Often, either inadvertently or by design, employers do not treat interns as employees. Instead, interns are frequently labeled trainees, assistants, or learners and receive little or no pay for the work they perform.
There are circumstances under which individuals who participate in “for-profit” private sector internships or training programs may do so without compensation. Unless a job meets certain conditions, however, interns are considered employees and for-profit companies must pay them at least the minimum wage under federal and state laws.
The federal Fair Labor Standards Act (FLSA) defines an employee as “any individual employed by an employer.” 29 U.S.C. § 203(e)(1). The FLSA definition of employ includes “to suffer or permit to work.” In 1947, the U.S. Supreme Court held that the FLSA definition of employ does not make all persons employees who, without any express or implied compensation agreement, may work for their own advantage on the premises of another. Walling v. Portland Terminal Co., 330 U.S. 148. The Court pointed to six criteria that characterize interns or trainees who need not be paid:
- The training, even though it includes actual operation of the employer's facilities, is similar to that which would be given in a vocational school;
- The training is for the benefit of the trainees;
- Trainees do not displace regular employees, but work under close observation;
- The employer that provides the training derives no immediate advantage from the activities of the trainees and, on occasion, the employer's operations may actually be impeded;
- The trainees are not necessarily entitled to a job at the completion of the training period; and,
- The employer and the trainee understand that trainees are not entitled to wages for the time spent in training.
The U.S. Department of Labor (DOL) consistently has applied these criteria in answering inquiries about the employment status of interns. Accordingly, whether or not interns are employees under the FLSA will depend upon all the circumstances of their activities. In the context of school-to-work programs, provided the six criteria listed above are met, the DOL says workers will not be considered employees if:
- Educational or training programs are designed to provide them with professional experience in the furtherance of their education; and,
- The training is academically oriented for the benefit of the students.
The DOL has said that if an employer uses interns as substitutes for regular workers or to augment its existing workforce during specific time periods, the interns should be paid at least the minimum wage and overtime compensation for hours worked over 40 in a workweek. If the employer would have hired additional employees or required existing staff to work additional hours had the interns not performed the work, then the interns will be viewed as employees and entitled compensation under the FLSA.
Conversely, if the employer is providing job shadowing opportunities that allow an intern to learn certain functions under the close and constant supervision of regular employees, but the intern performs no or minimal work, the activity is more likely to be viewed as a bona fide education experience. On the other hand, if the intern receives the same level of supervision as the employer’s regular workforce, this would suggest an employment relationship, rather than training.
The DOL has also said that internships should be of a fixed duration, established prior to the outset of the internship. Further, unpaid internships generally should not be used by the employer as a trial period for individuals seeking employment at the conclusion of the internship period. If an intern is placed with the employer for a trial period with the expectation that he or she will then be hired on a permanent basis, that individual generally would be considered an employee under the FLSA.
Employers should remember that, in addition to federal rules, state rules relating to the employee/unpaid-intern distinction vary.
Individuals who volunteer or donate their services, usually on a part-time basis, for public service, religious or humanitarian objectives, not as employees and without contemplation of pay, are not considered employees of the religious, charitable or similar non-profit organizations that receive their service.
For example, the DOL has said that members of civic organizations may help out in a sheltered workshop; men's or women's organizations may send members or students into hospitals or nursing homes to provide certain personal services for the sick or elderly; parents may assist in a school library or cafeteria as a public duty to maintain effective services for their children or they may volunteer to drive a school bus to carry a football team or school band on a trip.
Similarly, the DOL has said an individual may volunteer to perform such tasks as driving vehicles or folding bandages for the Red Cross, working with disabled children or disadvantaged youth, helping in youth programs as camp counselors, scoutmasters, den mothers, providing child care assistance for needy working mothers, soliciting contributions or participating in benefit programs for such organizations and volunteering other services needed to carry out their charitable, educational, or religious programs.
Under the FLSA, however, the DOL has said that employees may not volunteer services to for-profit private sector employers. On the other hand, in the vast majority of circumstances, individuals can volunteer services to public sector employers. When Congress amended the FLSA in 1985, it made clear that people are allowed to volunteer their services to public agencies and their community with but one exception - public sector employers may not allow their employees to volunteer, without compensation, additional time to do the same work for which they are employed. There is no prohibition on anyone employed in the private sector from volunteering in any capacity or line of work in the public sector.