The FLSA creates a narrow exception to the applicability of its minimum wage and overtime provisions for unpaid internships when certain enumerated criteria are satisfied. If these strict criteria are not satisfied, then the position is not exempt from the overtime and minimum age requirements of the FLSA. Therefore, those individuals would be considered normal employees and must be compensated in accordance with the FLSA. These criteria are as follows:
- 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;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees, but works under close supervision of existing staff;
- 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;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
These criteria have been provided specific meanings and uses by the FLSA and the applicable case law; therefore, we recommend that employers secure legal advice as to whether these criteria are satisfied in their specific circumstances. However, one rule to keep in mind is that if the employer is using the intern as a substitute for a regular worker, then it is quite likely that the intern would be subject to the minimum wage and overtime provisions of the FLSA.