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Fair Pay

Think interns mean free labor? Think again.
September 1, 2007
URL: http://www.entrepreneur.com/article/183054

Your employees are overworked, but you don't want to pay for extra help. How about bringing in a couple of unpaid interns?

Resist that temptation. The Fair Labor Standards Act distinguishes between interns and employees. Unless your internship program is essentially educational, your interns will look suspiciously like employees--and you can get into legal trouble for not paying them at least minimum wage.

The FLSA sets out six ways to tell the difference:

1. While the intern's training might include equipment specific to your company, it must be similar to that in a vocational school.

2. The intern must not displace or replace regular employees.

3. Interns are not necessarily entitled to a job at the end of the program.

4. Both employer and intern must understand that the intern isn't entitled to wages for training.

5. Training must be primarily for the intern's benefit.

6. The employer must derive no immediate advantage from this work.

When these cases land in court, judges tend to look at the spirit of the internship program. If it's mainly a way for your business to get free labor, pony up minimum wage. If it's basically an educational endeavor with side benefits for the business, call your local college about a genuine internship.

Jane Easter Bahls is a writer in Rock Island, Illinois, specializing in business and legal topics.