Summertime means internships for many college and high school students trying to get their foot in the door in the world of business and gain experience in their chosen course of study. Internships are welcomed by employers because they offer the opportunity to identify and train prospective employees at a reasonable cost. The temporary nature of the internship, however, can cause questions for employers about the employment status of the intern, making compliance with state and federal employment laws tricky.

Among the most important of questions for employers to answer is whether the intern qualifies as an “employee” under state and federal law, thus requiring compliance within the Fair Labor Standards Act (FLSA) and state wage regulations. Interns generally are considered to be “employees” because they perform services in exchange for something of value. There is an exception under the FLSA, however, for internships which are designed solely to facilitate learning. That exception applies to internships which meet the following criteria:

• The training, although it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school.
• The training is for the benefit of the student intern.
• The student intern does not displace regular employees, but works under the close observation of a regular employee or supervisor.
• The employer provides the training and derives no immediate advantage from the activities of student, and, on occasion, the operations may actually be impeded by the training.
• The student is not necessarily entitled to a job at the conclusion of the training period.
• The employer and the student understand that the student is not entitled to wages for the time spent in training.

These factors are aimed at identifying education-based internships, which are much less common than corporate recruiting-based internships. If, however, the majority of these factors apply to the internship, when looking at the totality of the circumstances, then the intern will be considered a “learner/trainee,” rather than an “employee,” and will not be subject to minimum wage and overtime laws.

Employers of learner/trainees are under much less stringent employment regulation than employers of “employee” interns, but there are nonetheless some regulations that will continue to apply to all interns. Both the Michigan Supreme Court and Michigan Court of Appeals have held that a contract for hire, for purposes of the Michigan Worker’s Disability Compensation Act, may be established based upon an exchange of services for training or college credit. As such, and regardless of their classification, all interns are eligible for workers’ compensation if injured while working. Employers must be careful to comply with workers’ compensation regulations.

Internships are wonderful tools for both the student and the employer alike. If you or someone you know would like more information about internships available to college and high school students, visit the Pure Michigan Talent Connect. Employers seeking more information on the legal ramifications of employing interns should feel free to contact us for more information.