Q. "Do I have to pay our summer intern?"
Answer:
It depends on if they're really an intern. The Department of Labor (DOL) has implemented a “primary beneficiary” test* to help establish compensation requirements. Generally:
If the experience is primarily for the benefit of the intern, they can be classified as such and do not have to be paid.
If the employer primarily benefits, the individual must be classified as an employee and paid in accordance with minimum wage and overtime pay rules as set out in the Fair Labor Standards Act (FLSA).
Ask the following when determining who is primarily benefiting:
What significant educational benefits exist? Is the training similar to an educational environment or tied to the intern’s formal education program? Will they receive academic credit?
Is compensation expected or has payment been discussed? Is there an expectation of a paid position at the end of the internship?
How does the intern’s work impact paid employees? Does it lighten their load? Complicate it? Is the internship’s duration limited only to when beneficial learning is provided or do the start and end dates primarily benefit the organization?
Keep in mind:
No single factor dictates “employee” status
Each case must be carefully and individually analyzed
The professional or academic benefit should be abundantly clear
Check compliance with both state and federal laws and avoid violating applicable child labor laws when hiring individuals under the age of 18
When in doubt, it’s best to classify the individual as an employee
*For more detailed information regarding the “primary beneficiary” test, review the DOL’s Fact Sheet #71.