If you are an employer looking to host an intern there are certain guidelines that you are required to legally follow. Parameters have been laid out by various government agencies and legislation to protect interns and employers. Key laws to consider include the U.S. Department of Labor Wage & Hour Division Fact Sheet #71 for unpaid internships, child labor laws for interns under 18, and Affordable Care Act compliance.
Questions to ask tied to legal compliance:
- Is your internship paid or unpaid?
- The length of your intern's employment.
- Will your interns be high school or college students?
- The learning objectives outlined in your internship job description.
- The types of projects your intern will be responsible for.
Remember these three key steps when creating an internship program to ensure you are following the legal requirements:
- Follow the steps in creating an internship program (Click here to learn more)
- Consult with your company's legal counsel, or
- Contact an employment law professional
Don't let legal requirements deter you from this opportunity for growth in your business. See below for more information.
U.S. Department of Labor Guidelines
Unpaid Internship Guidelines from the U.S. Department of Labor for "for-profit" private sector companies under the Fair Labor Standards Act.
The Department of Labor Wage & Hour Division has issued Fact Sheet #71 to serve as guidelines for Unpaid Internship Programs. Employers must follow these guidelines if they plan to hire unpaid interns. In addition, individual states may also have their own stringent guidelines. It is important to seek legal guidance when implementing an unpaid internship program.
Hiring an unpaid intern? Are you a "for-profit" private sector company?
Test all the requirements below and make sure your program is in line with the DOL guidelines.
Fact Sheet #71 at a Glance
- Internship provides supervised training & educational environment
- Internship's tasks tied to intern's educational objectives
- Intern does not displace regular employees, works under current staff
- Employer derives no immediate advantage from intern's services
- Intern is aware & in agreement that they are not entitled to a job at end of internship
- Intern is aware & in agreement that they will not be paid
Fact Sheet #71
Quick Summary of DOL Fact Sheet #71 6-Step Test
An internship can be unpaid as long as:
- The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment.
Tip — Create a strong internship plan that outlines the learning objectives of your internship and make sure they are in your intern's job description, posting, in the introduction package with your offer letter, and covered during onboarding process with supervisor and in weekly supervisor meetings.
- The internship experience is for the benefit of the intern.
Tip — The intern's goals and actual tasks/activities must be closely tied to the intern's core components of their learning objectives.
- 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.
Tip — When an intern performs work that an employer would otherwise have to pay an employee to perform, the employer receives an immediate benefit/advantage from the intern's services. This is not permitted. Common examples of this type of work: copying, scanning, shredding, running errands.
- The intern is not necessarily entitled to a job at the conclusion of the internship.
Tip — This is to safeguard that an unpaid internship is not being used as a trial period for someone that is going to be hired.
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
Tip — Both the previous requirement and this requirement can be fulfilled through a written agreement to clarify non-payment between the employer, the intern and even an educational institution.
Internships and Affordable Care Act (ACA) Compliance
Internships and Affordable Care Act (ACA)
A lot of requirements have been outlined by the Affordable Care Act that affects employers today. It is necessary to consult with your company's legal counsel or an employment law professional to verify ACA compliance for any interns you will be hosting.
ACA Compliance At a Glance
- Who are covered employers?
The Affordable Care Act (ACA) requires "Covered Employers"
defined as for-profit and non-profit companies with 50+ employees to provide
coverage to "full time" and "full time equivalent" (FTE) employees.
- When are employees exempt from coverage?
Paid employees classified as "seasonal" or "variable hour"
working less than 30 hours per week under 120 days or averaged over a year are
exempt from ACA requirements of coverage. As long as a paid intern (vs. unpaid
intern as defined by the Department of Labor FLSA guidelines) is monitored closely
under these requirements then the employer does not need to provide coverage.
- What employees are automatically exempt from coverage?
Full-time paid interns working for government entities, and
students still on their parent's health care coverage under the ACA's age limit of 26.
**If an applicable large employer does not offer required coverage, it may face "pay-or-play" penalties if even one full-time employee receives a premium tax credit through a health-care exchange.
ACA Compliance Detailed
- Only "Covered Employers" are bound by ACA requirements.
- Covered Employers— any employer, including nonprofit organizations, that employs 50 or more employees working an average of 30 or more hours per week. "Covered Employers" can exclude interns in this number of full time employees as a "class", but this "leaves them susceptible to a penalty if interns receive subsidized coverage through an exchange," (see SHRM article below).
- "Full Time" and "Full Time Equivalent" (FTE) employees are both included under the umbrella of employees affected by the ACA.
- The Affordable Care Act (ACA) defines a full-time employee as someone that averages more than 30 hours per week for 120 days and does not make an exception for interns. The 120 days do not have to be consecutive, but must occur during a 360-day period.
- Independent contractors or unpaid interns, as both are excluded from the definition of "employee" under the Fair Labor Standards Act.
- For educational organizations, hours of service performed by students in positions subsidized through a federal or state work study program do not count as ACA covered employees.
- An intern is eligible for coverage if paid and scheduled to work for greater than 30 hours per week for more than 120 consecutive days.
- ACA exceptions for paid interns include:
- Seasonal Employees— customarily six months or less at approximately the same time each year (for interns, this is typically summer or winter break)
- Variable-hour Employees— have changeable weekly hours with no expectation of consistency (an intern can fall into this category if he/she "works full-time in the summer but then sporadically during the year [in some weeks the employee will work 40 hours, other weeks he or she works 0 hours] ").
- Interns whose parents provide existing health
— ACA allows parents to keep their children on their insurance until the age of 26. If coverage is provided in that manner, the intern is not required to be covered by the employer
— Full-time paid interns at government entities can be excluded
- Society for Human Resource Management (SHRM) recommendations:
- "If you intend to define interns as seasonal employees, clearly state that in their offer letters and make sure that their actual employment follows suit."
- "Work closely with your broker and legal counsel to ensure internships are compliant. The ACA regulations around benefits eligibility are complex and amendments are still being issued, so it's important to have expert counsel in making sure that your company's HR practices are on point."
- Monitor the work and hours of interns closely and remember that they should not be considered a long-term substitute for hiring regular employees.
Society for Human Resource Management (SHRM)
National Association of College & Employers (NACE)
Toll-free help line:
Monday-Friday 8am to 5pm
For General questions regarding labor laws and internships or
child labor in New Mexico, call the New Mexico Department of Workforce Solutions, Labor Relations Division.
Las Cruces Office:575-524-6195
Santa Fe Office:505-827-0091