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Fair Labor Standards Act (FLSA) and nonpaid internships: Quiz

The Fair Labor Standards Act (FLSA) requires that nonexempt employees receive at least minimum wage for all hours worked and must also receive time-and-a-half pay for all hours worked more than 40 during the workweek.

While the FLSA doesn't define what an intern is, nor provide an exemption from minimum wages or overtime for interns, it does define an employee as "any individual employed by an employer." The definition of "employ" under the FLSA "includes to suffer or permit to work."

Under federal law, for-profit organizations must pay workers unless the position fits six criteria. The following quiz helps to illustrate the six criteria.

Would the employee be correctly classified as a “Coordinator”, “Trainee”, or “Intern”?

For an unpaid internship to be lawful under the Fair Labor Standards Act (“FLSA”), the intern must be classified as a “trainee” rather than an employee.

Does the training need to be similar to that which would be given in a vocational school?

Yes.

Is the internship program for the benefit of the company to leverage willing people to help the company in exchange for experience?

No, the training is for the benefit of the trainee.

Can you use the unpaid internship program to delay hiring normal employees?

No, the trainees cannot displace regular employee positions.

Are you required to make some kind of hiring offer to unpaid interns at the end of the program, even if you know they won’t take it?

No, trainees are not necessarily entitles to a job at the completion of the training period.

To ensure compliance, employers offering unpaid internships should structure the position in a way that the intern receives the full benefit of the experience.

Failing to comply with wage and hour laws can lead to serious FLSA administration errors that could cost your business thousands in fines. Tools like the FLSA Compliance Kit can help you navigate through every FLSA regulation from child labor laws to timekeeping discrepancies.

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Modern Business Associates frequently deals with designing internship programs. As a Professional Payroll and HR outsource organization, our clients rely on us to help them effectively deal with these kinds of topics.