HR Management & Compliance

DOL Test for Classifying Interns as Unpaid

Unpaid internships can be mutually beneficial for students and employers: students receive invaluable workplace experience and employers benefit from the opportunity to begin training the next generation of talent. However, you must be aware of the distinction between paid and unpaid internships.
Internships in the for-profit, private sector will most often be viewed as employment by the federal Department of Labor (DOL), unless the test described below is met. Interns who qualify as employees rather than trainees, typically must be paid at least the minimum wage and overtime compensation for hours worked over 40 in a workweek.
According to the DOL, however, if all of the following six factors are met, an employment relationship does not exist between an intern and the company that sponsors the participant.

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;


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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 no employment relationship exists, the participants are not subject to the federal Fair Labor Standards Act.
These distinctions regarding internships can be hard to wade through unless your employees are trained in how to distinguish the nuances and abide by the various employment laws.
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