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The U.S. Department of Labor (DOL) has increased efforts in investigating unpaid internships to determine if the work performed should be compensated. The DOL rules governing unpaid internships are not new; however, investigation and enforcement of these rules has recently become a DOL priority and part their 2011-2016 Strategic Plan.

The DOL guidelines that define the six step criteria for legally employing an unpaid intern in ‘for-profit’ private sector settings* are:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in an educational environment or vocational school.
  2. The internship experience is for the benefit of the intern.
  3. The interns do not displace regular employees, but work under their close supervision (see details listed below).
  4. The business that provides the training derives no immediate advantage from the activities of the intern, and may in fact be impeded.
  5. The interns are not necessarily entitled to a job at the conclusion of the training period.
  6. The employer and the interns understand they are not entitled to wages for the time spent in the internship.

If any of these criteria are not met, the intern is considered an employee covered by the provisions of the Fair Labor Standards Act (FLSA) and is entitled to at least minimum wage and overtime compensation.

*Unpaid internships in the public sector and for non-profit charitable organizations, where the intern volunteers without expectation of compensation, are generally acceptable. When in doubt, contact the DOL.

Academic Credit

An employer is not automatically exempt from paying an intern solely because the intern is receiving academic credit. However, formalizing the educational components of the internship can help meet the “educational environment” requirement in criteria number 1 of the DOL guidelines noted above.

Best practices to meet the DOL criteria
  • Design the internship experience to primarily benefit the student, not the employer. The more the experience is structured around a classroom or academic experience, the more likely it will fulfill DOL criteria.
  • Designate a formal mentor/supervisor for the internship experience and provide close supervision. Have the supervisor and intern outline learning objectives and have the intern keep a journal or complete assignments that summarize their learning experiences around the objectives. Design objectives so that the intern develops skills that can be used in multiple settings (i.e. transferable skills).
  • Have a written, signed agreement that includes a job description and/or learning objectives that meet the DOL criteria, and that indicates a fixed start and end date for the internship. This can be covered by internship affiliation and learning agreements, which should be completed prior to the intern beginning the experience.
  • Both the intern and employer should understand and agree that the intern is not entitled to wages. This parameter should be included in the written agreement.
Workers’ Compensation

Reported unpaid interns and volunteers at WSU may be covered by workers’ compensation insurance provided by the Department of Labor and Industries. In order to assure coverage, departments are responsible for complying with the provisions found in the Business Policies and Procedures Manual 60.81 – Volunteers.

Workers’ compensation for unpaid interns and volunteers may cover medical expenses but not wage replacement. In order to ensure an individual is reported, departments must submit a completed Volunteer Monthly Report to Human Resources Services by the 15th of the following the month of activity to report volunteer hours. The 2011 rate for covering an unpaid interns and volunteers is $0.0524 per volunteered hour.

Resources
Who to Contact
  • For questions regarding the internship program at WSU, contact Judy Hopkins, Internship Coordinator (judy_hopkins@wsu.edu), internships@wsu.edu, or in the ASCC at 509-335-6000.
  • For questions regarding compliance with internship laws and policy, Human Resource Services, at 509-335-4521.
  • For questions regarding the volunteer policy and workers compensation coverage, contact Jamilee Gecas, Sr. Human Resource Consultant, in Human Resource Services, at 509-335-4521.
Washington State University