As summer approaches many companies are now hiring summer interns. For years, many employers in for profit businesses would hire interns and not pay them. The thought being that the intern did not need to get paid because the intern was getting the benefit of experience and possibly a “foot in the door.” However, in most situations, failing to pay an intern is a violation of New York State’s Minimum Wage Act as well as the Federal Fair Labor Standards Act. Interns that meet the requirements of an employee, must be paid and must also receive, if applicable, overtime pay.

According to the New York State Department of Labor fact sheet, in New York an internship can be unpaid only if it meets ALL of the below 11 criteria:

1. The training, even though it includes actual operation of the employer’s facilities, is similar to training provided in an educational setting.

2. The training is for the benefit of the intern; any benefit to the employer must be incidental.

3. The intern does not displace regular employees and works under close supervision (i.e. job shadowing).

4. The activities of the intern do not provide an immediate advantage to the employer, but may actually detract from productivity for the employer.

5. The intern is not necessarily entitled to a job at the end of the internship and is free to work elsewhere in the same field.

6. The intern is notified, in writing, that they will not receive any wages and are not considered employees for minimum wage purposes.

7. Any clinical training is done under the supervision and direction of people with knowledge and experience in the activity.

8. The intern does not receive any employee benefits.

9. The training is general and qualifies the intern to work in any similar business; it is not designed specifically for a job with the employer.

10. the screening process for an internship is different than a screening process for employment.

11. Advertisements, postings or solicitation for the program clearly discusses education and training and not employment.

For more information about the above criteria visit the New York State Department of Labor by going to the following website: https://www.labor.ny.gov/formsdocs/factsheets/pdfs/p725.pdf   

The U.S. Department of Labor (“DOL”) also set forth new guidelines in determining if an intern is really an employee under the Fair Labor Standards Act. The text is flexible and may depend on the “unique circumstances of the case”.  See https://www.dol.gov/whd/regs/compliance/whdfs71.htm

The DOL follows the 7 point primary beneficiary test. The seven factors are: The extent that the (a) intern and employer clearly understand that there is no expectation of compensation; (b) internship provides training similar to a classroom setting; (c) internship is tied to the intern’s education by coursework or academic credit; (d) internship accommodates the intern’s academic commitments; (e) internship is limited in duration to the time in which it provides the intern with beneficial learning; (f) the intern’s work compliments rather than displaces paid employees; (g) the intern and employer understand that the internship does not guarantee a paid job. If analysis of the circumstances reveals that the intern is actually an employee then the intern is entitled to minimum wage and overtime pay under the Fair Labor Standards Act.