Should Interns Be Paid?

June 1, 2016

Summer will be here before you know it, which means college students are looking for internships to help gain experience and learn from hands-on training. While many internships are unpaid, your business must meet certain requirements before offering unpaid internships.

The Fair Labor Standards Act places restrictions on unpaid internships. There are six factors which determine the eligibility of hiring interns without pay. If the position meets ALL six factors, a company may offer an unpaid internship.

Six Determining Factors:
1. The training is similar to and educational environment.
2. The internship is for the intern's benefit
3. The intern does not displace a regular employee.
4. There is no immediate advantage to the company.
5. There is no expectation of future employment.
6. The intern understands that the internship is unpaid.

Legally, you must pay your intern minimum wage if ALL six factors are not met. If the position meets all six factors, then you can offer an unpaid internship, but it is recommended you give a stipend for gas, food, etc.

The following of proper guidelines is critical in keeping a company out of hot water. As companies look to save money where they can, this is one area where managers should not take a chance in order to improve their bottom line.

Failure to pay interns could result in a lawsuit or could cost your company money by owing back wages to the intern. Additionally, if the intern is doing the work of a regular staffer, the intern must be paid. 

This information is provided courtesy of CFO and Controller Alert.com and Glatt et al.v. Fox Searchlight Pictures, Inc. 

The Wood Products Manufacturers Association (WPMA) is always striving to keep members aware of regulations that could affect their business and their bottom line.

For more information please contact Philip Bibeau at WPMA, 978-874-5445.

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