Do Employers Need to Pay Their Interns?

Internships are governed by the U.S. Department of Labor to ensure that workers are paid fairly, and interns are often paid at least the federal minimum wage. Internships, which are sometimes misunderstood as unpaid work, are actually short-term learning opportunities for students or prospective employees to gain practical experience in their field.

If you’re not sure whether or not an intern has to be paid, what factors should you consider? When deciding whether or not to permit unpaid work from interns, the Department of Labor uses a multi-factor test known as the “primary beneficiary test”. The Courts, in a nutshell, look at who gains the most from the employment arrangement. If the company is the “principal beneficiary”, then the worker is entitled to payment. By adopting this standard, the courts consider these seven factors:

  • To what extent do both the intern and the company know that the intern won’t be being paid for their labor? A written document stating that the intern would receive no payment for their time while interning at the private company should be adequate evidence to counteract any claims made by the intern that they were promised payment for their internship.
  • How much does the internship resemble formal education in terms of learning opportunities?  This element can be considered met if the intern is exposed to a wide range of practical experiences and is encouraged to actively engage in their education.
  • How much does the intern’s internship fit into their official education, if at all, and whether they can get course credit for their time spent learning?  To this end, it is helpful to provide access to opportunities by way of a learning institution.
  • How well can the intern’s academic schedule can be accommodated during the internship?  While considering an internship, it’s important that the company be able to work around the intern’s schedule each semester, year, etc.
  • How long is the internship’s duration?  Internships don’t last forever and have a beginning and end date. The purpose of an internship is to give the intern valuable work experience and insight that can help them in their future professional endeavors.
  • How much do the intern’s efforts supplement those of salaried employees as opposed to replacing salaried employees?  Interns, for instance, usually put in fewer hours than regular employees and aren’t considered a replacement for salaried employees in the workplace.
  • To what extent the intern and the employer are aware that the internship is unpaid and does not lead to a paid position upon completion?  If an intern goes on to earn a degree in physical therapy, for instance, and you decide to hire them after they graduate, you cannot do so for the same position that they were working as an intern.

You can get some guidance on how to classify interns and employees from the Department of Labor’s aforementioned seven factors, but this is by no means a full list, and even when these factors are applied, legal issues may arise. If you are unsure whether or not you are required to pay your interns in accordance with the aforementioned seven factors, please contact the experienced employment law attorneys at Walsh Law Group, LLC here.

Do interns have to be paid minimum wage and overtime?

Unpaid interns are not covered by the Fair Labor Standards Act (“FLSA“) or the Florida Minimum Wages Act because they are not considered employees. This means they are not guaranteed an hourly rate or any wage at all in exchange for their labor. Yet even while they are not entitled to overtime pay under the law, unpaid interns may be expected to put in extra hours.

However, in recent years, several interns have come out with legal claims arguing that they should have been classified as “employees” instead. Many interns were not given meaningful work to do and instead were assigned things that a paid employee would normally do. This violates the Fair Labor Standards Act’s guidelines for unpaid internships and has led to back pay for numerous interns. In order to avoid having to pay interns a minimum wage, businesses that use interns should make sure their internship programme complies with the Fair Labor Standards Act’s guidelines. Internships must meet certain criteria to be considered legitimate, such as serving the intern’s best interests, providing meaningful learning opportunities, and not a replacement of a full-time, salaried staff of employees.

Do interns have Protections Against Harassment, Discrimination, and Retaliation?

Because they are not employees, unpaid interns are not afforded the protections of Title VII or the Florida law against discrimination. This means that interns have no protection from discrimination, harassment, or retribution in the job under the law. Unfortunately, unlike the other seven states and the District of Columbia, Florida has yet to enact anti-discrimination legislation to protect unpaid interns from harassment and exploitation. 

This can be especially problematic due to the typical power imbalance between a manager and their unpaid intern. Interns should be aware that managers may engage in sexual harassment or other forms of mistreatment if given the chance, threatening to stop the internship or offer a poor reference if the intern rejects their approaches. The fact that retribution for reporting harassment is not illegal under employment regulations further discourages unpaid interns from stepping forward to report the objectionable behavior. We can only hope that Florida is just the first of many states to pass legislation providing interns with additional legal rights than they already enjoy without compensation.

Offering unpaid internships comes with a certain degree of risk for employers. One way to reduce the cost of fighting against a claim under the FLSA is to pay at least the federal minimum wage to your interns. If you are unsure whether or not you are required to pay your interns, please contact the experienced employment law attorneys at Walsh Law Group, LLC here.