Legal Issues Employers Should Know

Fair Labor Standards Act
                                                                                                                
Employers must be aware of and ensure compliance with the Fair Labor Standards Act (FLSA), before classifying an intern as an unpaid "trainee." If an intern is considered an "employee" for purposes of the FLSA, then the employer must pay its interns at least the minimum wage.

"Employee" is defined by the FLSA as "any individual employed by an employer." Under the FLSA, to "employ" means "to suffer or permit to work." Since this definition is somewhat circular, the Department of Labor's Wage and Hour Division developed a six-factor test for determining whether workers are to be considered "trainees" or "employees" under the FLSA. 

Fair Labor Standards Act (FLSA) 

To Pay or Not To Pay?
Most students cannot afford to accept unpaid internships without taking a second paid position elsewhere. Consider paying interns by the hour or offering a monthly stipend. A typical hourly internship wage ranges from minimum wage upwards to $20/hour. At Chapman, a student can receive both academic credit and compensation for an internship experience. Although employers are not required by law to pay interns who qualify as learner/trainees, the U.S. Department of Labor does require that employers obtain proof from non-paid interns that academic credit is being received.

Student interns may not be classified as independent contractors because they require on-going supervision and regular interaction with the employer. Consequently, it is unlikely that the student will have the degree of independence in performing his/her work that is essential in establishing independent contractor status.