Now that the school year is winding down, its time for internships to begin. Internships provide great benefits to both parties. Interns are given an opportunity to experience company culture, learn what it’s like to actually perform in a particular field, see career opportunities and learn outside the classroom. Companies are provided with an opportunity to bring in students who show promise, prove that the company is a good place to work and essentially audition the intern for an entire summer. So what’s the problem?

Well, for starters, if you’re not paying your intern, you’d better make sure you aren’t violating the Fair Labor Standards Act. Under the FLSA, the term “employ” is defined very broadly and includes “suffer or permit to work.” As a result, if your unpaid intern is “employed” under the FLSA, they’re entitled to at least minimum wage.

Department of Labor Factors

While each unpaid internship must be evaluated on a case-by-case basis, there are factors which will help to determine whether an intern should be paid or not. An internship may be unpaid if:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which 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.

While none of the factors is dispositive, an internship must generally meet all six of the factors for an internship to be unpaid. Like many legal “tests,” the DOL factors include some straightforward factors and others that require some parsing.

Benefits of the Unpaid Internships

In short, under this factor a court will look at the level and amount of training the intern receives. The internship must offer some educational opportunity to the intern, whether it is in the form of formal classes or more hands-on learning experiences. An internship doesn’t need to be all geared toward education, so you shouldn’t feel obligated to take it to an extreme. For example, your interns can work on projects or assignments that are similar to those your employees are working on, but they should be on the simpler end of the spectrum and the intern should be provided with a great deal of feedback.

No Immediate Advantage

While this prong initially seems somewhat confusing, it actually dovetails with benefitting the intern. If your interns are being provided with training and education, then it’s much less likely that they are providing you with an immediate benefit. Essentially, an intern that does not necessarily generate profit or help in making money for the business will pass this part of the test. For example, your interns shouldn’t directly sell products to your customers or take actions for which your clients would typically pay. They should, however, shadow your employees to learn the job, or be placed in other situations where they are observing, rather than doing, the intended work.