The Wage and Hour Division of the Department of Labor has issued a blog post about the differences between paid vs. unpaid internships.  The Division is concerned that interns work under conditions that are in compliance with the federal law. The Fair Labor Standards Act, as interpreted by the Supreme Court, provides criteria for what is and is not legal regarding payment for internships. Six criteria must be applied when determining if an internship can be unpaid:

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 Wage and Hour Division believes that it is important that students familiarize themselves with those six requirements, and especially important that employers do so as well. The Division also stresses that the following guidelines should also be considered:

• Interns in the non-profit and government sectors may not have to be paid. The Wage and Hour Division recognizes an exception to the employment relationship for individuals who volunteer their time, freely and without anticipation of compensation for religious, charitable, civic, or humanitarian purposes to non-profit organizations.

• In the for-profit world, the more an internship is used to benefit the employer, and the employee performs productive work, the more likely it is that the intern is an employee and therefore entitled to be paid properly.

• The more a for-profit employer structures an unpaid internship program around a classroom or academic experience as opposed to the employer’s actual operations, the less likely the internship will be viewed as employment.

• Interns in the “for-profit” private sector who qualify as employees rather than trainees typically must be paid at least the federal minimum wage and overtime compensation for hours worked beyond 40 in a workweek.