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To Pay or Not to Pay: A Quick Guide to Internships

(posted: March 20th, 2017)

To Pay or Not to Pay: A Quick Guide to Internshi

Some companies start thinking about summer interns this early in the year, and every year we get questions about whether it's okay to have unpaid interns or not.

Internships can be a great experience for all involved: Employers can wind up with future employees who are already well on their way to being fully trained and immersed in company culture, while the interns learn valuable skills in real-world situations, enhance their resumes for post-graduation job searches, and build their network.

However, employers who bring in unpaid interns have some tough hurdles to clear to avoid legal action, and you will want to give serious consideration to weighing the risks vs the benefits.

An Unpaid Internship Must be a Learning Experience

For it to be a legally unpaid internship it must be abundantly clear that it is a learning experience for the intern. If the value to the intern isn't clear, he or she starts to look a lot like an employee who just isn't getting paid. And that's when your legal problems begin.

Standards For Unpaid Internships

The U.S. Department of Labor (DOL) and the California Department of Labor Standards Enforcement (DLSE) have certain standards in place that employers must meet for unpaid internships. Basically, you must ensure that the intern is receiving a valuable learning experience in exchange for their free labor.

Unless all of the following criteria are met, the intern is legally an employee and must be paid minimum wage, earn overtime, and is fully covered by state and federal employment laws.

Interns:

  • Cannot displace regular employees.
  • Are not guaranteed a job at the end of the internship.
  • Are given a clear understanding that they are not entitled to wages during the internship period.
  • Must receive training from the company, even if it impedes the regular work of the business.
  • Must get hands-on experience with equipment and processes used in the industry.
  • The engagement must primarily benefit them, not the company.

So, if you are considering an unpaid internship program this spring or summer, do yourself a favor and take the time to ensure that it meets the legal standards. Or make it a paid position.

If you have any questions about internships, please contact us.

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