Unpaid internships offered by for-profit companies are subject to the U.S. Department of Labor’s Fair Labor Standards Act (FLSA), which establishes minimum wage and overtime standards. However, for-profit company internship programs that offer an educational experience for the benefit of the intern may be exempt from FLSA regulations under a “trainee” exception. Unpaid internships offered by nonprofits and government agencies are also exempt from FLSA regulations.
“While businesses may believe they have met all the necessary guidelines regarding unpaid programs, they may find that, more often than not, they haven’t,” says Tyson. “When in doubt, it’s always a good idea to check with the Department of Labor or your human resources or general counsel departments.”
In addition to complying with FLSA, businesses should consider the following when establishing an internship program:
- Recent lawsuits by unpaid interns are changing the landscape for organizations with internship programs. While these cases dealt with compensation issues, companies also should consider how to treat interns with regard to anti-discrimination and anti-retaliation policies, handling grievances, and any other protections offered to other employees.
- Beware of state wage and hour laws which may vary in terms of what is considered proper compensation or hours worked.
- Interns should receive a detailed description of the internship, the training experience and a statement that the program complies with labor laws.