Intern Intricacies: Classifying Your Summer Help Without Getting Burned

By Debbie Tam

It’s that time of year when businesses open their doors to young workers who are on school breaks, who are looking to dip their toes in the workforce to gain some skills and experience. Summer internships are equally beneficial to employers who need help in a tight labor market.

Although the number of Americans participating in the workforce today exceeds pre-pandemic levels, the overall labor force participation rate has declined. According to the U.S. Chamber of Commerce, if the labor force participation rate were the same as in February 2020, there would be more than two million additional Americans in the workforce, helping to fill those open jobs.

Enter the summer intern to provide some relief for employers. However, employers must be cautious in their use of interns and comply with the federal laws such Fair Labor Standards Act (FLSA).

Paid or unpaid intern?

The FLSA does not provide an exemption for internships from minimum wage and overtime requirements (see Payroll Guide ¶18,142). The primary beneficiary test is generally used to determine whether an intern must receive wages for the services they perform for a for-profit, private-sector employer.

Applying the primary beneficiary test.

The primary beneficiary test requires the following list of factors to be considered in determining whether an intern should be paid:

• the extent to which the intern and employer understand that there is no expectation of compensation (any express or implied promise of compensation supports a finding that the intern is an employee);
• the extent to which the internship provides training that would be similar to that which would be given in an educational environment;
• 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 with beneficial learning;
• the extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant benefits to the intern; and
• the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

(Glatt v. Fox Searchlight Pictures, Inc. , 811 F.3d 528, 536-37 (2d Cir. 2016).

Paid interns are subject to FLSA.

If an intern is paid, interns are subject to FLSA provisions including minimum wage and overtime requirements. Paid interns will also be generally subject to state labor laws which may have more stringent wage and hour requirements.

Child labor considerations.

Employers that wish to hire minor-aged interns available during summer break must also comply with child labor laws. The FLSA governs the employment of minors. Generally, the minimum wage requirement for an intern is 16 under the FLSA, with some limited exceptions for workers aged 14 and 15. See Payroll Guide ¶18,185.

• Workers aged 14 and 15. Federal law limits the number of jobs these minors may perform. While school is not in session, the FLSA allows these workers to work eight hours per day, up to a total of 40 hours per week. Hours are restricted from 7 a.m. to 9 p.m. from June 1 through Labor Day.
• Workers aged 16 and 17. Under the FLSA, a child aged 16 and older are permitted to work in any occupation not specifically declared hazardous by the Secretary of Labor. These workers may be employed for unlimited hours under federal law.
• Workers aged 18. Workers aged 18 and older or not subject to federal child labor laws.
• State law restrictions. In addition to restrictions imposed by the FLSA, states have their own child labor prohibitions and exemptions, and special meal and break requirements that only apply to minor-aged workers that differ from federal law requirements. Further, states may have age certificate requirements that must be satisfied prior to employing a minor.
• Child labor penalties. Employers who violate federal child labor laws may be subject to a penalty of $16,035 in 2025. See Payroll Guide ¶18,575 for additional information.

Changes on the horizon?

The National Association of Colleges and Employers (NACE) continues to advocate for federal legislation that would make unpaid internships illegal. NACE expressed concerns that the primary beneficiary test is overbroad and misapplied by businesses.