Summer Interns – Paid or Unpaid?

June 2, 2014 at 9:56 AM

Every spring many companies begin to think about hiring college and/or high school students as summer interns and each year many companies ask the age old question: “Do we have to pay our summer interns?”

Early in January 2014, a federal court granted preliminary approval to a $450,000 settlement between a modeling agency and its former interns as a result of a collective class action claiming that the company intentionally misclassified employees as interns to avoid paying wages and overtime.

In deciding whether or not to pay interns make certain that the interns are classified correctly under the Fair Labor Standards Act (FLSA). The Department of Labor (DOL) offers a Six Factor Test for Intern Pay to aid companies in determining correct classification as interns.

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1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training that 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 these factors are met, then the employer and intern do not have an “employment relationship” and therefore, the FLSA’s minimum wage and overtime pay requirements are not applicable.

If any one of these factors is not met, the DOL normally views the intern as an employee and must be paid at least minimum wage and overtime compensation for hours worked over 40 in a work week.

If interns are learning skills that can be used in multiple settings and are not specific to the employer’s operation, the more likely the internship would be viewed as training as the intern is not performing the routine work of the business on a regular and recurring basis.

The employer should establish a fixed duration of time, providing a beginning and end date before the intern begins training. Unpaid internships should not be created by the employer as a trial period for individuals seeking employment at the end of the internship as under the FLSA, the intern would be considered an employee.

Helen M. Sorrentino is the owner and Managing Member of HR Practices, LLC, a Human Resources consulting firm. She started the company is 2009 to respond to the needs of the small business owner with an employee base between two (2)-fifty (50) employees in New Jersey and New York City.

Helen has 20+ years of experience in Human Resource management working within diverse industries such as engineering and manufacturingapparel, biotechnical, printing, music and telemarketingIn past her HR roles she provided support to all levels of management in training, organizational development, coaching, planning and all areas of Human Resources.  These companies ranged from an employee base of less than forty (40) employees up to seventy-five hundred (7500) employees and represented such industries as engineering, apparel, telemarketing and biomedical.

Helen holds a Bachelor of Arts degree from Kean University; a Master of Arts from Montclair University and a Master’s of Science degree in Human Resources Management from Upsala College.  Helen stays current by taking continuing education courses via seminars and webinars encompassing state and federal labor law compliance, policies/procedures, health care reform and all areas of employee relations to recruiting and background checks  to terminating employees to responding to EEOC, DOL, Wage & Hour, OSHA and ICE audits

HR Practices LLC is currently a member of the below professional organizations:

A few of the industries represented by HR Practices’ clients are; apparel, medical billing; doctors’ offices; biotechnical; printing; electrical contractors; non-profit organizations, day care business; cosmetics, physical therapy and other consulting businesses.

The opinions expressed herein are the writer's alone, and do not reflect the opinions of TAPinto.net or anyone who works for TAPinto.net. TAPinto.net is not responsible for the accuracy of any of the information supplied by the writer.

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