Ask the Trainer: Paying Students for Training Programs

Tom Hunt » Ask the Trainer: Paying Students for Training Programs

This month’s training question is, “When students are given the opportunity to participate in a training program, must they be paid?”

Here is how our expert responded:

“Determining whether employees truly qualify as unpaid interns, or should really be paid employees is a tricky issue for employers,” says Susan E. Prince, J.D., BLR legal editor. The U. S. Department of Labor (DOL) “intends to crack down on this, so employers need to be very careful when hiring their interns over summer and winter breaks to make sure they do not violate the laws.”

If an intern is unpaid, the employer should have documentation to substantiate that the intern meets DOL’s test for unpaid trainees, Prince says. “DOL sets out the rules very clearly.”

DOL states that it will most often view internships in the for-profit, private sector as employment, unless the test described below is met, and that interns who qualify as employees rather than trainees typically must be paid at least the minimum wage and overtime compensation for hours worked over 40 in a workweek.

According to DOL, an employment relationship does not exist between an intern and sponsoring company if all of these six factors are met:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training that 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.

In general, the more an internship program is structured around a classroom or academic experience as opposed to the employer’s actual operations, the more likely the internship will be viewed as an extension of the individual’s educational experience, DOL states.