Must Employers Pay Their Interns?

While it may be tempting in these tough economic times to utilize interns because some consider them as "free help," employers must first determine whether or not their interns need to be paid to avoid violating federal and state labor laws.

Whether or not an employer must pay an intern depends on whether the student is considered an employee subject to the requirements of the Fair Labor Standards Act (FLSA). The FLSA requires employers to pay all employees at the rate of not less than current minimum wage for hours worked.  Currently, the New York state minimum wage is $7.15 per hour, which is higher than the federal minimum wage of $6.85 per hour.  However, keep in mind the federal minimum wage will increase to $7.25 effective July 24, and the state minimum wage typically increases to match the federal. 

To help ensure compliance and assist employers in making a proper determination under the FLSA regulations, the U.S. Department of Labor (US DOL) developed six criteria that must be met in order for a student to not be considered an employee within the meaning of the FLSA. 

• The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school.
• The training is for the benefit of the trainee.
• The trainees do not displace regular employees and work under close observation.
• 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.
• The trainees are not necessarily entitled to a job at the completion of the training period.
• The employer and the trainee understand that the trainee is not entitled to wages for the time spent in training.

A US DOL opinion letter on the FLSA status of student interns states, "…where certain work activities are performed by students that are simply an extension of their academic programs, we often would not assert that an employer-employee relationship exists for purposes of the FLSA. Thus, provided the six criteria are met, where educational or training programs are designed to provide students with professional experience in the furtherance of their education, and the training is academically oriented for the benefit of the students, it is our position that the students will not be considered employees of the firm to which they are assigned.  To view the full text of the opinion letter, go to
http://tinyurl.com/ncsx7c.

Employers who are seeking additional guidance on whether their interns must be paid should contact the US DOL at (716) 842-2950 (Buffalo office).  It is also wise to consult legal counsel when designing and implementing an internship program.  

RBA members with questions about internship programs should contact the HR Helpline staff: Kathy Novak or Jennifer Suppe.