What Employers Should Know Before Hiring Minors for Unpaid Internships

By: Tyson Gorman with assistance from Taylor Cardwell, Wyatt Summer Associate

With summer just around the corner, many employers will be met with an influx of minors seeking internship opportunities for skills development, networking, and hands-on experience in their field of choice. Internships can be a great way for employers to gauge the potential and talent of a young person, and for young people to gain job skills. However, before choosing to hire minors for unpaid internships, it is important for employers to understand the parameters of acceptable unpaid internships and whether they are in fact legally required to pay interns under the Fair Labor Standards Act (FLSA).

In the United States, child labor is regulated by the FLSA and applicable state laws. Under the FLSA, “for-profit” employers are required to pay employees for their labor. The burning question is: are interns and students employees? The FLSA provides employers with a seven-standard test to determine whether an intern or student is in fact an employee under the FLSA, who must then be compensated at (at least) minimum wage.

The Test for Unpaid Interns

The primary beneficiary test is used to gauge whether an intern is, in fact, not an intern and rather an employee under the FLSA. The FLSA guidelines are designed to examine the “economic reality” of the intern-employee relationship to gauge which party is the “primary beneficiary” of the relationship. To put it simply, for an internship to be legal, the intern must be getting most of the benefit in the form of gaining knowledge and experience. If the majority of the benefit would be gained by the employer, in the form of free labor, then the internship must be paid. The FLSA has outlined the following seven factors as part of the test:

1. 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.
2. 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.
3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
6. 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.
7. 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.

Each of these factors is weighed, and no single factor is determinative. Accordingly, whether a student or intern is an employee under the FLSA depends on the unique circumstances of each case.

Employers should be aware that if the analysis of the circumstances reveals an intern is, in fact, an employee, then he or she is entitled to minimum wage (and potentially overtime) pay under the FLSA.

Minimum Age

For most employers, a minor needs to be at least 14 years of age to be hired as an unpaid intern.

Work Permits

Kentucky does not require employers to obtain “work permits” to hire minors as unpaid interns, however, many states do require this.

Hours of Work The FLSA, and well as Kentucky and Indiana state law, place limits on the number of hours per day and week that minors can work. These limitations vary based on the age of the minor and whether school is in session.

For employers that want to hire unpaid interns, it is important to remember that the FLSA’s guidelines require the duration and timing of the internship program to coincide with breaks in the academic calendar.

Type of Work to Be Performed

Employers should be aware that the FLSA dictates the type of work unpaid interns can perform. Ideally, interns should be completing tasks related to the intern’s formal education program, rather than tailored to meet the employer’s business needs. A legal intern, for example, could conduct research and draft documents to be completed by an associate or partner. On the other hand, a legal intern could not be expected to complete grunt work that other employees do not want to complete. Employers should ensure the work of interns complements the work of paid employees, not substitutes for them. The more a task contributes to the professional development of the intern, the more likely the task will be considered training and thus can be unpaid.

Moreover, employers are required to follow the numerous restrictions imposed by the FLSA on the tasks minors can perform. A list detailing the tasks minors are prohibited from performing (most of which are considered too dangerous for minors to engage in) under federal law can be reviewed here. Employers should be aware of the heightened responsibilities that come with hiring minors as unpaid interns. While this article addresses some of the more prevalent child labor issues, employers should be aware that the law imposes numerous restrictions on the employment of minors which are not addressed herein, including rules governing the number of hours minors can work per day, background checks on minor employees, work permits, posting of laws requirements, and meal/rest periods. Employers considering hiring unpaid interns are encouraged to consult with knowledgeable employment law counsel to ensure their policies and practices comply with all relevant child labor laws and the primary beneficiary test for hiring unpaid interns.

C. Tyson Gorman

Tyson Gorman leads the Firm’s Labor & Employment Service Team.  He has assisted numerous management teams with collective bargaining agreement negotiations and arbitrations.  He also maintains an active litigation practice, assisting clients in all manners of litigation including commercial disputes, employment claims, personal injury/product liability defense, and construction and real property/title matters. Read More