Home > Property & Casualty > Intern vs. Employee – employers need to know the difference

Intern vs. Employee – employers need to know the difference

internWith Summer approaching and many college students looking for internships, companies should review employment laws that determine whether an intern qualifies as an employee or a trainee. The Department of Labor’s Wage and Hour Division fact sheet on internship programs provides useful information on this subject. Under the Fair Labor Standards Act (FLSA), covered and non-exempt individuals who are “suffered or permitted” to work must be paid at least the minimum wage and overtime compensation for hours worked over 40 in a workweek. Typically, interns in the “for-profit” private sector qualify as employees unless their work status meets certain criteria that defines them as trainees. For example, an intern working in the “for-profit” private sector does not have to be paid if the job serves mainly for his or her educational benefit and the training meets certain objectives. In order to determine whether an internship or training program meets this exclusion, employers should apply the following criteria to their decision:

  • The internship is structured around a classroom or academic experience, even if the intern is attends and works out of the employer’s operational facilities.
  • The internship experience benefits the intern.
  • The intern does not act as a substitute for regular workers but works under supervision of the existing staff.
    • Note that if, on the other hand, the employer would have needed to hire additional employees had the interns not performed the work, then the interns are considered employees and entitled to compensation under FLSA regulations. Similarly, if the intern is expected to perform with the same level of supervision as the employer’s regular staff (and does not receive additional guidance and/or assistance from the employer), then the relationship is considered one of employment.
  • The employer receives no immediate benefit or advantage from the work performed by the intern, and on occasion, its operations may be impeded by the additional training taking place.
    • When interns are required to perform productive work (such as filing, clerical work or assisting customers) that benefits the employer in the form of improved operations or additional skills, then they must be treated as an employee and are not excluded from the FLSA’s minimum wage and overtime requirements.
  • The intern is not guaranteed or entitled to a job at the end of the training period.
  • Both the employer and the intern agree that no compensation will be paid during the time spent working.

If all of these criteria are met, then the intern is not classified as an employee under the FLSA, and employers are not required to provide minimum wage and overtime compensation. The internship or training program should be scheduled for a specific time period, and should not be used as a trial period for the intern’s future employment. Keep in mind that the determination of whether individuals are considered interns or employees largely depends on the specific facts and circumstances of each program, and should be reviewed carefully by companies to be sure all compliance measures are met.

About the Author

Mary McMahon Burke is a Vice President and Senior Client Manager at William Gallagher Associates (WGA). She works in the Property and Casualty Group with a primary focus on Worker’s Compensation.

617.646.6728 | MMcmahon@wgains.com | Connect with Mary on LinkedIn

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