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Internships: Paid or Unpaid, FLSA and Compliance Issues Abound

Posted on: June 13th, 2013 | Category: Government Regulatory & Compliance Issues, Human Resources, Our Blog

Summertime, and the living is easy…

…unless you are struggling to figure out how to classify those new interns to comply with the Fair Labor and Standards Act (FLSA) and other government regulations. Then summertime can be a royal pain in the neck. Headlines in the news about the trend in wage and hour litigation filed by unpaid interns suing for pay under FLSA—against Hearst Corp., Fox Searchlight Inc., the “Charlie Rose”, for example—have plenty of employers’ attention this season, and for good reason. The penalties, expenses and bad press involved can be a nightmare.

Making Internships Work and Staying Compliant in 2013

When it comes to setting up unpaid internships, the U.S. Department of Labor (DOL) has outlined what it expects. The following six criteria must be applied when making this determination:

  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.

summer internships and FLSAKeep in mind that any housing or food stipends, or other forms of “pay”, should be clearly designated as unrelated to wages. Or, if it they are wages, that they meet at least the minimum wage requirements under the FLSA and applicable state laws.

“Paying interns minimum wage and overtime, if they work over 40 hours a week, can help you avoid running into a lot of the disputable compliance issues later on,” says Tina Hamilton, PHR, president and CEO of hireVision Group, Inc. “Plus, this will allow your interns to focus better on your company because they won’t be scrambling to work a ‘second job’ around the time they are with you in order to cover their expenses. And think of the better pool of students you will have to choose from if you offer compensation along with the chance to gain valuable work experience.”

Is it time to rethink the link between paperwork and progress?

Our team of human resources professionals help keep you in compliance with FLSA and other government requirements, as well as help you manage other HR processes so you can focus on what you do best: running your business.

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