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Summer Internships: To Pay or Not to Pay?

Toby Graham /
  • Categories: HR

Granted, Shakespeare may not have been contemplating the nobility of paying or not paying a summer intern, but it is a valid question. Summer brings vacation requests, company picnics, and opportunities for young adults to gain real-life work experience through internships.

Internships are beneficial for employers and students. Interns can assist with short-term projects, special events, and promote the employer’s visibility with future graduates entering the workforce. But how does a company decide if they are required to pay an intern?

The U.S. Department of Labor (DOL) Wage and Hour Division (WHD) defines the difference between a paid and unpaid internship under the Fair Labor Standards Act (FLSA) (See Fact Sheet #71).

A simple guide to identifying a paid or unpaid internship is:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all six criteria are met, the internship can be categorized as unpaid. However, if there is ambiguity or concern, the company is welcome to pay their intern and/or reach out to an expert, such as KPA. A paid intern is treated just like a non-exempt employee and is subject to minimum wage laws under the Fair Labor Standards Act (FLSA). Paid interns will track their time, are eligible for overtime, and may even qualify for health benefits if they meet the Affordable Care Act (ACA) definition of a full-time employee.

Hopefully, employers and summer interns can define a mutually beneficial and compliant relationship. Creating memories and connections through real-life work experience is an amazing opportunity and is often a very worthwhile endeavor.

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