In January 2018 the United States Department of Labor (DOL) updated Fact Sheet #71: Internship Programs under the Fair Labor Standards Act.
Is it illegal to offer an unpaid internship? That depends. The Fair Labor Standards Act (FLSA) requires “for-profit” employers to pay employees for their work. Interns and students, however, may not be “employees” under the FLSA – in which case there is not a law requiring compensation for their work. The guidelines for determining who is an employee and who is an intern have been updated by DOL with release of Fact Sheet #71.
Since 1947, the answer to that question has been muddled by the U.S. Department of Labor (DOL) and a Supreme Court decision with a six point test. In order to classified as an intern (and thus not subject to FLSA), all six factors had to be met. With the revised Fact Sheet, DOL has adopted what our Circuit Court has recently decided.
We must look at who is the primary beneficiary of the relationship. If it is the student, then an unpaid internship can be considered. If it is the employer, then the student should be considered an employee and is covered under the FLSA.
In today’s competitive workplace, it makes sense to attract the best candidates with a meaningful paid internship but there is more flexibility now.
The updated fact sheet may be found at https://www.dol.gov/whd/regs/compliance/whdfs71.htm.