Hiring an intern is an enticing option for companies. Even though the days of “unpaid internships” are over, bringing an intern on board will likely still be much cheaper than hiring someone traditionally. Also, it’s a great way for businesses to find new talent to potentially add to the workforce after the internship.
Under the Fair Labor Standards Act (FLSA), most interns are considered employees that are subject to the FLSA’s overtime and minimum wage requirements. The U.S. Department of Labor uses a primary beneficiary test to determine whether an intern for a business is considered an employee for purposes of the FLSA. However, not all states utilize this test. New York is one of these outliers.
The New York State Department of Labor uses a test consisting of 11 criteria, all of which must be satisfied in order for an intern to be unpaid. Here are the necessary elements:
1) The training, even though it includes actual operation of the employer’s facilities, is similar to training provided in an educational program. Example – The internship program builds on a classroom or academic experience.
2) The training is for the primary benefit of the intern.
3) The intern does not displace regular employees, and works under close supervision from an employee.
4) The activities of the intern do not provide an immediate advantage to the employer. On occasion, operations may actually be impeded because if the intern.
5) The interns are not necessarily entitled to a job at the conclusion of the training period and are free to take jobs elsewhere in the
same field. Tip – refrain from having interns sign non-competes upon hiring.
6) The interns are notified, in writing, that they will not receive any wages and are not considered employees for minimum wage purposes.
7) Any clinical training is performed under the supervision and direction of people who are knowledgeable and experienced in the activity.
8) The interns do not receive employee benefits.
9) The training is general, and qualifies trainees or students to work in any similar business.
10) 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 only uses criteria relevant for admission to an independent educational program.
11) Advertisements, postings, or solicitations for the program clearly discuss education or training, rather than employment.
As you can see, if you’re planning on bringing an intern into your company, you should consult with legal counsel to ensure compliance with all applicable laws and regulations.