The Free Intern May No Longer Be Free

Internships are win-win. You get free help for your business and they get the experience they desire. Well, not anymore. In April of 2010, the U.S. Department of Labor issued new guidelines as to the definition of an intern and in most cases, you are going to have to pay.

According to the Fair and Labor Standards Act it has been determined thatinterns in the for-profit’ private sector who qualify as employees rather than trainees typically must be paid at least the minimum wage and overtime compensation for hours worked over forty in a work week.

How do you determine if your intern is an employee and should you be paying them minimum wage? The Supreme Court has determined these 6 points as the criteria for determining the intern status:

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.

Points #3 and #4 are going to be the highest hurdles. Because even filing papers is considered support staff and stuffing envelopes benefits your marketing strategy. For interns NOT to be an employee, you are really put in a position to teach them in a way that is of no advantage to your business.

If adding additional paid positions to your staff creates taxation and benefits challenges, you may want to look into using a staffing company, who is likely to be familiar with the rules of employment and can work taxes, worker’s compensation and perhaps benefits into a flat rate.

You can read the whole Act at: http://www.dol.gov/whd/regs/compliance/whdfs71.pdf,

or visit the Wage and Hour Division Website: http://www.wagehour.dol.gov for more information on minimum wage.

This article may be reprinted when the copyright and author bio are included.
2010 Catherine Lang-Cline, Portfolio Creative, LLC.