Federal Law Requires Pay For Most Interns

In the for-profit private employment market, interns are usually considered employees who must be paid regular minimum wage and, if earned, regular overtime wages under federal wage and hour law.  But occasionally people may serve as interns without compensation.  The United States Department of Labor considers all of the facts and circumstances of an internship program in deciding whether the program’s participants must be paid as regular workers.

Several factors are evaluated to determine whether interns should be paid:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all of the factors listed above are met, an employment relationship does not exist under federal law and the intern need not be paid regular or overtime wages.  This is a difficult test to meet and few internships will lawfully be unpaid internships.

As noted, one of the factors is whether the employer benefits from the intern’s labor.  Interns who assist with the employer’s operations or actually engage in productive work for the employer should be paid.  That’s especially true when employers use interns as substitutes for regular workers or to increase existing labor forces during certain time period.  Interns will be viewed as compensable employees if they’re doing work that the employer would have otherwise hired additional employees to perform.

The Department of Labor also analyzes whether the internship is of an unlimited duration.  Internships that do not have a set ending point are a red flag.  Another warning sign for the DOL is employers who use internships as a casting call for future employees.  Interns on a trial run with an employer, when there’s a chance that the intern may later be hired on a permanent basis, are normally considered paid employees.


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