Under the FLSA, the definition of “employ” includes to “suffer or permit to work.” Covered and nonexempt individuals who are “suffered or permitted” to work must be compensated for the services. Internships in the “for-profit” private sector will most often be viewed as employment, unless the test described below relating to trainees is met. Thus, interns who qualify as employees, rather than trainees, typically must be paid at least the minimum wage and overtime compensation for hours worked over 40 in a workweek.

Test for unpaid interns. There are some circumstances under which individuals who participate in “for-profit” private sector internships or training programs may do so without compensation. According to the Supreme Court, the term “suffer or permit to work” cannot be interpreted so as to make a person whose work serves only his or her own interest an employee of another who provides aid or instruction. This may apply to interns who receive training for their own educational benefit if the training meets certain criteria. The determination of whether an internship or training program meets this exclusion depends upon all of the facts and circumstances of each program.

The following six criteria must be applied when making this determination:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in an educational environment.
2. The internship experience is for the benefit of the intern.
3. The intern does not displace regular employees, but works under close supervision of existing staff.
4. The employer that provides the training derives no immediate advantage from the activities of the intern and, on occasion, its operations may actually be impeded.
5. The intern is not necessarily entitled to a job at the conclusion of the internship.
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all the factors listed above are met, an employment relationship does not exist under the FLSA, and the Act’s minimum wage and overtime provisions do not apply to the intern.

Source: US Department of Labor, Wage Hour Division Fact Sheet #71: Internship Programs Under the Fair Labor Standards Act (http:/www.dol.gov/whd/regs/compliance/whdfs71.htm).