The Sophisticated Employer Blog

Businesses that are contemplating hiring “unpaid interns” for seasonal summer work should critically assess whether those internships actually qualify as paid positions. The Fair Labor Standards Act (“FLSA”) defines the term “employ” very broadly as including to “suffer or permit to work.” Internships in the “for-profit” private sector will generally be viewed as employment, unless the six-criterion test described below is met: 

Rule #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.

Rule #2: The training is for the benefit of the trainees.

Rule #3:  The trainees do not displace regular employees, but work under their close observation.

Rule #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.

Rule #5: The trainees are not necessarily entitled to a job at the conclusion of the training period.

Rule #6: The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training.

If all six factors are met, an employment relationship does not exist and the FLSA’s minimum wage and overtime provisions do not apply to the intern.