Janice Lozano
The classification of student interns as employees is a complex issue that varies depending on the jurisdiction and the specific circumstances of each case. In the United States, the Fair Labor Standards Act (FLSA) requires for-profit employers to pay employees for their work, but interns and students may not always be considered employees under this legislation. The Department of Labor has outlined criteria to determine whether an intern is a trainee or an employee, including factors such as the nature of the training, the expectation of compensation, and the extent to which the internship is tied to the intern's educational program. While internships in the public sector and for non-profit organizations are generally exempt from minimum wage requirements, internships in the private sector are more likely to be viewed as employment relationships. Ultimately, the classification of a student intern as an employee has legal, financial, and reputational implications for both the intern and the employer, and it is essential to carefully consider the applicable laws and regulations in each case.
| Characteristics | Values |
|---|---|
| Entitlement to minimum wage and overtime pay | Depends on whether the intern is considered an employee under the Fair Labor Standards Act (FLSA) |
| Intern's expectation of compensation | If there is an expectation of compensation, it suggests that the intern is an employee |
| Similarity to educational training | If the internship provides training similar to an educational environment, it suggests that the intern is not an employee |
| Tied to a formal education program | If the internship is tied to a formal education program, it suggests that the intern is not an employee |
| Accommodation of academic commitments | If the internship accommodates academic commitments, it suggests that the intern is not an employee |
| Limited duration | If the internship is limited to a duration that provides beneficial learning, it suggests that the intern is not an employee |
| Displacement of regular employees | If the intern displaces regular employees, it suggests that they are an employee |
| Entitlement to a job after the internship | If the intern is entitled to a job after the internship, it suggests that they are an employee |
| Sector of the employer | In the private sector, internships will often be viewed as employment unless they meet specific criteria |
| Promise of a contract of future work | If there is a promise of a contract of future work, the intern is considered a worker and is entitled to the minimum wage |
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What You'll Learn
- Interns and students may not be considered employees and therefore not entitled to compensation
- Courts use the primary beneficiary test to determine if an intern is an employee
- Internships are often unpaid, but there is a concern businesses exploit this
- Internships in the private sector are usually viewed as employment
- Interns should be paid if they are performing work usually done by employees
Interns and students may not be considered employees and therefore not entitled to compensation
Whether an intern or student is legally considered an employee depends on the specific circumstances of each case and the jurisdiction in which the internship is carried out. In the US, the Fair Labor Standards Act (FLSA) requires ""for-profit" employers to pay employees for their work. However, interns and students may not be considered "employees" under the FLSA, in which case they are not entitled to minimum wages or overtime pay.
Courts in the US use the "primary beneficiary test" to determine whether an intern or student is an employee under the FLSA. This test examines the ""economic reality" of the intern-employer relationship to determine which party benefits more from the relationship. Factors considered in this test include the extent to which the intern and employer understand that there is no expectation of compensation, whether the internship provides training similar to that in an educational environment, whether the internship is tied to the intern's formal education program, and whether the internship accommodates the intern's academic calendar.
If an intern or student is found to be an employee under the FLSA, they are entitled to minimum wage and overtime pay. On the other hand, if they are not considered employees, they are not entitled to these benefits. It is important to note that even if an internship meets federal standards for unpaid internships, stricter local rules may take precedence. Therefore, employers should be aware of both federal and local laws when determining whether to compensate interns.
While internships are traditionally unpaid, there has been a recent concern that businesses are exploiting interns by having them do the job of an employee without providing the benefits and protections afforded to employees under the FLSA. To address this concern, the Wage and Hour Division of the Department of Labor has issued criteria to help determine whether an intern is a trainee or an employee who must be paid minimum wage and overtime. A student intern may not be considered an employee entitled to pay if the internship primarily provides professional experience that furthers their educational goals. However, if they are performing work typically done by employees and are not receiving training and close mentoring, they should be compensated.
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Courts use the primary beneficiary test to determine if an intern is an employee
Whether an intern is considered an employee depends on the unique circumstances of each case. Courts use the "primary beneficiary test" to determine whether an intern or student is, in fact, an employee under the Fair Labor Standards Act (FLSA). This test allows courts to examine the "economic reality" of the intern-employer relationship to determine which party is the "primary beneficiary" of the relationship.
The primary beneficiary test is a flexible test with seven non-exhaustive factors. No single factor is determinative, and all seven factors must be weighed, balanced, and considered under the totality of the circumstances. The seven factors are:
- The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
- The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
- The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
- The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
- The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
- The extent to which the internship includes actual operation of the facilities of the employer.
- The extent to which the intern does not displace regular employees but works under their supervision.
If the employer is the primary beneficiary, the intern must be compensated as an employee under at least the minimum wage provisions of the FLSA. If the intern primarily benefits from the relationship, the internship can be unpaid.
It is important to note that the rules and tests for determining whether an intern is an employee may vary depending on the state and local jurisdiction. Additionally, even if an intern is not considered an employee, they may still be entitled to certain protections, such as protection from discrimination and harassment, under state or local laws.
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Internships are often unpaid, but there is a concern businesses exploit this
Whether an intern is legally considered an employee depends on the unique circumstances of each case. In the US, the Fair Labor Standards Act (FLSA) requires ""for-profit" employers to pay employees for their work. However, interns and students may not be considered "employees" under the FLSA, in which case they are not entitled to minimum wage or overtime pay. Courts use the "primary beneficiary test" to determine whether an intern or student is an employee under the FLSA. This test examines the ""economic reality" of the intern-employer relationship to identify the ""primary beneficiary".
Some sources argue that internships are often unpaid because they are primarily intended to benefit the intern through training and work experience. This training is similar to that provided in an educational environment and is supervised by existing staff. The employer does not benefit from the intern's activities and understands that the intern is not entitled to wages.
However, there is a growing concern that businesses are exploiting interns by having them perform the job of an employee without providing the benefits and protections afforded to employees under the FLSA. Unpaid internships have been accused of exacerbating socioeconomic and racial inequalities by providing free labour to employers. Research has also indicated that unpaid internships are often less effective in providing students with the intended benefits. For example, students with paid internships receive more job offers and higher starting salaries than those with unpaid internships.
To address these concerns, the Wage and Hour Division of the Department of Labor has issued criteria to determine whether an intern is a trainee or an employee who must be paid minimum wage and overtime. Additionally, some states have implemented their own regulations, such as requiring interns to receive college credit.
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Internships in the private sector are usually viewed as employment
The Fair Labor Standards Act (FLSA) requires "for-profit" employers to pay employees for their work. However, interns and students may not be considered "employees" under the FLSA, in which case the act does not require them to be compensated for their work. The FLSA defines "employ" as "suffering or permitting of work," and the Department of Labor emphasizes that internships in the private sector are typically viewed as employment unless they meet a test of exclusion.
The primary beneficiary test is used by courts to determine whether an intern or student is an employee under the FLSA. This test examines the economic reality of the intern-employer relationship to determine which party benefits more from it. If an intern or student is deemed an employee, they are entitled to minimum wage and overtime pay under the FLSA. On the other hand, if they are not considered an employee, they are not entitled to these benefits.
The primary beneficiary test is flexible, and no single factor is determinative. Some factors that are considered include the extent to which the internship is similar to training in an educational environment, whether the internship is tied to the intern's formal education program, and whether the internship accommodates the intern's academic calendar.
While internships are traditionally unpaid and viewed as opportunities for individuals to gain experience in a particular field, there has been growing concern that businesses are exploiting interns by having them perform employee duties without providing the benefits and protections afforded to employees under the FLSA. As a result, the Wage and Hour Division of the Department of Labor has issued criteria to determine whether an intern should be classified as a trainee or an employee who must be paid minimum wage and overtime.
In summary, internships in the private sector are generally viewed as employment, and employers should carefully consider the applicable laws and criteria when determining whether to compensate interns.
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Interns should be paid if they are performing work usually done by employees
The Fair Labor Standards Act (FLSA) requires "for-profit" employers to pay employees for their work. However, interns and students may not be considered "employees" under the FLSA, in which case they are not entitled to minimum wages or overtime pay. The FLSA also exempts volunteers for state or local government agencies or humanitarian purposes for non-profit food banks.
The Department of Labor uses the "'primary beneficiary test' to determine whether an intern or student is an employee under the FLSA. This test examines the "economic reality" of the intern-employer relationship to determine which party benefits more from the relationship. If the intern is the primary beneficiary, they are not considered employees and are not entitled to minimum wages or overtime pay.
Courts have identified seven factors as part of the "primary beneficiary test":
- The extent to which the intern and employer understand that there is no expectation of compensation. A promise of compensation suggests that the intern is an employee.
- The internship provides training similar to that in an educational environment, including hands-on training.
- The internship is tied to the intern's formal education program through integrated coursework or the receipt of academic credit.
- The internship accommodates the intern's academic calendar.
- The duration of the internship is limited to the period of beneficial learning for the intern.
- The internship provides training that is similar to that given in an educational environment.
- The internship does not displace regular employees, and the employer does not derive immediate advantage from the intern's activities.
In addition to federal standards, states, cities, and local jurisdictions may have additional conditions that employers must satisfy. In general, it is safer to pay interns if there is any doubt about whether the internship should be paid. Student interns should be paid if they are performing work usually done by employees and are not receiving training and close mentoring. If interns are considered employees, they must be paid at least the minimum wage and receive overtime when applicable, in accordance with federal, state, or local laws.
Therefore, interns should be paid if they are performing work usually done by employees to ensure compliance with labor laws and to avoid negative consequences such as audits, lawsuits, or negative publicity.
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Frequently asked questions
Student interns might not be considered employees and therefore may not be entitled to pay if the training program primarily provides them with professional experience that furthers their educational goals.
Student interns should be paid if they are performing work usually done by employees and are not receiving training and close mentoring.
The Department of Labor has identified seven factors as part of the "primary beneficiary test", including the extent to which the internship provides training similar to an educational environment, whether the internship is tied to the intern's formal education program, and whether the internship accommodates the intern's academic commitments.
