Ask the Expert: How Do We Determine Pay for Interns?

Question: Is there a deciding factor(s) to unpaid vs. paid interns? Are there specific wage ranges for paid interns? Is there a formula or process to use when deciding the pay for an intern?  (We are a public agency in Illinois.)

Answer from the experts at HR.BLR.com:

Thank you for your inquiry regarding paid and unpaid interns.

Since your organization is a public agency,  it may use unpaid volunteer interns if it chooses to do so.  Under federal regulations, “An individual who performs hours of service for a public agency for civic, charitable, or humanitarian reasons, without promise, expectation or receipt of compensation for services rendered, is considered to be a volunteer during such hours.” (See 29 CFR Sec. 553.101).

Under the federal Fair Labor Standards Act (FLSA), to employ an individual is defined broadly as “suffering” or permitting that person to perform work.  See 29 U.S.C. sec. 203(g).  However, there is an exception for volunteers for state and local governments.  According to the FLSA regulations, “an individual who performs hours of service for a public agency for civic, charitable, or humanitarian reasons, without promise, expectation or receipt of compensation for services rendered, is considered to be a volunteer during such hours.”  See 29 C.F.R. sec. 553.101(a).  Volunteers may be paid expenses, reasonable benefits, a nominal fee, or any combination thereof, for their service without losing their status as volunteers.

Note that the federal Department of Labor (DOL) generally assumes that an intern working for a “for profit” private employer is performing work in place of an employee and should be paid as such and so it is up to the private employer to prove otherwise.  DOL Fact Sheet #71, available here, addresses interns in “for profit” private employers and provides six criteria for determining whether the interns should be paid employees or may be treated as unpaid interns.  However, interns who volunteer for public sector organizations are not subject to the for-profit intern criteria.

If you do pay the interns, there is no specific pay range except that you must pay them at least the minimum wage, which in Illinois is currently $8.25 per hour as employees.  However, new employees (in the first 90 days) and employees under the age of 18 may be paid 50 cents less than the required minimum wage and so may be paid $7.75 per hour.