By KAREN MICHAEL Special Envoy
Many high school and college students are about to start their summer internships. Whether the employer is obligated to compensate them is determined by several factors and depends on federal and state law.
Under the Fair Labor Standards Act, any “for-profit” employer must compensate its employees for their work. The current minimum wage in Virginia is $11 per hour.
The question for the private sector workforce is whether the intern meets the definition of an “employee” who must be paid. Indeed, interns or students in the private and “for-profit” sector are not defined as “employees” in certain circumstances and, therefore, employers do not have a legal obligation to compensate them.
Public sector and not-for-profit employers can hire “volunteers”. If employers choose to pay them, the employer must comply with other minimum wage and overtime requirements.
The Ministry of Labor has published an information sheet on the circumstances in which a private employer can hire an unpaid intern or student. The decision is based on the “economic reality” of the employer-employee relationship.
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There are seven factors identified by the courts and the Ministry of Labor to determine whether an intern/student can work without pay:
1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation.
2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including clinical training and other practical training provided by educational institutions.
3. The extent to which the internship is linked to the intern’s formal education program through integrated courses or receipt of academic credit.
4. The extent to which the internship adapts to the academic commitments of the intern by corresponding to the academic calendar.
5. The extent to which the duration of the internship is limited to the period during which the internship provides the intern with beneficial learning.
6. The extent to which the intern’s work complements, rather than replaces, 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 carried out without the right to gainful employment at the end of the internship.
The criterion is flexible and no factor is decisive.
The problem with this analysis is that if the employer is wrong and does not compensate the intern properly, then the employer has violated federal and state law and the intern/student would be entitled to back pay, damages – interest and attorney’s fees.
Due to the complexity of the analysis, employers should pay their interns at least the minimum wage of $11 per hour. Employers must comply with all the usual requirements of a regular employee, including requiring the intern to record all hours worked during a work week and to pay the intern at the overtime rate of pay for all hours worked beyond 40 hours in a work week.
Karen Michael is a lawyer and president of Richmond-based Karen Michael PLC and author of “Stay Hired”. She can be contacted at email@example.com.