Career Services

Internship compensation

Career Services strongly encourages employers to pay their interns, regardless of whether interns are earning academic credit for the demonstrated learning associated with their internships.

Rationale

  1. The United States Department of Labor (DOL) has set forth a legal framework compelling for-profit employers to provide minimum wage and overtime provisions to interns except in very rare cases.
  2. Equitable access to internships and their myriad benefits requires that paid internships be available for students who cannot afford to engage in uncompensated internships.
  3. Wages provide compensation for the effort put forth in an internship itself, which cannot be replaced with academic credit attained for the completion of assignments demonstrating learning. Furthermore, students pay tuition for internship credits.

Legal framework

In 2018, the U.S. Department of Labor’s Wage and Hour Division updated Fact Sheet #71: Internship Programs Under the Fair Labor Standards Act (FLSA). Fact Sheet #71 states that:

“The FLSA requires “for-profit” employers to pay employees for their work. Interns and students, however, may not be “employees” under the FLSA—in which case the FLSA does not require compensation for their work.”

Courts have used the “primary beneficiary test” to determine whether an intern or student is, in fact, an employee under the FLSA. This test allows courts to determine which party, the employer or the intern, is the “primary beneficiary” of the relationship. Courts have identified the following seven factors as part of the test:

DOL criteria for unpaid interns

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

LEGAL DISCLAIMER – The information presented here should not be considered legal advice. Employers are encouraged to check with their in-house legal team regarding these matters.

Adapted from UW Seattle’s Career & Internship Center resources