Summer Intern? Summer Employee? DOL Sees a Difference
The U.S. Department of Labor has recently offered new guidance about wage and overtime pay requirements for summer employees and interns. The DOL standards apply to private sector, ‘for profit’ employers.
Interns who are more ‘employees’ than ‘trainees’ must generally be paid at least minimum wage, and they must also be paid overtime wages for hours worked in excess of 40 hours per week. A person whose work is more self-serving, i.e. work done more for the educational benefit of the intern than for the benefit of the employer may not fall into this category. If there is no ‘employment relationship,’ then the minimum wage and overtime provisions do not apply.
How is a private ‘for profit’ employer to determine how to pay its summer interns?
The DOL offers these criteria:
a. Is the internship environment more educational than operational? Does the intern get college credit for the work?
b. Is the internship for the benefit of the intern, rather than for the immediate advantage of the company? In fact, does the intern’s presence occasionally impede operations?
c. Does the intern displace regular employees?
d. Is the intern entitled to a job at the end of the internship?
e. Is there an understanding between employer and intern that the intern will not receive wages for the time spent with the company?
The more the intern experience provides training and instruction which can be used in other workplace settings, and the less dependent the business is on the work done by the intern, the more likely it is that the internship will be viewed as ‘training’ rather than employment. In that context, the provisions of minimum wage and overtime laws will not apply.
Employers should take care not to misclassify summer interns to avoid compliance with wage requirements. If an intern does meaningful work (filing, clerical, sales, etc), the employer is benefitting from that work. And, if the intern is being used as a substitute for absent regular workers, he/she is doing regular work. The reality is that summer interns often fit into the daily work routine of the workplace, doing the same or similar work as regular employees, maintaining the same schedules and following the same rules. When that occurs, the intern is likely to be considered an employee, entitled to the wages of an employee. In that case, the intern should be paid at least minimum wage, and he/she should be compensated for overtime.
The prudent employer will establish a clear understanding with summer interns regarding the anticipated work environment and the agreed upon pay arrangement before the first day at the worksite.
Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.