Real-Time HR is a series of posts containing real HR questions that are answered by qualified experts in the field. We publish them here for our readers to gain valuable insights into trending HR topics.
Question:
Are we required to pay summer interns?
Answer from Kyle, PHR:
It depends on whether the worker is considered an employee.
The U.S. Department of Labor (DOL) has adopted the primary beneficiary test to determine whether a worker is an employee or an intern. If the worker primarily benefits from the employment relationship, they can be classified as an intern, and they don’t have to be paid. If the employer primarily benefits, the worker must be classified as an employee and must be paid minimum wage and overtime under the Fair Labor Standards Act.
To determine who primarily benefits, consider the following:
- 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.
- The extent to which the internship provides training that would be similar to what 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 intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
- The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the end of the internship.
According to the DOL, the test is flexible, so no single factor is determinative. If you’re not sure whether the worker should be classified as an unpaid intern or paid employee, the safer option would be to classify them as an employee. Misclassification can be costly. And as is true when classifying any worker as a non-employee, check state law for additional requirements.
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