The Dangers of Unpaid Interns

It’s that time again—college students are knocking on your door seeking summer internships, many offering their services for free to get their foot in the door. But EMPLOYERS BEWARE: There are some dangers associated with using unpaid interns, including a potential lawsuit under the Fair Labor Standards Act (FLSA). For interns to truly qualify for an unpaid internship, their internship must meet all six of the following criteria:

1. The training you provide the intern is similar to what they would receive in a vocational school or other academic institution. So, for example, if the intern is studying accounting, you might give them the opportunity to learn about bookkeeping or budgeting.
2. The internship is primarily for the benefit of the intern. As with rule (1), the training should further the intern’s education. It should provide them with bona fide educational credit and a real learning opportunity, as opposed to just making copies and coffee runs.
3. Unpaid interns do not displace regular employees. Under this rule, not only must you avoid replacing existing workers with interns, but if your organization would have had to hire additional workers to meet current work demands, you can’t fill the gap with unpaid interns.
4. You do not derive immediate advantage from the work performed by the intern. See rule (3). The internship must be primarily for the benefit of the intern. If the employer is the primary beneficiary of an internship, for example, and the employer reduces costs or accomplishes necessary tasks through the intern, the DOL will consider the intern an employee under the FLSA.
5. You must not lure interns with the promise of employment at the end of the internship.
6. The intern must fully understand that they are not entitled to wages for the internship. Also, because of rule (5), you should not promise to pay for the internship with “back wages” upon hiring the intern as a regular employee.

It is not illegal to have unpaid interns. But it is still a dangerous practice unless you can prove that you are providing “bona fide training” for which they will receive school credit, and you are not taking advantage of them by requiring too many administrative tasks. In most cases, we recommend that you pay interns a minimum wage in order to minimize risk.

To read the entire “Fact Sheet #71: Internship Programs under the Fair Labor Standards Act,” click here.