Staying in Compliance with FLSA and Internships in Your Organization
Summer is a popular time for many organizations to take on students and interns. Internships can be a beneficial experience for all involved. On the one hand the intern gains valuable experience in an organization, which can be applied towards future careers. The organization also benefits by having an extra hand in the office and completing work that full time employees may not have a chance to get to. Interns also provide new energy to the office and a fresh perspective on work practices.
Internships are advantageous for all parties involved, however it is important for organizations to stay in compliance with the Fair Labor Standards Act (FLSA).
As of January 2018, organizations who offer internships are subject to a new primary beneficiary test, which consists of seven questions. The goal of this test is to determine whether the primary beneficiary of the work completed during the internship is the intern or the employer.
This test looks at things such as if the internship provides training similar to an education environment, or if the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.
The FLSA requires for profit employers to pay employees for their work; interns may not be employees under FLSA, in which case FLSA does not require compensation. These seven questions should be answered prior to classifying the internship as paid or unpaid to avoid an audit from the Department of Labor. If analysis of these results determines that an intern is an employee, they are entitled to minimum wage and overtime pay under FLSA.
Still have questions on the primary beneficiary test requirements? Check out this Fact Sheet from the Department of Labor.
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