Nowadays, it seems that any college student’s resume is incomplete without an internship – the more well-known and prestigious the employer, the better. For both student and company, it seems like a win-win arrangement: the intern gains a reference and real-life work experience while the company gets free labor. Or is it really that simple?

By bringing students into their workplaces on an internship basis, many companies are exposing themselves to potential wage and hour lawsuits. The Fair Labor Standards Act (FLSA) requires employers to pay interns if the employment relationship does not meet six strict criteria. As outlined in the Department of Labor’s Fact Sheet #71, these criteria must be met for the intern-employer relationship to be exempt from FLSA:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

The fact sheet goes on to say that the more an intern’s experience at the employer is similar to that experienced in an educational environment, the more likely the intern-employer relationship is a true internship, and therefore exempt from FLSA.

Students who are serving in or have served in an internship capacity – and who were not paid – may be eligible for compensation. This includes the minimum wage and overtime pay for hours worked in excess of 40 per week.