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Do I Have to Pay and Intern?

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It depends. An intern isn’t free labor, even if the intern is learning while he or she is working. Basically, the issue is whether the person is an “employee” under the Fair Labor Standards Act.

There is actually a six-factor test you can use to determine if an intern must be paid. This is the Department of Labor test that determines if a worker can be classified as “trainee.” For an intern to be unpaid, all of the following factors must be present:

1. The training is similar to training the student would find in a vocational school;

2. The training is for the benefit of the student/intern;

3. The training doesn’t replace the work of regular employees;

4. The intern is not entitled to a job at the end of the internship;

5. The intern understands he or she is not entitled to wages for the training;

And, perhaps, the biggest issue of all:

6. The employer that provides the training not only doesn’t benefit from it, but, in fact, the training may actually hamper normal business functions.

As an example of this last factor, if you have an intern who is answering calls, filling out forms, and providing actual work for you, you are benefiting from the intern’s work, even though the intern may be learning the business at the same time. In this situation, the intern must be paid as an employee.

If, on the other hand, you are taking time out of your regular operations to sit and train this person on various aspects of your business, the presence of the intern is actually keeping you from doing your job, and is not benefiting you in any way. In this second example, the intern may be unpaid — he or she is not actually an employee who provides work for your organization.

If you are contemplating hiring an intern, be sure you understand the factors involved in determining whether he or she must be paid.