An internship is a temporary employment arrangement that gives an individual the opportunity to gain experience in a certain field. Internships generally occur during school as a means to prepare you for your future career. However, many people will take an internship as their first job out of college. Internships look great on a resume and often give job seekers a competitive edge since they already have hands on experience in the industry.

How are Interns Paid?

Internships can be paid or unpaid. Sometimes an educational institution will even offer tuition credits to interns in lieu of taking regular classes. If an intern is paid, they could be paid hourly or may receive a stipend instead. A stipend is a set amount that an individual will receive in increments that is meant to help with their expenses.

How Do Internships Differ From Other Employment Arrangements?

The traditional employment arrangement involves an employee-employer relationship. A regular employee is paid a salary and usually offered benefits. Interns are usually never offered benefits.

Additionally, employees have the expectation of continued employment with the company. Interns know that their employment is temporary and will be informed of their end date before starting the internship. Lastly, employees do not work for an educational benefit like most interns do.

Employers will sometimes hire independent contractors to work on projects or assist with daily business operations. Independent contractors are self-employed and not considered employees of the company. They offer their services on a freelance basis and do not receive benefits. An independent contractor’s wages are not taxed like employee and paid internship wages are.

How are Legal Disputes Surrounding Internship Employment Handled?

1. Intern or Employee?

The Fair Labor Standards Act (FLSA) provides criteria to determine whether an individual working at a for-profit company should be viewed as an employee or unpaid intern. This is referred to as the primary beneficiary test because it determines who receives the main benefit of the work. While all factors need to be considered, not all factors need to be present for an individual to be classified as an intern as opposed to an employee.

The presence of the following factors would be more indicative of an internship relationship under the FLSA:

  • Neither party expected there to be compensation for the work performed;
  • Neither party expects the position to convert to a paid job after the temporary work is completed;
  • The work stops after the individual receives the beneficial learning that was expected;
  • The work provides an educational experience similar to what a classroom curriculum would include;
  • The individual’s academic obligations and academic calendar are taken into consideration;
  • The work performed does not replace that of a full time employee but instead provides more of an educational benefit to the individual; and
  • The work relates to the individual’s current educational program (such as when academic credit is received).

If the individual is classified as an employee as opposed to an unpaid intern, they will be entitled to minimum wage and overtime pay under the FLSA.

2. Intern or Independent Contractor?

There could be a dispute about whether an individual is acting as an independent contractor or an intern. If this question comes into play in court, the following factors would likely be analyzed:

  • How the individual was compensated. If there is no compensation, the arrangement would likely be viewed as an internship or volunteer work. If the individual is paid hourly and not taxed, this would be indicative of an independent contractor arrangement.
  • The nature of the work and training. If the work and training is more education based and the employee has no or minimal experience in the field, they are likely working in an internship capacity. Independent contractors are usually skilled industry experts or at least familiar with the type of work involved.
  • The level of oversight and instruction by the employer. If there is more oversight, the work arrangement will likely be viewed as an internship. Independent contractors generally have minimal oversight and often work remotely. This is because they are more experienced and do not need as much guidance as a student or new graduate who never worked in the industry would require.
  • Whether there were any oral or written agreements between the parties. The agreement would be the most important factor because it shows the intent of the parties.

To avoid this issue, an employer should clearly inform the person as to whether they will be acting in the capacity as an intern or independent contractor. That way they can have clear expectations and address any concerns before beginning work for the company.

Do I Need to Contact an Attorney for Issues with My Internship?

If you believe you have worked as an employee or independent contractor under the guise of an unpaid internship, contact a local employment attorney to discuss your options and help you take the matter to court. However, keep in mind that if you received academic credit from your educational institution for your work, there is a very good chance that you will be classified as an intern.