While companies, educators and students alike see many benefits in internship opportunities, the DOL has issued a clear warning that it is cracking down on unpaid internships that do not meet specific requirements. 

Restating its longstanding “trainee” criteria specific to the context of unpaid interns, the DOL recently published a new Fact Sheet providing information to help determine whether interns must be paid the minimum wage and overtime under the FLSA when providing services to “for-profit” private sector employers. 

Stating its position that such internships will most often be viewed as employment and that any exception will be applied narrowly, the DOL has provided the following six-factor test: (1) the internship must be 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 any regular employee, but works under close supervision of 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 end of the internship; and (6) the employer and the intern understand that the intern is not entitled to wages for the time spent in the internship. Only if a company can show that all factors are met will the student intern be exempt from the minimum wage and overtime requirements of the FLSA. 

While companies may look at the benefit student interns receive in gaining valuable work experience as sufficient “evidence” that an internship need not be paid, that factor alone no longer establishes a no-employment relationship. Companies currently using unpaid interns should carefully review their intern positions and make changes as necessary.