Internship FLSA Laws and Regulations for Consideration

Revised: April 2021

Original Publication: March 25, 2019

My HR career started with an internship as an undergraduate student at Elmira College and a local organization, Kennedy Valve Manufacturing, typical HR duties, with opportunities to sit in on grievance and arbitration meetings.  Almost 14-years later, this challenging internship provided me opportunities, which laid the foundation for my career. 

Structured and project driven internships provide students great opportunities to obtain real world experience, that will make a difference as they grow into their careers.  Employers can bring interns in at a relatively inexpensive cost to the organization (or free) and have readily available access to a pool of applicants for potential hire after they graduate.  Collaborating with local colleges can also improve community relationships.  Set the tone as an organization and look for opportunities to hire and grow your internship programs.  It does make a difference to future employment opportunities for younger workers. 

Internship Benefits to Interns:

1. “Interns can gain a real-world view inside a particular industry or job before they devote significant time and money to qualify themselves for such positions. This may help them eliminate wasteful “false starts” in their educational and career choices.
2. Interns can gain realistic expectations about workplace demands and rewards.
3. By acquiring organizational knowledge, an intern can be at a competitive advantage over job applicants without internship experience.
4. Similarly, an internship can be viewed as an expanded job interview; the intern has ample opportunity to display his or her best attributes to a potential employer over an extended period. The typical job applicant, on the other hand, may have only two or three hours of time with the organization before the hiring decision is made.
5. Even if an internship does not blossom into a regular position with the organization, the intern will enlarge his or her network of contacts in the working world and will probably be able to add a few names to his or her list as references when applying for positions elsewhere.”[i]

The goals of an internship program should follow the SMARTER paradigm. The goals should be:

6. Specific, clear and understandable.
7. Measurable, verifiable and results-oriented.
8. Attainable.
9. Relevant to the mission.
10. Time-bound with a schedule and milestones.

“The seven factors of primary beneficiary test for unpaid interns and students:

The Test for Unpaid Interns and Students
Courts have used the “primary beneficiary test” to determine whether an intern or student is, in fact, an employee under the FLSA.² In short, this test allows courts to examine the “economic reality” of the intern-employer relationship to determine which party is the “primary beneficiary” of the relationship. Courts have identified the following seven factors as part of the test:

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.

Courts have described the “primary beneficiary test” as a flexible test, and no single factor is determinative. Accordingly, whether an intern or student is an employee under the FLSA necessarily depends on the unique circumstances of each case.

If analysis of these circumstances reveals that an intern or student is actually an employee, then he or she is entitled to both minimum wage and overtime pay under the FLSA. On the other hand, if the analysis confirms that the intern or student is not an employee, then he or she is not entitled to either minimum wage or overtime pay under the FLSA.” (Federal DOL)

Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act

Click to access whdfs71.pdf

New York State Requirements Unpaid Internships:

“In addition to the DOL’s internship requirements, New York law limits for-profit companies’ ability to provide internships to students. In New York, for-profit employers must meet six additional requirements to offer unpaid internship opportunities:

1. The trainees or students are notified, in writing, that they will not receive any wages and are not considered employees for minimum wage purposes.
2.  Any clinical training is performed under the supervision and direction of people who are knowledgeable and experienced in the activity.
3. The trainees or students do not receive employee benefits.
4. The training is general and qualifies trainees or students to work in any similar business. It is not designed specifically for a job with the employer that offers the program.
5. The screening process for the internship program is not the same as for employment and does not appear to be for that purpose. The screening uses criteria relevant only for admission to an independent educational program.
6.  Advertisements, postings, or solicitations for the program clearly discuss education or training, rather than employment, although employers may indicate that qualified graduates may be considered for employment.

Because of the numerous requirements for-profit employers must satisfy to offer internship opportunities, it is essential that New York employers understand both the DOL and New York Labor guidelines to ensure that any internship programs are compliant.” (https://www.lexology.com/library/detail.aspx?g=6496537a-6d11-4a25-8f3b-8511f9051751)

---

[i] https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/employinginterns.aspx