Internships can be a great way to gain experience and connections in a company or field that you want to start a career in.
Many students will do internships alongside their studies to make sure that they can easily get into a graduate job with the right experience needed for that job.
However, there is a lot of controversy surrounding internships, especially unpaid ones, for their blurred lines in relation to employment.
The relation to employment in interns differs on if the intern is getting paid or not. Unpaid internships are one of the most controversial types of work experience that you can partake in.
Many people protest interns doing the same job as full-time employees while receiving no compensation for their work.
Despite the protest, unpaid internships are not going away anytime soon, with a recent NACE survey showing that 40% of college students that are doing an internship alongside their study are not being paid.
Paid internships are a less controversial way of gaining work experience for a certain field or company, they allow the subject to get the relevant experience and connections to make a career in that field, while still being compensated for their work and time.
Both unpaid and paid internships have different relationships to employment, this article will explore the laws around what makes an employee an employee and where does the line between intern and employee lay.
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Are Unpaid Interns Employees?
The short answer to this question is no, unpaid interns are not employees. However, the parameters that make an unpaid intern not an employee are a little more complicated than that.
The United States government passed the Fair Labor Standards Act (the FLSA) in 1938, the act outlines that if you work for a for-profit company or a non-profit company that generates $500,000 or more in revenue annually then you are considered an employee and you must be paid for your work.
However, when it comes to unpaid interns and trainees, the FLSA doesn’t recognize them as employees of the company and therefore aren’t required to be paid if certain criteria are met.
These certain criteria are that which is laid out in the Primary Beneficiary test.
If the intern is not the primary beneficiary of the agreement to be an unpaid intern then they are considered an employee of the company in question and are entitled to minimum wage and overtime pay if necessary.
The United States Department of Labor created the primary beneficiary test to navigate the subjectivity around who the primary beneficiary is in an unpaid internship, as before this test, there were many disputes over whether or not certain interns should be classed as employees of the company.
Below we have outlined the primary beneficiary test from the US government website.
Primary Beneficiary Test
- The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
- The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
- The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
- The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
- The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
- The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
- The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.
These parameters are the rules which ensure that the intern is the one benefiting from an unpaid internship.
If one of these parameters aren’t met then it is the company that is benefiting from the intern and cases can be made that the company is the primary beneficiary, therefore the intern will be classed as an employee and are entitled to minimum wage under the FLSA.
The primary beneficiary test has been deemed a flexible test by courts as no factor on the test is determinative and is up to interpretation, meaning that the outcome of this test will be dependent on the exact circumstances that your internship falls.
Are Paid Interns Employees?
The short answer to this question is, yes, paid interns are employees. Unlike the employment status of unpaid interns, paid intern’s employment status is quite simple.
Many people think that being a paid intern is the same as being a trainee or an entry-level position to a company that allows a company to almost try out an employee before they make them an employee.
In many ways this is the case, however, a “paid intern” is simply a job title, the same as ‘doctor’, or ‘architect’, and isn’t a separate employment classification.
Under the FLSA, paid interns are W-2 employees and have the same protections as any other employee under the FLSA, including guaranteed minimum wage and overtime pay. They will also come under employee protection acts.
As well as a wage and employee protection, if a paid intern works at least 30 hours per week, they are entitled to the opportunity to enroll in the company’s health insurance if they have been working at that company for over 90 days under the Affordable Care Act.
A good factor to keep in mind when asking if interns are employees is that if you are paid, you are an employee. Paid interns will get all of the benefits from the company they work at as any other employee under any other title, that is if they are working more than 30 hours a week for 90 days.
Unpaid interns on the other hand are a little more complicated, they will not count as employees of a company if the company can prove that the intern is the primary beneficiary of the internship.
If any of the factors outlined in the primary beneficiary test are false then the company will be deemed the primary beneficiary and therefore the intern is entitled to minimum wage, overtime pay, and other benefits.