In order for the internship to be unpaid, all six of the following criteria must be met based on the Fair Labor Standards Act:
- The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an education environment (such as a vocational school);
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees, but works under close supervision of existing staff;
- 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;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
If all six of these criteria are met, there is no employment relationship between the company and the intern, therefore the intern is not required to be paid. However, if one or more of the criteria are not met, the intern should be treated the same as a regular W-2 employee, and should be paid at least minimum wage for each hour worked.
More information on this topic is available on DOL Fact Sheet #71.