Unpaid internship programs are a time-honored institution for many employers, providing benefits to the interns and the company or institution alike. But a recent and burgeoning trend of lawsuits by interns alleging that they are employees under the federal Fair Labor Standards Act (FLSA) and/or state wage-and-hour laws who must be paid at least minimum wage has left many employers questioning whether an unpaid internship program is worth the risk. This article discusses recent significant cases addressing the issue, and suggests ways in which employers can increase the likelihood that an unpaid internship program will pass muster.
The FLSA requires that “employees” be paid at least minimum wage for all regular hours worked, and that nonexempt employees be paid overtime for all hours worked in excess of 40 per week. Proponents of unpaid internships argue that interns are not employees, and therefore need not be paid in accordance with the FLSA. But the FLSA’s broad and vague definitions of “employee” (“any individual employed by an employer”) and “employ” (“to suffer or permit to work”) give interns ammunition in arguing that unpaid internships are unlawful under the act.
