Is It Okay That I Don’t Pay Summer Interns?

Rarely. It is very common for businesses to recruit and hire interns and not pay them for their work. We all probably know some enterprising student crossing her fingers to land a prestigious unpaid internship. These students are often looking to learn valuable skills, obtain references, pad their resumes and make contacts for future employment with the company. There can be a lot of value in having an internship, making compensation a secondary interest. From the company’s perspective they benefit as well. They get the opportunity to develop a prospective employee, receive benefit from actual work performed, and market the company through recruitment. And historically there is this idea that internships are unpaid, so companies understandably apply the profound legal defense of “monkey-see, monkey-do.”

It’s unfortunate the law generally requires that companies compensate interns for their time working for the company. Why does it? Because most interns are essentially employees performing work for the company, and employees who perform work are entitled to compensation of at least the minimum wage. There are exceptions, but they are limited. To understand whether your business is excepted by this rule, examine the following criteria considered by the Department of Labor and determine whether your business meets all of them:

• The internship is similar to training which would be given in an educational environment;

• It is for the intern’s benefit;

• The intern does not displace a regular employee, but works under close supervision;

• The company derives no immediate advantage from the intern’s activities, and occasionally the intern’s activities might impede operations;

• There is no entitlement to a job for the intern after the internship; and

• Both the company and the intern understand the intern is not entitled to wages for the time spent in the internship.

Thompson Coe and myHRgenius Tip of the Week is not intended as a solicitation, does not constitute legal advice, and does not establish an attorney-client relationship.