office. However, private sector, "for-profit" employers need to be aware that they are required to pay at least minimum wage and overtime to summer help unless these internships or training programs meet the following criteria:
- The internship is similar to training which would be given in an educational environment;
- The internship is for the benefit of the trainees;
- The interns do not displace regular employees, and work under close supervision of existing staff;
- The employer derives no immediate advantage from the activities and, on occasion, its operations may actually be impeded;
- The interns are not guaranteed permanent positions at the conclusion of the internship; and
- The employer and interns understand beforehand that the internship is unpaid.
See U.S. Dept. of Labor, Wage and Hour Division, Fact Sheet #71.
The determination whether an internship or training program meets all six requirements depends upon all the facts and circumstances of each program. In addition to owing unpaid wages and potentially hefty fines, unpaid programs that do not meet all of the Department of Labor’s criteria could lead to legal problems involving workers’ compensation, employee benefits, unemployment insurance and federal and state taxes.
Employers should structure unpaid internships to meet the above criteria. Also consider having a written agreement with the interns outlining the nature of the work and that the program is being operated to provide a learning experience for the interns. If in doubt about compliance, employers should pay at least minimum wage and overtime to avoid legal problems because the Fair Labor Standards Act, the federal statute that covers minimum wages and overtime, as well as state wage and hour laws, define “employ” very broadly.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.
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