Paid vs Unpaid Internships – What is the Law?

 Many students and recent graduates accept roles labeled as “internships,” often assuming they will not receive full wages or salaries due to the entry-level nature or educational focus of the position. However, many internships fail to meet legal requirements regarding minimum wage and overtime pay, especially in the private sector. If you’re considering or involved in an unpaid internship, it’s important to understand your rights under U.S. labor laws.

Are Internships Considered Employment in the U.S?

 According to the U.S. Department of Labor, the Fair Labor Standards Act (FLSA) broadly defines employment as any work performed for an employer. Most internships in the private sector are legally considered employment, which means interns should typically be paid at least the minimum wage and receive overtime pay for hours worked over 40 in a week. However, there are exceptions.

Legal Unpaid Internships: The Criteria

 Some internships or training programs in the for-profit sector may be unpaid, but they must meet strict criteria. The U.S. Supreme Court has determined that a person who works primarily for their own benefit, and not for the employer, may not be classified as an employee. In such cases, the internship may be unpaid if all of the following six criteria are met:

1. Educational Focus: The internship should mirror the training and experience found in an educational environment, even if it involves real-world tasks.
2. Intern Benefits: The primary benefit of the internship should be for the intern, not the employer.
3. Non-displacement of Employees: Interns must not replace regular employees and should work under close supervision from the employer’s staff.
4. No Immediate Employer Benefit: The employer should not gain immediate advantages from the intern’s work, and the intern’s presence may even slow down operations occasionally.
5. No Guaranteed Job: Interns are not entitled to a job offer after completing the internship.
6. No Wages Expected: Both the intern and the employer must agree that the internship is unpaid.

If an internship meets all six of these requirements, it may be classified as a legal unpaid internship under the FLSA, meaning minimum wage and overtime laws do not apply.

 These rules exist to protect workers from being exploited under the guise of internships. If you’re participating in or considering an unpaid internship, make sure it meets all legal standards. If it doesn’t, you may be entitled to compensation.

 Key Takeaways:

 Most private-sector internships should pay at least minimum wage and overtime.

• Unpaid internships in the private sector are only legal if they meet specific criteria.
• Interns should not replace regular employees, and the primary benefit of the internship should go to the intern, not the employer.

Understanding these legal guidelines can help you make informed decisions about unpaid internships and ensure your rights are protected.