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05/01/15


Summer Interns: When it’s OK not to pay

By: Darla J. McClure

Related Attorney(s): Donald N. SperlingKaren N. ShapiroAndrew L. SchwartzJordan G. Savitz

Media Type: Alert

Should I pay my summer intern? Many employers ask this question at this time of year, and it’s an important one because failing to properly categorize the internship as paid could have a devastating effect on the employer. 

The Fair Labor Standards Act (“FLSA”) states that individuals who are “employed” must be compensated for the services they perform for an employer.  FLSA broadly interprets the term “employed” to mean “suffer or permit to work.”   Given this broad interpretation, most interns would qualify as employed and must be paid minimum wage and overtime in order to comply with FLSA.  Montgomery County minimum wage is $8.40 an hour, $1.15 higher than the federal minimum wage.

FLSA has permitted certain exceptions to this rule, one of which is individuals who work for a “for-profit,” private sector employer in an internship or training program that meets certain criteria.  The determination of whether an internship or training program meets this exception depends upon all of the facts and circumstances of the program.  FLSA has set forth six specific factors that must be met in order to fall within the exception and allow interns to be in unpaid positions:

  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.

The employer must satisfy all of the criteria set forth above in order to have a bona fide unpaid internship or training program.  If all of the criteria are satisfied, an employment relationship does not exist under the FLSA and the minimum wage and overtime requirements do not apply to the intern.

If you have questions about hiring or paying summer interns, or any other questions related to employment law, please contact one of the attorneys in our Employment Law Department.


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