DOL Changes Rules on Unpaid Internships

The DOL has made it easier for employers to avoid paying interns by abandoning their six-part test for distinguishing between interns and employees. The updated fact sheet was released today. You may view it here.

DOL Changes Rules on Unpaid Internships: What Employers Need to Know

In a move that will have significant implications for employers across the country, the U.S. Department of Labor (DOL) has changed rules on unpaid internships, providing clearer guidelines on when internships must be compensated. These changes aim to protect workers from exploitation while ensuring that internships remain a valuable learning opportunity for students and early-career professionals. As part of this update, the DOL has redefined what constitutes a “bona fide” internship and clarified when an internship must be paid under the Fair Labor Standards Act (FLSA).

What the DOL Changes Mean for Employers

The DOL’s new rules come at a time when unpaid internships have been increasingly scrutinized for potentially violating wage and labor laws. While internships are designed to provide valuable work experience, the DOL’s updated guidelines make it clear that employers cannot take advantage of interns by failing to pay them when their work qualifies as “employment.”

Under the new DOL rules, internships in the private sector are only exempt from payment if they meet a strict set of criteria. The intern must gain educational experience that aligns with their academic program, the internship must be for the benefit of the intern, and the intern cannot be displacing regular employees. Importantly, if the intern is performing work that directly benefits the employer—such as assisting with day-to-day business operations—they must be paid at least the minimum wage.

Key Changes in the DOL’s Internship Guidelines

1. Educational Benefit Must Be Clear: The internship must primarily benefit the intern, not the employer. Interns should be engaged in tasks that provide hands-on learning experiences directly related to their academic goals or career development. Work that merely supports the business operations of the company (like filing, answering phones, or general office tasks) may no longer qualify as unpaid work.
2. No Displacement of Paid Employees: Under the new rules, interns should not replace regular employees. Interns are meant to supplement existing teams, not take on tasks that a paid worker would typically perform. This is a critical distinction that could determine whether an internship program complies with federal wage and labor laws.
3. Clear Understanding of Unpaid Internships: If an employer is offering an unpaid internship, they must ensure that the position meets all of the educational and non-exploitative criteria laid out by the DOL. Internships that don’t meet these standards must be paid in accordance with the minimum wage laws.
4. Internship Duration: The length of an internship has also come under scrutiny. While there are no hard-and-fast rules regarding the duration, internships that extend too long without a clear educational component might raise red flags with the DOL. Employers should ensure that the internship is time-limited and focused on skill-building rather than just cheap labor.