Beware the U.S. Department of Labor is investigating and prosecuting small businesses, and David Letterman, for failing to pay minimum wage and overtime to interns. There are some circumstances under which individuals who participate in “for-profit” private sector internships or training programs may do so without compensation. The Supreme Court has held that the term “suffer or permit to work” cannot be interpreted so as to make a person whose work serves only his or her own interest an employee of another who provides aid or instruction. This may apply to interns who receive training for their own educational benefit if the training meets certain criteria. The determination of whether an internship or training program meets this exclusion depends upon all of the facts and circumstances of each such program.
The following six criteria must be applied when making this determination:
If all of the factors listed above are met, an employment relationship does not exist under the Fair Labor Standard Act (“FLSA”), and the Act’s minimum wage and overtime provisions do not apply to the intern. This exclusion from the definition of employment is necessarily quite narrow because the FLSA’s definition of “employ” is very broad.
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