If you are considering hiring a summer intern, it would be wise to start planning now. Internships can be an invaluable resource for inexperienced workers. They can also provide businesses with a steady stream of future employees who are already familiar with your company and its internal processes.
However, it is important employers don’t violate the Fair Labor Standards Act (FLSA), which generally requires that all workers be paid at least minimum wage, as well as overtime. Does this mean that interns must be paid for their work? In order to answer this question, courts use what is called the “primary beneficiary test” to determine whether an intern must be paid or not.
The primary beneficiary test has seven factors, none of which are determinative:
- Whether the intern and the company clearly understand that there is no expectation of compensation
- Whether the internship will provide training similar to that provided in an educational environment, including clinical and hands-on training
- Whether the internship is tied to a formal education program, such as being worth academic credit
- Whether the internship is scheduled around the academic calendar to accommodate the intern’s academic commitments
- Whether the internship’s duration is limited to the period during which the intern is provided with beneficial learning
- Whether the intern’s work complements or displaces the work of paid employees
- Whether the intern and the company understand that the intern is not entitled to a job at the conclusion of the internship
This analysis is highly fact-intensive, and employers should contact an employment attorney before they decide to make an internship unpaid.